Implementing Tax Treaties in the Equalisation Levy Law in India

Abstract

India follows the dualist model in its legal system wherein international treaties are not automatically incorporated in domestic law but require transformation through implementing legislation. The equalization levy was brought in the statute books in India in 2016 and its scope substantially expanded in 2020. Since the levy was brought in, not in the Income-tax Act, 1961 (ITA) but through separate legislation, whether the levy is an income-tax and whether a tax covered by the tax treaties has been hotly debated. This paper examines whether, in the absence of an implementing provision in the EL law similar to section 90 of the ITA, tax treaties can impact the levy. The paper explores various constitutional provisions and jurisprudence in India on implementing international conventions and attempts to identify the various possible arguments for and against the proposition that EL is impacted by the tax treaties which may aid the reader to discern the correct legal position on the subject.