Connected to India

Serving Indians Abroad

subscribe

For news, views, interviews.

Business-Bollywood-Features-News-Fun-Stuff

India, US strike deal on digital services tax

India and the US had agreed to resolve differences on the two percent equalisation levy (digital services tax) imposed by the former nation. 

India’s digital services tax or equalisation levy was introduced in April 2020 for foreign e-commerce sellers of goods and services to level the playing field with local businesses who pay taxes in India.
India’s digital services tax or equalisation levy was introduced in April 2020 for foreign e-commerce sellers of goods and services to level the playing field with local businesses who pay taxes in India. Photo courtesy: Asia Society

Since April 2020, India has imposed a digital services tax on foreign e-commerce companies selling goods and services online to customers in the country and showing annual revenues more than INR 20 million (USD 275,404). The agreement is akin to the Unilateral Measures Compromise reached among the UK, Austria, France, Italy, and Spain with the US on October 21, 2021, India Briefing reported. 

Under the agreement, India will continue to impose the levy until March 31, 2024, or till the implementation of Pillar one of the OCED agreements on taxing multinationals and cross-border digital transactions, whichever is earlier. 

The US will terminate the trade tariff actions it had announced in June 2021 against India and several other countries in response to the levy and will not take any further actions. 

India’s digital services tax or equalisation levy was introduced in April 2020 for foreign e-commerce sellers of goods and services to level the playing field with local businesses who pay taxes in India. 

As per the latest change to India’s tax law, foreign e-commerce companies will need to segregate inventory of resident and non-resident sellers on their platforms to make clear where the levy will be applicable.

On March 23, 2021, the Indian parliament confirmed changes to the 2021 Finance Bill, including clarity on the digital equalisation levy. 

The office of the United States Trade Representative (USTR) has widely opposed the digital tax imposed on online platforms by various countries, as leading firms are of American origin. The USTR stated that such a levy was discriminatory to US commerce and actionable under its law – Section 301, Trade Act of 1974.

Read more India News and USA News here

Author
CtoI News Desk
CtoI News Desk – CtoI

Singapore-headquartered online media company targeting Indian Diaspora across Singapore, US, UK, India and UAE. Connected to India covers developments around NRIs. Cover arts, political, sports, finance, entrepreneurship, business, movies, dramas, entertainment and other news for Indians living worldwide.

Comments