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08/01/21 14:46 PM IST

India's digital tax

In news

The US administration has accused that India's digital tax - 2 percent equalisation levy on e-commerce supply of services

Issue
  • The agency finds three issues with India's DST, the first being discrimination against US digital services companies.
  • "India's DST is discriminatory on its face. The law explicitly exempts Indian companies, while targeting non-Indian firms.
  • The result is that US "non-resident" providers of digital services are taxed, while Indian providers of the same digital services to the same customers are not.
  • This is discrimination in its clearest form," the report says.
  • Major complaint raised against India is that its DST is burdensome or restrictive.
Significance
  • At least three aspects of India's DST unreasonably contravenes international tax principles.
  • "Stakeholders have found the text of the DST to be unclear and ambiguous.
  • This creates uncertainty for companies regarding key aspects of the DST, including the scope of taxable services and the universe of firms liable to pay the tax.
Source: The Hindu

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