Digital services tax in India to be probed by US

Published: June 5, 2020

US has decided to investigate the digital services taxes (DST) imposed by India, which is one of the trading partners of US. If found problematic, US can, in turn, consider imposing punitive tariff sanctions which can aggravate the trade friction between India and US. Countries like Austria, the European Union, Indonesia, Brazil, the Czech Republic, Italy, Spain, Turkey, and the United Kingdom are also being investigated for the same by the United States Trade Representative (USTR) under Section 301 of its Trade Act. The act is to respond to discriminatory trade practices by foreign countries against US.

About the Equalization Levy
In the Finance Act 2016, Indian government introduced the equalization levy of 6% on a section of non-resident businesses, including social media platforms and digital content streaming services to expand its tax base, given the huge customer base these companies enjoy in India.

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