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In recent times, India had decided to increase the tax on digital services after the United States, in an answer to such a decision, started a probe to ensure if the policy is discriminatory in nature against the U.S., especially against the tech giants. India has now decided to defend its decision in regard to the same.
Unknown sources have confirmed that India is not keen on changing its position on including e-commerce within the scope of its levy. Prime Minister Narendra Modi announced the widened tax structure, while announcing the budget, which has already come into effect. The United States Trade Representative confirmed that India is one of the ten nations facing the probe that is meant to evaluate if the digital tex system is discriminatory against the tech giants like Apple Inc., Alphabet Inc.’s Google and Amazon.com Inc.
Other than simply defending the digital tax widening, the Indian government has also decided to negotiate to look towards prevention of imposition of tariffs in a scenario where the US Trade Registration declares it to be an unfair policy. The Organisation for Economic Cooperation and Development has been trying to formulate an agreement with almost 140 countries on a global level of taxation. This is essentially to talk about how multinationals and the big players in the market, especially the growing tech giants, are taxed in various nations where they have a large consumer base.
Originally, India levied about 6% tax in the form of an ‘equalisation levy’ on the various digital companies. The new expansion will be a 2% rate on revenues of these e-commerce operators and suppliers. It essentially aims at equalisation of levy from the online advertisers to, in fact, all online commerce practised in India by way of business that did not have taxable presence in the country.
It has come to notice that even in the times of Covid-19, the government refuses to abandon its effort on this negotiation and is working in “full steam”.
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