Agreement on transitional approach between India and US for digital tax on e-commerce supplies

Published on November 25, 2021

India and the United States have agreed for a transitional approach on equalisation levy or digital tax on e-commerce supplies beginning from April 1, 2022, till pillar one takes effect or March 31st, 2024, whichever is earlier (called “interim period”). In a major reform of the international tax system, on October 8 this year, 136 countries, including India, have agreed to an overhaul of global tax norms to ensure that multinationals pay taxes wherever they operate and at a minimum 15% rate (under pillar 2).However, this would require countries to remove all digital services tax including India’s Equalisation levy and other similar unilateral measures adopted by other countries. 

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