Digital tax to stay until OECD pact comes into force

The 2 per cent equalisation levy imposed by India on digital players will continue for US companies until a global agreement on taxing multi- national enterprises (MNEs) comes into effect or March 31, 2024, whichever is earlier. The United States on the other hand has committed to withdrawing its threat of retaliatory trade action against India, according to an agreement reached between the two countries on Wednesday.

New Delhi and Washington have agreed to count the benefits of a global agreement om taxation from the next financial year. However the benefits would actually accrue once the global pact comes into effect or March 31, 2004, whichever is earlier in form of credit according to the reading of the pact by experts. According to the bilateral agreement India’s equalisation levy will not go away in interim period which starts from April 1, 2022.

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