By: Nandika Chand | Last Updated July 20, 2020
India stands adamant on its decision to tax companies offering digital services such as Amazon, Google and Facebook. And this has been relayed to the US trade department.
The US, not so happy with New Delhi’s decision, had initiated investigations to assess whether the levies discriminate against American technology majors. The investigations focus on cocerns about discrimination against US companies, retroactivity and unreasonable tax policy.
Along similar lines, France is an example for India as the former’s decision prompted Washington to levy 25% tariffs last week on a series of French goods worth about $1.3 billion. Tariff on goods such as makeup and handbags will take effect after 180 days since France has not started collecting its digital tax.
In March 2020, India adopted a 2% tax on digitisation transactions. It applies only to non-resident companies, and covers online sales of goods and services to, or aimed at persons in India. The tax is applicable only to companies with annual revenues in excess of US$267,000 which came into effect on April 1, 2020.
The United States and India have been in negotiations to achieve a limited trade deal with ambitions for a free trade agreement in the near future.