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India and the US extend the 2% digital tax treaty on e-commerce until June 30

India and the United States have decided to extend their agreement on the 2 percent equalization levy imposed by New Delhi on e-commerce platforms until June 30, the Finance Ministry said on Friday.

In October 2021, India and the US reached an agreement to resolve differences over the equalization levy, better known as the digital tax.

Under the agreement, India will continue to impose the tariff until March 31, 2024, or until the implementation of Pillar 1 of the OECD Agreement on Taxing Multinational Enterprises and Cross-Border Digital Transactions. In return, the US will end the trade tariff actions it had announced in response to the tariff and will take no further action.

On December 18, 2023, the Inclusive Framework issued a statement calling for finalizing the text of the multilateral Pillar 1 treaty by the end of March 2024, with a view to holding a signing ceremony before the end of June 2024.

“All other conditions of the transition approach remain the same,” the ministry said. It added that India and the United States will remain in close contact to ensure that there is a common understanding of their respective obligations and will seek to resolve all issues in this matter through constructive dialogue.

First print: June 28, 2024 | 8:22 PM IST

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