The Indian government introduced a digital tax for tech giants in 2016
India has extended the levy to ecommerce products and companies
India’s ecommerce policy gives preferential treatment to local companies, says the US
Even as India is working on the revised ecommerce policy that would impact all marketplace and inventory-based operations in the market, US authorities have urged the government to reconsider many clauses in its current draft policy. The US has also cautioned the Indian government against the implications of any digital tax, popularly known as Google Tax, or equalisation levy imposed on tech giants.
US authorities are concerned about certain provisions of the ecommerce policy which gives preference to domestic products over foreign entities. Besides this, the policy also talks of data localisation requirements, restrictions on cross-border data flow, expanded grounds for forced transfer of intellectual property, and proprietary source code.