India Resists US Push to Permanently Scrap Digital Tax in Trade Deal Talks
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Amid ongoing India–US trade discussions, India's Commerce Ministry has opposed a clause proposed by the United States that would prevent India from reintroducing digital taxes like the equalisation levy in the future. This development comes as India attempts to ease US concerns over high tariffs and show willingness to cooperate on trade reforms.
In March 2025, the Indian government had suggested removing the equalisation levy on digital ads as part of the Finance Bill amendments. However, legal advisers to the Commerce Ministry now advise negotiators not to accept the US's current demand, as it imposes an obligation only on India.
According to insiders, the US proposal lacked mutuality—it asked India to commit to not applying digital service taxes but made no such commitment from the American side. This was perceived as a "unilateral obligation" rather than a balanced agreement.
India is cautious, especially since any legal commitment could limit its future policy options in the fast-evolving digital economy. Meanwhile, the country still faces the threat of 26% reciprocal tariffs from the US, highlighting the sensitivity and complexity of trade negotiations.
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