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  • Nov 25, 2021
  • India, US reach settlement on 2% equalisation levy

    India and the United States have reached an agreement to settle differences relating to the 2% equalisation levy imposed by New Delhi on e-commerce operators.

    The settlement is broadly on the lines of the one reached under the Unilateral Measures Compromise reached among the UK, Austria, France, Italy and Spain with the US on October 21 this year.

    Under the agreement, India will continue to impose the levy March 31, 2024, or till the implementation of Pillar 1 of the OECD agreement on taxing multinationals and cross-border digital transactions.

    The US will terminate the trade tariff actions it had announced in response to the levy and will not take any further actions.

    "India and US have agreed that the same terms that apply under the October 21 joint statement shall apply between the US and India with respect to India's charge of 2% equalisation levy on e-commerce supply of services and the US' trade action regarding the said equalisation levy," the finance ministry said in a statement. It added that India and the US will remain in 'close contact' to ensure there is a common understanding of the respective commitments, and any further differences of views on this matter are resolved through constructive dialogue.