India’s 6% equalisation levy on foreign online advertising platforms may
impede its overseas trade and increase the risk of retaliation from
countries where Indian companies are doing business, the US has
cautioned. This is because its provisions do not provide credit for tax
paid in other countries for the service provided in India, it said.
In its latest report on trade barriers, the US also marked a slew of
issues in India’s digital trade including those proposed in the draft
ecommerce policy, such as data localisation requirements, restrictions
on cross-border data flows, expanded grounds for forced transfer of
intellectual property and proprietary source code, and preferential
treatment for domestic digital products. Washington said it “strongly
encourages India to reconsider this draft policy”.
