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Digital Tax

 What is Digital Tax?

Equalisation Levy (Digital Taxation) was introduced in India (the first country in the world to do so) in the Year 2016 on online Advertisement, subsequent to the ‘Report of the Committee on Taxation of E-Commerce’ which proposed Equalisation Levy on Specified Transactions. However it was kept outside the domain of the Income Tax Act, which leads to certain issues e.g. a tax credit of Equalisation Levy in other countries, no liability of the beneficiary, Tax Neutrality, etc. thereafter the amendments of 2018, introducing the concept of Significant Economic Presence (SEP) and the lately (2020) introduced amendment to Finance Act 2018.

Rapid digitization is one constant that has changed the world we live in. From buying groceries, booking cabs, and watching movies to connecting with people the world over through social media/ messaging applications, almost everything is possible online. As more and more people participate in the digital economy, there is a need for countries to develop a framework to regulate and to get a 'fair' share of taxes from the revenues generated by such businesses.


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