INDIA: Agreement on Lifting of DST Punitive Tariffs Reached with US

The Office of the United States Trade Representative (USTR) announced on 24 November 2021 that India and the United States have reached a deal over the 2% Digital Services Taxes (DST) that India imposed on large US internet firms, such as Facebook, Google and Amazon, implemented from April 2021. The US introduced punitive tariffs of 25% on about 25 Indian exports in June 2021. Due to come into force in November 2021, these tariffs were temporarily suspended for 180 days. 

The dispute was settled as a result of the Organization for Economic Cooperation and Development (OECD) agreement on international taxation. The settlement requires India to phase out its equalisation levy, and for any tax liability that US companies accrue in India during the interim period to be creditable against future taxes. In return, the US will drop the punitive tariffs that had been adopted in its DST Section 301 investigation.