Digital services tax in India discriminates against US companies: USTR

India’s 2 per cent digital services tax on e-commerce supply discriminates against US companies and is inconsistent with international tax principles, according to a US Trade Representative (USTR) investigation.

The finding paves the way for potential retaliatory tariffs but the USTR did not immediately specify actions to counter such taxes.

USTR’s investigation said the Indian levy discriminates against American companies, unreasonably contravenes international tax principles, and burdens or restricts US commerce.

The latest report of the office of the USTR said that “our investigation indicates that India’s DST discriminates against US digital services companies”.

It observed that India’s digital services tax (DST) is discriminatory on its face, as the law explicitly exempts Indian companies while targeting non-Indian firms.