MNCs could face double taxation or get tax arbitration due to new digital transaction law

MUMBAI: As India introduced an equalisation levy at 2%, many companies may be staring at the possibility of double taxation on digital transactions such as buying software or equipment.

Currently, many of them pay a 10% royalty withholding tax on purchases from multinationals located outside India.

India has brought in new regulation effective April 1 whereby the 2% tax could be levied on any purchase by an Indian or India-based entity through an overseas ecommerce platform.