According to experts, while India has already phased out the equalisation levy, or tax on specified services like online advertisement and provision for digital advertising space, since April 2025, overseas digital firms continue to be taxed under the Significant Economic Presence (SEP) rules introduced in 2018, which tax non-resident firms crossing revenue or user thresholds.
The White House fact sheet, released late on Monday, stated that India has agreed to negotiate a set of bilateral digital trade rules to address discriminatory or burdensome practices and other barriers to digital trade, including provisions prohibiting the imposition of customs duties on electronic transmissions.
No formal statement was issued by India. “The moratorium on customs duties on digital trade remains a contentious issue at the World Trade Organisation (WTO), with India and the United States holding divergent positions,” said Bipin Sapra, partner and indirect tax policy leader at EY India. Under the goods and services tax, or GST, digital service providers, foreign and domestic, must pay 18% tax on services such as streaming, cloud, software, gaming and digital advertising consumed in India.
“The levy of GST on digital products under online database retrieval services has posed significant challenges, and its removal would help resolve several ongoing disputes,” Sapra said. “Given the strength of India’s indigenous digital industry, the overall impact of such a move is likely to be positive,” he added.