US Proposes Up To 25 Per Cent Tariff On 40 Indian Products In Response To Equalisation Levy Imposed By India

The Biden administration in the United States (US) has proposed to impse retaliatory tariffs of up to 25 per cent on import of around 40 Indian products in response to India's imposition of equalisation levy or digital services tax (DST) on non-resident e-commerce operators, reports Economic Times.

On Thursday (25 March), United States Trade Representative (USTR) said that the tariffs would collect duties on goods from India in the range of amount of DST which India is likely to collect from the US-based e-commerce operators. USTR has estimated the collections to be about $55 million per year.

USTR's report on Next Steps of 301 Digital Services Taxes Investigations states, "In particular, USTR proposes to impose additional tariffs of up to 25% ad valorem on an aggregate level of trade that would collect duties on goods of India in the range of the amount of DST that India is expected to collect from US companies."

The USTR's proposal on retaliatory tariffs comes as in January, USTR had observed, that the DSTs adopted by Austria, India, Italy, Spain, Turkey, and the UK were subject to action under Section 301 as they discriminated against US' digital companies, were inconsistent with principles of international taxation, and burdened US-based companies.

It should be noted that the 2 per cent equalisation levy, or the so-called Google tax, came into effect on 1 April 2020.