Archive · 28 Jul 2025
India-US Trade Deal Faces Roadblock on Digital Tax Proposals
India and the US are trying to make a trade deal, but they can't agree on digital taxes.
The US wants India to promise it won't make new taxes on digital services, like a tax on online ads.
But India's advisors say this isn't fair because the US isn't offering the same promises.
They worry that agreeing could hurt India's tech businesses and set a bad example.
The US thinks some of India's current digital taxes are unfair to American companies.
Both sides are still talking to try to find a solution.
India's legal advisors advised against accepting a US proposal restricting future digital tax options.
The US proposal was viewed as a one-sided obligation lacking reciprocal provisions for US digital taxes.
India is a significant exporter of digital services, particularly IT, to the US market.
The US has previously cited India's digital tax as discriminatory against US firms.
Negotiations for a trade agreement are ongoing, with digital taxes as a sticking point.
- Who
- India and the United States are negotiating a trade agreement.
- What
- India's legal advisors have recommended against accepting a US proposal concerning digital taxes in trade negotiations.
- When
- Negotiations are ongoing; a US team will visit India in mid-August.
- Where
- Trade agreement negotiations between India and the United States.
- Why
- Disagreement over digital taxes, with India seeking to protect its digital trade interests.
India
United States
Digital Tax Agreements
India
Should not accept a 'unilaterally framed obligation' regarding digital taxes in the trade deal.
United States
The US is concerned about India's digital tax policies.
- Issue
- Digital taxes in India-US trade deal
- US Concern
- India's equalisation levy considered discriminatory
- India's Position
- Reserving the right to decide on digital taxes
- Next Steps
- US team to visit India in mid-August
- Tax being Amended
- Equalisation levy on online advertisements