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The 2% Equalisation Levy on e-commerce supplies was introduced in India through the Finance Act 2020 under a new §165A of the Finance Act 2016. It applied to the aggregate amount received by a non-resident e-commerce operator from "e-commerce supply or services" — broadly defined to include online sale of goods, provision of digital services, and facilitation of such sales — where the operator had annual turnover exceeding ₹2 crore from India-sourced consideration. Unlike the 6% levy under §165 (restricted to digital advertising), the 2% levy was extraterritorial in its reach: it applied to goods sold to Indian buyers even when the seller was a non-resident entity outside India.
The measure was immediately challenged by the US. USTR opened a Section 301 investigation in June 2020, covering digital services taxes in multiple jurisdictions including India. In November 2021, USTR terminated the India Section 301 action after India joined the OECD/G20 Inclusive Framework statement committing all members to remove unilateral DST measures once Pillar 1's Amount A rules entered into force. India's October 2021 commitment explicitly included removal of the 2% levy.
Finance Minister Nirmala Sitharaman announced the §165A repeal in the Union Budget speech on 23 July 2024, with immediate effect from 1 August 2024 — the opening date of the new fiscal quarter. The Finance (No. 2) Act, 2024 received Presidential assent and was notified in the Official Gazette on 16 August 2024. Revenue collected under the 2% levy was approximately ₹3,500 crore in FY2023-24 (the final full year of collection).
commitment, but Pillar 1's multilateral Amount A rules have not entered into force — so India has removed its transitional measure without the multilateral replacement it was conditioned on.
after this repeal; it was separately abolished effective 1 April 2025 via Finance Act 2025, eliminating India's entire equalisation levy framework.
commitment → 2024 legislative implementation) is the structural analog to how other DST countries may unwind their measures. Compare Canada, which rescinded its DST under direct Trump trade pressure in June 2025 — far faster but politically coerced rather than multilaterally negotiated.
India-sourced digital revenues; Flipkart (Walmart subsidiary, India-domiciled) had a mixed exposure through its cross-border facilitation activities.
complete India's OECD Pillar 1 DST unwind — and has USTR acknowledged this?
Section 301 structural excess capacity investigation or other bilateral trade forums?