India, US agree on transitional approach on Equalisation Levy 2020

India and United States have agreed on a transitional approach on Equalisation Levy 2020. India and United States have agreed that the same terms that apply under the October 21 Joint Statement shall apply between the two countries with respect to India’s charge of two per cent equalisation levy on e-commerce supply of services and the United States’ trade action regarding the  Equalisation Levy. 

However, the interim period that will be applicable will be from 1st of April 2022 till implementation of Pillar One or 31st March 2024, whichever is earlier. Ministry of Finance in a statement said that India and United States will remain in close contact to ensure that there is a common understanding of the respective commitments and endeavor to resolve any further differences of views on this matter



through constructive dialogue. It said, the final terms of the Agreement will be finalised by 1st  of February next year.

On 8th of October this year, India and United States joined 134 other members of the Organisation for Economic Co-operation and Development and G20 Inclusive Framework in reaching agreement on the Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy.

On 21st of October, the United States,  Austria, France, Italy, Spain, and the United Kingdom reached an agreement on a transitional approach to existing Unilateral Measures while implementing Pillar 1. The agreement is reflected in the joint statement that was issued by these countries.