Taxation in India's Digital Economy: Challenges, Reforms, and Global Alignment

The digital economy in India has expanded rapidly, posing significant challenges to traditional tax frameworks. This study offers a comprehensive analysis of the evolving taxation landscape within India's digital economy, focusing on direct and indirect tax measures and the country's alignment with global initiatives such as the OECD's Base Erosion and Profit Shifting (BEPS) project. This research employs a descriptive and exploratory methodology, utilizing secondary data from academic sources, government documents, and industry reports. The findings indicate that India has taken proactive measures to adapt its tax system, including implementing the Goods and Services Tax (GST), introducing the Equalization Levy, establishing Significant Economic Presence (SEP) rules, and imposing withholding taxes on e-commerce transactions. Nonetheless, challenges remain in defining tax jurisdictions, preventing profit shifting, and balancing revenue generation with digital innovation. This study underscores the necessity for international cooperation and alignment with global tax initiatives, as well as the integration of advanced technologies in tax administration. Future research should focus on the long-term economic impacts of India's digital tax measures, comparative analyses with other countries' approaches, and their effects on foreign investment and local digital enterprises. As India continues to refine its digital taxation framework, policymakers must consider the principles of value creation, nexus, and fairness while engaging with global efforts to harmonize digital taxation rules.

Digital Economy, Taxation, India, BEPS

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