Decoding India's stand on digital tax

Traditional international tax law principles fail to account for the developments in technology that allow businesses to cater to market jurisdictions remotely

In the recent past, international tax law principles have come under greater scrutiny for failing to maintain pace with developments in the field of technology. The laws envisage that a business deriving income from cross-border transactions is chargeable to income tax in the country where such business’ residence is located. The concept of residence, in turn, is based on the traditional understanding of physical presence applicable to brick-and-mortar models. It fails to account for the developments in technology that allow businesses to cater to market jurisdictions remotely. As a result, many businesses book massive gains by digitally servicing large markets