Year: 2025
Type: article
Abstract: India's direct tax system is changing to meet the challenges of increasing digital economy. Conventional tax systems find it difficult to raise revenue from digital transactions, so efforts are being made to introduce instruments such as the Equalisation Levy and Significant Economic Presence (SEP) rule to tax foreign digital companies. India is also joining efforts in global tax reforms, especially the OECD's Two-Pillar Solution, which aims to implement fair taxation of multinational enterprises, in addition to the global minimum corporate tax (15%). With the growth of cryptocurrencies and virtual digital assets (VDAs), the regulations have become tighter, such as a 30% tax and 1% TDS on transactions. Furthermore, development in artificial intelligence (AI) and big data is making tax compliance easier with faceless assessments and auto audits. The growth of the gig economy, freelancers, and influencers can result in new taxation regulations or common deductions. Startups and SMEs in the digital economy, on the other hand, would gain from tax relief and reduced corporate tax rates in order to encourage innovation. India's tax regime will keep evolving according to the digital economy through technology-based compliance, equitable taxation policies, and international alignment in order to facilitate sustainable revenue generation and economic growth.
Authors: Kiran Kumar M, Sahana Reddy, Numars Venkata Sai Sreekar, Kounissa Basu Ray
Institution: Jain University
Language: English
Topic: Taxation and Legal Issues
Subfield: Accounting
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4409397691