On January 6, 2021, the U.S. Commercial Agent’s Office (USTR) released a report finding that the Indian Government’s 2% Digital Services Tax (DST) under the 2020 Finance Act discriminates against and against U.S. businesses Established principles violate international tax law and restrict US trade. The report was released following an investigation into the USTR under Section 301 of the US Trade Act of 1974, which gives the USTR the power to respond appropriately to any discriminatory actions by another country that adversely affect US trade.
India’s 2% daylight saving time is collected on revenue from digital services offered in India, including digital platform services, digital content sales and data related services. India was one of the first countries in the world to introduce a countervailing charge of 6% in 2016. However, the levy was limited to online advertising services (commonly known as “digital advertising taxes” or DATs). However, summer time 2020 is broader and covers all types of digital transactions.
By and large, the USTR report finds that daylight saving time is discriminatory in two ways. First, it says that daylight saving time discriminates against US digital companies because it specifically excludes domestic (i.e. Indian) digital companies from its scope. Second, daylight saving time is discriminatory as it does not extend to identical services provided by non-digital service providers, according to the report. While these two results may seem justified at first glance, they are completely out of place and ignore the background and context in which daylight saving time was introduced.