INDIA Law and Practice Contributed by: Shivalik Chandan, Hardik Choudhary, Dhruv Singh and Arjun Khurana, G&W Legal
1. Digital Economy 1.1 Key Challenges
Commission of India (CCI). In 2020, the CCI initi - ated an investigation into the two platforms for alleged violations of the Competition Act, 2002. Both companies challenged the probe in court, and the matter remains pending. The outcome of this investigation, including any penalties or corrective actions, will depend on the court’s decision. In 2024, the CCI also imposed a fine on Meta for violations of the Competition Act. 1.2 Digital Economy Taxation Taxation of digital goods and services in India is covered within the goods and services tax (GST) regime of the country. GST is levied on “Online Information Database Access and Retrieval” (OIDAR) services, which are defined as including services where delivery is mediated by information technology over the internet or an electronic network, including services such as digital advertising, cloud services, provision of digital goods or content (such as books, movies, games, music, software, etc), digital data stor - age, and online gaming. Taxation for OIDAR services under the GST regime is applicable where the place of supply of the service is in India. In the event the service provider/supplier is located outside India, taxes for B2B supplies are chargeable on a reverse charge mechanism. However, for B2C sales in such situations, the foreign service provider would be liable to pay the applicable GST on such services. As such, all foreign service pro - viders providing OIDAR services to Indian con - sumers must undertake the necessary compli - ances under the GST laws, including obtaining the required registration, and filing the applicable returns. 1.3 Taxation of Digital Advertising There are no specific tax implications around digital advertising, and these services are also
The primary areas of legislation applicable to the digital economy in India include data protection, consumer protection, and the regulatory frame - work for digital payments. In recent years, India’s antitrust regulator has also increased scrutiny in the digital economy space. The Digital Personal Data Protection Act 2023 (DPDPA), which is expected to come into force in 2025, will apply to all entities – whether Indian or foreign – that process personal data in India or target Indian data subjects for goods or services. The Information Technology Act 2000 (IT Act) is India’s primary legislation governing the use of computer resources. Provisions related to cyber - crimes, such as identity theft, cheating and mis - representation, as well as breaches of contract, are relevant to the digital economy. Consumer protection laws also play a role in the digital economy, as discussed under rele - vant sections. Entities involved in payment sys - tems must comply with regulations issued by the Reserve Bank of India (RBI). The Payment and Settlement Systems Act 2007 (PSS Act) is the primary legislation for payment systems, requiring RBI approval for any payment system operating in India. The RBI issues regulations that payment systems must follow, along with guidelines like those for payment aggregators and payment gateways, credit card and debit card issuance, and card transaction tokenisa - tion. These guidelines vary depending on the nature of the business. Large e-commerce entities, such as Amazon and Flipkart, have been under heightened scruti - ny by India’s antitrust regulator, the Competition
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