India has emerged as one of the fastest-growing digital economies, driven by rising internet use, smartphone adoption, and expanding e-commerce activities. The growing presence of multinational digital platforms exposed weaknesses in traditional tax rules based on physical presence. To address this, India introduced the Equalization Levy (EL) in 2016, initially imposing a 6 percent tax on online advertising and later expanding it in 2020 to a 2 percent levy on non-resident e-commerce operators. However, in line with global tax reforms under the OECD framework, the 2 percent levy was abolished in 2024 and the 6 percent levy is proposed to be removed in 2025. With the phase-out of the EL, Significant Economic Presence (SEP) now serves as India’s primary rule for taxing the digital economy, subject to treaty compatibility and profit attribution clarity.