LEGAL FRAMEWORKS FOR TAXATION OF ONLINE MARKET PLAYERS IN INDIA

The rapid expansion of digital platforms has exposed fundamental weaknesses in traditional tax laws built around physical presence and territorial nexus. Online market players generate substantial economic value in user jurisdictions while often remaining outside effective tax reach, resulting in significant revenue losses and regulatory imbalance. This article critically examines the evolving legal frameworks governing the taxation of digital businesses, with a focus on international initiatives such as the OECD’s Two-Pillar Solution, regional responses like the European Union’s Digital Services Tax, and national approaches under India’s GST regime and U.S. marketplace facilitator laws. It analyses judicial developments that have restrained aggressive administrative practices while underscoring the need for legislative clarity. The article argues that fragmented unilateral measures risk legal uncertainty, trade conflicts, and innovation slowdowns, and contends that coherent, technology-enabled, and harmonised tax frameworks are essential to ensure fairness, enforceability, and long-term sustainability in the digital economy.