Equalization levy was imposed in India as means of equalizing the tax on foreign online businesses and Indian online businesses. However, equalization levy failed in its objective because there were numerous disputes about its mechanism and calculation.
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While one of the aims of equalization levy was to bring tax liabilities of foreign and Indian digital companies at par. However, frequent disputes was not the reason for removing equalization levy. The pressure from US and the upcoming global tax system were proximate reasons to withdraw the equalization levy.