India is expected to take the first steps towards implementing the global minimum tax deal in the upcoming Budget. The Ministry of Finance is working on introducing the necessary provisions in the Income Tax Act to adopt and set the guidelines towards this new global framework, reported the Mint.

The Union Budget next month is also expected to offer guidance on the matter, though detailed provisions are expected to arrive at a later date, a person with knowledge of the matter told the Mint.

Also read: Explained: The G7 corporate tax deal and how it may benefit India

The tax deal was signed in a historic moment last year that is expected to bring about one of the largest tax reforms across the globe. A group of 136 sovereign jurisdictions had agreed to the international tax reform, which would combat tax avoidance by multinational corporations who have profited from a “race to the bottom” in terms of effective tax rates.

The agreement, which represented the consensus of the entirety of the G20, EU, and OECD, set out that corporations will be paying a minimum of 15 percent corporate tax in every jurisdiction where they are making a profit or where they have sizeable revenue, despite having no physical presence. The global minimum tax of 15 percent is expected to generate approximate tax revenues of $150 billion.

Also read: Global minimum tax - a welcome development

But as part of the agreement, India would have to stop imposing its separate digital services tax (DST) on large companies like Google and Amazon. Nations, including India, are waiting for clarity on setting about the new global cooperative tax regime.

The Organisation for Economic Co-operation and Development (OECD) had already released a portion of the model rules for the new tax regime in December, but the framework for some of the other parts of the agreement like the Global anti-Base Erosion (GloBE) rules, Income Inclusion Rule (IIR) and the Undertaxed Payments Rule (UTPR) are still being worked upon.

Also read: OECD/G20 framework on global tax: What does it mean for India?

(Edited by : Shoma Bhattacharjee)