The rapid expansion of the digital economy has exposed structural limitations in traditional international and domestic tax frameworks. Digital businesses can generate substantial economic value in jurisdictions without maintaining a conventional physical presence, challenging established concepts of nexus, permanent establishment and source-based taxation. This paper examines the principal legal challenges in implementing digital taxation frameworks, with particular attention to India, the European Union and the United States, and evaluates their relationship with the OECD/G20 Inclusive Framework and the Two-Pillar Solution. The study follows a doctrinal legal research approach. It analyses legislation, judicial decisions, tax treaties, government and institutional materials, scholarly literature and international initiatives concerning digital taxation. The study focuses on the evolution of digital taxation, unilateral measures such as India's Equalisation Levy and European Digital Services Taxes, Significant Economic Presence, jurisdictional conflicts, compliance and enforcement problems, and the role of artificial intelligence, blockchain, big-data analytics and automation in tax administration. The analysis indicates that the principal difficulties are jurisdictional ambiguity, fragmented unilateral measures, double-taxation risks, compliance burdens, treaty interaction, enforcement across borders, data governance and the rapid emergence of new digital business models. The OECD's Two-Pillar framework offers a route toward greater international coordination, but implementation requires sustained cooperation, domestic legislative alignment and effective administrative capacity. The paper recommends harmonised legal definitions, coordinated international rules, simplified compliance, stronger data-protection safeguards, technologyassisted enforcement with due-process protections, and adaptive regulation for emerging digital sectors.