Mumbai: India is set to remove the 6% equalisation levy, also known as the ‘Google tax,’ on digital advertising services offered by foreign tech giants like Google and Meta, according to a report.
The tax removal is part of the amendments to the Finance Bill and will take effect from April 1, 2025. Originally introduced in 2016, the levy aimed to ensure foreign digital service providers earning revenue from India contributed to the exchequer, despite not having a physical presence. It was meant to create a level playing field between Indian businesses paying local taxes and global firms operating online.
However, the decision to scrap the tax comes amid efforts to ease trade tensions with the US, which had criticised the levy as “discriminatory” against American companies. Another factor influencing the move is that firms like Google and Meta passed the tax burden onto advertisers, increasing digital marketing costs for Indian businesses.
The removal is expected to benefit companies like Google, Meta, and Amazon by reducing tax compliance requirements and improving profit margins. It will also lower digital advertising expenses for Indian advertisers, encouraging greater investment in digital marketing, according to the report.
PNN
