In a bid to ease trade tensions with the United States, India has proposed to abolish the 6% equalisation levy (EL) on online advertisements as part of the 2025 Finance Bill amendments. The tax, colloquially known as the “Google tax,” has been in place since 2016, affecting digital services provided by foreign tech giants like Google, Meta, and Amazon.

The move is seen as an effort to show a more accommodative stance toward the US, which had criticized the levy for being discriminatory against foreign companies. In 2020, India also introduced a 2% EL on e-commerce platforms, which was repealed in 2024 due to US objections.

This decision follows a broader agreement by India, the US, and other OECD/G20 members to create a global framework addressing the tax challenges posed by the digital economy. Experts suggest that the removal of the 6% EL signals India’s intent to align with international norms and reduce tariff retaliation from the US. This shift is expected to bring clarity to taxpayers while addressing global concerns over unilateral digital taxation measures.

Source: The Indian Express