India is set to remove the 6% equalisation levy, also known as the “Google Tax”, on digital advertising services provided by foreign tech companies like Google and Meta. This change, part of the new amendments in the Finance Bill, will come into effect from April 1, 2025, according to a report by MoneyControl.
What Is the Equalisation Levy or Google Tax?
The equalisation levy was introduced in 2016 by the Indian government. It was aimed at foreign digital companies like Google, Meta (Facebook), and others that earn advertising revenue from India without having a physical office in the country.
The tax was intended to create fair competition between Indian businesses, which pay local taxes, and foreign players who operate through digital platforms but still earn huge profits from Indian users.
Why Is the Tax Being Removed?
The main reason behind this move is to reduce trade tensions with the United States. The US government had earlier raised objections to this tax, saying it unfairly targeted American tech firms.
Another reason is the extra cost it placed on Indian advertisers. Tech giants like Google and Meta were passing the tax cost to Indian businesses that use their platforms for digital ads. This made online marketing more expensive for Indian companies.
Who Benefits from This Change?
Removing the 6% tax will benefit both Indian advertisers and foreign tech firms:
Foreign Companies: Google, Meta, Amazon, and other digital platforms will have lower tax compliance burdens and better profit margins in India.
Indian Businesses: Companies that advertise online will face lower digital marketing costs, which may lead to increased spending on online campaigns and better reach.
Similar Step Already Taken Earlier
Earlier, India had also removed a 2% tax on non-resident e-commerce firms that offered online services without a local base. This was another step in aligning India’s digital tax policies with global practices.
When Will the Google Tax End?
The removal will take effect from April 1, 2025. Until then, the current 6% levy on foreign digital advertising services will still apply.
India’s decision to remove the 6% equalisation levy, or Google tax, marks a big shift in its digital tax policy. This step is expected to ease trade relations with the US and reduce advertising costs for Indian businesses.
It’s also likely to encourage more digital investment and help smaller advertisers reach wider audiences without bearing extra tax costs. As the change becomes effective in April 2025, both tech companies and Indian enterprises can plan their digital strategies with more confidence and clarity.
