India to eliminate Google Tax from April 1

To ease tensions with the US amid the tariff war, India has decided to eliminate the digital advertising tax, also known as the Equalisation Levy, from April 1st as part of the amendments to the Finance Bill.

Under this regime introduced in 2016, payments made by Indian businesses to digital companies like Meta and Google were initially taxed at 6%, beginning in 2016. In 2020, the tax regime was expanded to include a 2% additional tax on Indian e-commerce companies with annual earnings exceeding ₹2 crore. The Indian government generated ₹3,343 crore through this tax in the current fiscal.

India and the US set a target of $500 billion in two-way trade by 2030 during Prime Minister Modi’s visit to the US last month. The elimination of the digital tax is seen as a step in that direction.

Moreover, the Trump administration threatened reciprocal tariffs from April 2 on countries that levied digital taxes.

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