Modi government wants to scrap 'Google Tax': What is it?
What's the story
The Indian government has proposed the abolition of the 6% equalization levy (EL) on digital advertisements (also known as 'Google Tax'), as part of amendments to the Finance Bill, 2025.
The EL was introduced in 2016 and is applicable to payments (over ₹1 lakh annually) by Indian businesses to foreign firms for digital advertising services.
The proposed amendment seeks to abolish this levy from April 1, 2025.
Tax adjustments
US pressure influences policy modifications
The proposal to abolish the EL is viewed as India's attempt to ease some taxes on businesses, particularly those under pressure from the new US administration over tariffs.
In August last year, India had removed a 2% levy on digital services offered by overseas tech firms such as Google, Meta and Amazon.
However, the 6% levy on online ads has stayed.
Expert opinions
Experts weigh in on India's tax policy changes
Amit Maheshwari, a tax partner at AKM Global, said the government's decision to remove the EL is an attempt to show a more accommodating stance, ahead of possible tariff retaliation by the US.
He added it remains to be seen if this move might lead to any softening of stance by America.
Vishwas Panjiar from Nangia Andersen LLP also commented on India's introduction of Significant Economic Presence (SEP) concept targeting foreign companies with significant online presence here.
Bill amendments
Amendments to Finance Bill also address undisclosed income
Apart from the proposed removal of the EL, other amendments have been done in sections 113, 132 and 158 pertaining to assessment of undisclosed income detected during searches and seizures.
The term 'Total Income' is being replaced with 'Total Undisclosed Income.'
This change wants to clarify that the target of search and seizure proceedings is only undisclosed income, assuring taxpayers of their already disclosed income.