By Admin 
India had abolished the 6% equalization levy on digital advertising, commonly known as the ‘Google Tax’, long before the India-US trade framework was announced. However, an initial White House fact sheet indicated that the move was part of a bilateral trade agreement. Later, when there was a change in the fact sheet, the discussion started again.
When was the tax removed?
The 6% tax imposed on foreign tech companies providing digital advertising services was removed through an amendment in Finance Bill 2025. This decision came into effect from 1 April 2025. That means this step was taken about 10 months before the India-US trade framework came out.
What changed in the fact sheet?
The initial White House fact sheet had written that India would ‘remove its digital services tax’ but this line was removed in the revised version. Now it has only been said that India is committed to negotiating the rules related to digital trade.
What was ‘Google Tax’?
Equalization levy was implemented in 2016. Under this, 6% tax was imposed on foreign digital companies earning money from advertising in India, even if they had no physical presence in India. Its purpose was to ensure tax on earnings from digital business.
Why was the tax removed?
Government officials had said at that time that this step was taken to reduce trade tensions with America. America had long been calling this tax discriminatory against its tech companies. People associated with the industry had also said that companies like Google and Meta were passing the burden of this tax on Indian advertisers, due to which the cost of digital marketing was increasing.
Now what next?
India has already removed the 2% equalization levy on non-resident e-commerce companies in 2024. Although the American side wanted that such taxes should not be imposed again in future, but Indian advisors said that it is the country’s right to decide the tax policy and it should not be tied to any trade agreement.