India has announced plans to abolish the 6% equalisation levy on digital advertisements, effective April 1, 2025. This levy, introduced in 2016, applied to payments made by Indian businesses to foreign companies for online advertising services. The decision to remove the levy is part of amendments to the Finance Bill 2025, aiming to simplify tax laws and improve trade relations with the United States.
The equalisation levy was initially implemented to tax digital advertising services provided by foreign companies. Its removal is expected to benefit advertisers using platforms like Google and Meta by reducing advertising costs. This move is also seen as an effort to address concerns raised by the U.S., which had criticized the levy as discriminatory and had threatened retaliatory tariffs on countries imposing digital taxes on U.S. tech companies.
Industry experts anticipate that abolishing the levy will make online advertising more accessible and cost-effective, particularly benefiting startups and small businesses in India. It is also expected to encourage higher spending on digital platforms, further boosting the country’s rapidly growing digital ecosystem.
Overall, the removal of the equalisation levy is viewed as a positive step for both advertisers and foreign digital service providers, fostering a more favorable environment for digital advertising in India.