Government to abolish equalisation levy on online ads from April 1

The central government has proposed to abolish the Equalisation Levy, or digital tax, on online advertisements, effective from April 1, 2025.
This move is part of the 59 amendments to the Finance Bill presented by Minister of State for Finance Pankaj Chaudhary in the Lok Sabha, which is expected to benefit advertisers on digital platforms like Google, X (formerly Twitter), and Meta.
Introduced in June 2016, the 6% Equalisation Levy on online advertisement services was designed to tax digital advertising services provided by foreign companies. The Finance Bill amendment will remove this levy starting April 1, 2025, thus reducing the tax burden on digital ad consumers and platforms.
The original Equalisation Levy focused on digital advertising services, including the provision of digital advertising space. In 2020, its scope was extended to e-commerce transactions, imposing a 2% levy on e-commerce supplies, which was abolished in August 2024.
Experts suggest that the proposal to remove the 6% levy is part of India’s efforts to maintain a cooperative stance with the US, which had threatened to introduce reciprocal tariffs from April 2. Deloitte India Partner Sumit Singhania noted that the move aligns with the ongoing simplification of income tax laws in India.
AKM Global Tax Partner Amit Maheshwari told PTI that while the 2% levy faced more criticism from the US, this decision reflects India’s attempt to address concerns from its trading partners, particularly the US, and ease tensions.
Vishwas Panjiar, Partner at Nangia Andersen LLP, welcomed the move, highlighting that it provides certainty for taxpayers and addresses concerns over the unilateral nature of the levy raised by partner countries like the US.
Along with the Equalisation Levy removal, the government has also proposed changes to ease offshore fund investments and amended provisions related to search and seizure assessments in tax matters