India is set to remove the 6% equalisation levy on online advertising services starting 1 April 2025, following government approval of amendments to the Finance Bill 2025 as part of the 2025-2026 Budget.
The levy was first introduced in the 2016 Finance Act as a form of Digital Services Tax targeting non-resident companies providing online advertising services in India. It functioned as a withholding tax, requiring Indian businesses to remit 2% of the invoice amount directly to the tax authorities.
The announcement was made by the finance minister on Tuesday, 25 March 2025 and is expected to lower costs for major global technology firms such as Google (Alphabet), Meta, and Amazon. The decision is also viewed as an effort to ease trade tensions with theUS, which has previously raised concerns about India’s digital taxation policies.
Earlier, The Indian Union Cabinet approved the Income Tax Bill 2025, which superseded the old Income Tax Act of 1961. The proposed legislation seeks to streamline tax laws, remove outdated provisions, and simplify compliance processes.
