Mumbai: In a significant policy move, the Indian government has announced the abolition of the 6% Equalisation Levy on online advertisements, effective April 1, 2025. This decision, which is part of the 59 amendments to the Finance Bill introduced in the Lok Sabha by Minister of State for Finance Pankaj Chaudhary, is expected to ease the tax burden on digital advertisers and platforms like Google, X, and Meta.
The Equalisation Levy was originally introduced in 2016 under the Finance Act to tax online advertisement services, including digital ad space and related facilities. Over the years, the tax framework was expanded, with the Finance Act 2020 extending the levy to e-commerce transactions at a rate of 2%, which was later abolished in August 2024.
With the proposed amendment, Section 163 of the Finance Act, 2016, which governs the Equalisation Levy, will no longer apply from April 1, 2025. This move is widely seen as a step towards simplifying India’s tax structure and aligning with global digital taxation norms.
Experts believe the removal of the Equalisation Levy is also a strategic move to ease trade tensions with the United States, which had previously expressed concerns about the unilateral nature of the tax and threatened reciprocal tariffs starting April 2.
Apart from scrapping the Equalisation Levy, the Finance Bill 2025 introduces amendments aimed at easing offshore fund investments and modifying tax assessment rules under search and seizure provisions. The changes also focus on better reconciliation of income tax returns, further streamlining India’s tax landscape.
