MUMBAI: India plans to abolish its contentious 6% equalisation levy on digital advertisements, a move that primarily affected U.S. tech giants such as Google, Meta, and Amazon. The decision comes as part of efforts to address U.S. concerns and to advance a trade pact between the two nations.
The tax, which was introduced in 2020, required foreign companies providing online advertising services in India to withhold and remit the levy. U.S. companies, in particular, had raised concerns about the tax, arguing that it was discriminatory and unfair as domestic companies were exempt from it.
The proposed change, expected to be approved by India’s parliament this week, will make the elimination of the tax effective from April 1. This comes after U.S. President Donald Trump threatened to impose reciprocal tariffs on trading partners, including India, unless the issue was addressed.
In a recent visit by Indian Prime Minister Narendra Modi to the U.S., both countries agreed to work on the first phase of a trade deal by autumn 2025, aiming to reach $500 billion in two-way trade by 2030.
The move to scrap the tax is seen as an attempt to ease trade tensions between India and the U.S., and provide relief to U.S. tech firms that were impacted by the levy. However, it remains uncertain whether this step will lead to a softening of the U.S. stance on trade issues with India.
India’s finance ministry did not immediately comment on the development.
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