Government Proposes Removal of 6% Equalization Levy on Online Ads

The government proposed on Monday eliminating the 6% equalization levy on online advertising services provided by non-resident entities, a move that would benefit companies such as Google, Meta, and X.

The proposal is one of 59 amendments to the Finance Bill, 2025, that Minister of State for Finance Pankaj Chaudhary introduced in the Lok Sabha. It comes ahead of talks on a bilateral trade deal between New Delhi and Washington, as well as the imposition of reciprocal tariffs by American President Donald Trump on April 2.

However, the proposed amendments also seek to eliminate the corresponding income-tax exemption under Section 10(50), bringing such revenue into regular taxation. The move follows the government's earlier decision to eliminate the 2% levy on e-commerce transactions on August 1, 2024.

Amit Maheshwari, tax partner at AKM Global, stated that although the US was more critical of the 2 percent levy, the Indian government seems to be adopting a more accommodating posture in anticipation of additional tariff retaliation from the US.

"It is unclear whether this, in conjunction with continued diplomatic efforts, will weaken US policy, but eliminating the 6% tax on internet advertisements is a step in that direction."