New Delhi: Come April 1, India will be removing the ‘Google tax’.
It’s the 6% equalisation levy on digital advertising services provided by foreign tech firms like Google and Meta.
‘Google tax’, as it was commonly called, was introduced in 2016 to ensure that foreign digital service providers earning revenues from India should also contribute to the exchequer, even if not having a physical presence.
The idea was obviously to create a level playing field between Indian businesses which are subject to local taxes and global entities operating through online platforms.
However, as part of amendments to the Finance Bill — which will come into effect from April 1, 2025 — these government is set to be remove these taxes to pacify and ease tensions with the Donald Trump administration which has started a global tariff war for America’s benefit, MoneyControl reported.
‘Google tax’ is one of the tariffs the US had objected to, calling it discriminatory against American firms.
The other factor, according to MoneyControl, is that Google and Meta passed the tax burden onto advertisers, increasing digital marketing costs for Indian enterprises.
The abolition of ‘Google tax’ will be beneficial both ways. There will be reduced tax compliance requirements and improved profit margins for companies like Google, Meta and Amazon.
At the same time, it will lower digital marketing costs and encourage digital advertising investments by of Indian companies.
