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India to scrap ‘Google tax’ before US tariffs take effect
The provision has been included in the 59 amendments to the Finance Bill that finance minister Nirmala Sitharaman moved in Parliament on Monday
The government may scrap a 6% ‘equalization levy, or “Google tax,” that it had rolled out in 2016 on online advertisement services offered by offshore digital economy firms such as Meta and Google to Indian businesses through amendments in the Finance Bill 2025, which is being taken up for discussion in Parliament this week
India’s proposed move is likely aimed at placating US President Donald Trump, who has warned of reciprocal tariffs from 2 April.
The provision has been included in the 59 amendments to the Finance Bill that finance minister Nirmala Sitharaman moved in Parliament on Monday.
The government had in August scrapped a 2% levy that applied to services offered by offshore digital economy firms such as cloud and e-commerce services to Indian businesses. The government had, however, retained the 6% levy on online ad services offered by tech firms that do not have a presence in India.
The equalization levy “shall not apply to any consideration for any specified service received or receivable by a person on or after the first day of April 2020,” Mint reported.
The 2016 Finance Act introduced the equalization levy, a direct tax on online transactions for non-residents providing specified services like digital advertising.
Aimed at leveling the playing field for Indian companies, the levy has collected ₹3.343 crore until 15 March this financial year.
Other countries, including the UK, considered abolishing the tax to appease Trump.
Initially targeting foreign online ad platforms, the levy expanded in 2020 to include all e-commerce companies earning over ₹2 crore annually from India, provided they lacked a physical presence and their revenues weren’t classified as royalties.
Aligning with OECD guidelines, which simplify tax rules for global tech companies, India scrapped the 2% digital tax in August.
Despite this, Trump exited the OECD in January 2025, protesting the redistribution of multinational profits to revenue-generating jurisdictions.
Meanwhile, a US trade delegation led by assistant US Trade Representative Brendan Lynch will visit India from 25-29 March.
Lynch’s visit comes just days before Trump imposes reciprocal tariffs.
The US delegation will discuss a bilateral trade agreement, which will focus on tariff reductions and market access improvements.
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