India Abolishes 6% Equalisation Levy on Digital Ads from April 1, 2025
Updated: 26-03-2025 at 3:32 PM
1k
With the changes made to the Finance Bill of 2025, the Government of India is considering scrapping the Equalisation Levy (EL) charged to non-resident companies providing online advertisement services. As part of the 2016 Finance Act, the EL was implemented and has since caused friction with other nations, notably the United States.
This move is seen as a diplomatic and economic balancing act, coming just ahead of potential retaliatory tariffs from the US scheduled for April 2.
Read More: What Is Make In India Initiative?
What Is The Equalisation Levy?
The Equalisation Levy (EL) was first introduced in 2016 at 6% for foreign businesses that derived income from advertising services in India. It was further extended to cover e-commerce operators in 2020 but at a lower rate of 2% in a bid to tax the digital economy.
In 2024, the 2% EL on e-commerce was abolished, but the 6% charge on digital advertising stayed.
Why Has The Levy Been Removed?
1. To Avoid Trade Tensions with the US
The suspension of EL impacted Google, Meta, and Amazon. The US raised a flag on what it thought was unreasonable digital taxation and wanted to impose tariffs. Removing the EL is considered benevolent by the Indian government and a way to settle these trade conflicts.
2. Alignment with Global Tax Frameworks
India and a host of other nations are moving to adopt a common international tax system as envisioned in the OECD’s Two Pillar Solution. This policy includes a multinational approach to the taxation of digital companies, which renders unilateral taxes such as the EL unnecessary.
3. Reduce Cost Burden on Advertisers
Indian businesses paying for digital ads shouldered the burden in the end. Its elimination is anticipated to reduce expenses related to digital advertising, thus making online marketing accessible for emerging businesses and Micro, Small and Medium Enterprises (MSMEs).
Read More: What Is Digital India's Mission?
Impact On Digital Ecosystems
The recent shift in taxes and policies has been instrumental in developing India’s digital infrastructure, with positive effects on numerous parties. The reforms and restructures are directed towards building an equitable and cost-effective digital space which is in harmony with global standards.
| Stakeholder | Impact |
|---|---|
| Indian Advertisers | Reduction in digital ad costs |
| Tech Giants (Google/Meta) | Lower compliance and tax burden in India |
| Government | Aligns with global tax standards; averts potential sanctions |
| Start-ups/MSMEs | Increased affordability in digital marketing |
What's Next?
The global players are probably elated by India's decision to remove unilateral digital taxation, as it is perceived as a measure towards easier trade relations. Primary attention now lies with the execution of the OECD's Pillar One and Two tax rules, where India will remain highly engaged.
Conclusion
The Equalisation Levy is set to be abolished effective April 1, 2025, which signifies a change in India’s digital taxation policy. By reducing the advertisement tax, the government has shown its willingness to positively engage with the international community, foster fairer practices, and support the digital economy.
Join the conversation and stay informed! Visit the Jaagruk Bharat community page and be part of an active, engaged community as we work day and night to bring information to your fingertips.
0
0
1k
0
0
1k Views
0
No comments available
Our Company
Home
About
T&C
Privacy Policy
Eula
Disclaimer Policy
Code of Ethics
Contact Us
Cancellation & Refund Policy
Categories
Women
Insurance
Finance
Tax
Travel
Transport & Infrastructure
Food
Entertainment
Communication
Government ID Cards
E-commerce
Traffic guidelines
Miscellaneous
Housing and Sanitation
Sports
Startup
Environment and Safety
Education
Agriculture
Social cause
Jaagruk Bharat with its team work tirelessly to bring all government schemes, Sarkari Yojanas, policies and guidelines to you in a simplified and structured format.
Our team is at the forefront of gathering, verifying and breaking all central government and state government regulations uncomplicatedly.
Our mission and vision are to make the common citizen of India aware of all government-laid-out rules and policies in a single place. Thus, we Jagruk Bharat have created an all-inclusive portal for 1.5 billion Indian citizens to understand, utilize and avail benefits of govt schemes and policies and by bringing them under one roof.
Jaagruk Bharat (जागरूक भारत) is a one stop centralised destination where you can effortlessly find, understand, and apply for various government schemes. We are committed to ensuring transparency and empowering Indian citizens. Our goal is to keep India Jagruk about government policies, the latest news, updates, and opportunities.
All Copyrights are reserved by Jaagruk Bharat