Google, Meta set to benefit as India proposes to scrap equalisation levy from April 1

In a big relief for Google and Meta in India, the government has proposed to withdraw a 6% “equalisation levy” imposed on global tech giants that provide online advertisements services in India from April 1, 2025.

This will come into effect a day before reciprocal tariffs announced by US President Donald Trump from April 2.

Equalisation levy is charged at the rate of 6% from the consideration paid or payable for the services like online advertisement, provision for digital advertising space, any other facility or service for the purpose of online advertisement. Local units of Alphabet-owned Google and Facebook parent Meta pay more than half of equalisation levy in India. Equalisation levy has become synonymous with 'Google Tax' as the Alphabet-owned tech giant pays the highest equalisation levy in India.

The Ministry of Finance has included the reduction of the levy under the section 'Amendments to the Finance Act 2016' in the list of official changes in the Finance Bill 2025. This is one of the 59 changes to the Finance Bill presented in the Lok Sabha by Pankaj Chaudhary, the Minister of State for Finance.

The government’s move to do away with equalisation levy in its entirety is in sync with the present endeavour of carrying out simplification of income tax legislation, said Sumit Singhania, partner, Deloitte India.

“Even form an international tax policy standpoint, most of the unilateral measures undertaken by the government around the globe in the last several years to deal with growing tax challenges of digitalisation of economies have to be steadily wound back, to make way for uniform tax rules under two pillar solutions espoused by OECD. Given the context that preceded the enactment of equalisation levy, this would be a progressive policy move to restore a higher degree of certainty to taxpayers impacted by the levy,” said Singhania.

In 2020, an equalisation levy was introduced for non-resident e-commerce operators at a rate of 2%, but this was abolished in 2024.

The equalisation levy was introduced by the Finance Act, 2016 on online advertisement services, provision for digital advertising space, or any other facility or service for the purpose of online advertisement only.