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India proposes to scrap 6% equalisation levy on digital services, government source says

India proposes to scrap 6% equalisation levy on digital services, government source says

  • 25.03.2025 05:29
  • theprint.in
  • Keywords: High, Low

India plans to remove a 6% digital services levy, including ads, targeting U.S. tech firms like Google and Meta. The move aims to ease trade tensions with Washington after Trump threatened tariffs on India.

Alphabet ServicesGOOGLsentiment_dissatisfiedMETAsentiment_dissatisfiedAMZNsentiment_dissatisfied

Estimated market influence

Alphabet

Alphabet

Negativesentiment_dissatisfied
Analyst rating: Buy

Alphabet's Google is affected by the proposed removal of the 6% equalisation levy, which may impact their revenue.

Meta

Meta

Negativesentiment_dissatisfied
Analyst rating: Strong buy

Meta is affected by the proposed removal of the 6% equalisation levy, which may impact their revenue.

Amazon

Amazon

Negativesentiment_dissatisfied
Analyst rating: Strong buy

Amazon is affected by the proposed removal of the 6% equalisation levy, which may impact their revenue.

Context

Analysis of India's Proposed Scrapping of 6% Equalisation Levy on Digital Services

  • Proposed Abolition: India plans to scrap a 6% equalisation levy on online services, including advertising, as part of amendments to the Finance Bill 2025.
  • Affected Companies: The move impacts major U.S. tech giants like Alphabet’s Google, Meta (Facebook), and Amazon.
  • Parliament Approval: The proposed amendments are expected to be approved by parliament this week.
  • Reason for Change: New Delhi aims to address concerns raised by Washington, following threats of reciprocal tariffs by U.S. President Donald Trump on Indian exports.
  • U.S. Delegation Visit: A U.S. delegation led by Assistant U.S. Trade Representative Brendan Lynch is in India for talks with officials this week.
  • Impact on Trade Relations: While the U.S. has been more critical of India’s separate 2% digital services tax, scrapping the 6% levy signals an attempt to ease trade tensions.
  • Expert Analysis: Amit Maheshwari, tax partner at AKM Global, notes that this decision reflects India’s strategic efforts to improve trade relations with the U.S.

Long-term Implications: The move may pave the way for further reciprocal tax changes and could influence global digital services taxation trends.