India to scrap 6% digital tax to ease US trade tensions; relief for Google, Meta and Amazon

The Union government plans to abolish the 6% equalisation levy on digital advertising services amid its efforts to ease US concerns and facilitating a trade pact, according to multiple media reports.

The proposed change, part of amendments to the Finance Bill 2025, is expected to be approved by Parliament this week.

The levy, introduced in 2016, largely impacted US tech giants like Alphabet’s Google, Meta, and Amazon by requiring them to remit the tax on advertising services provided in India. The United States Trade Representative (USTR) had criticised the tax as "discriminatory and unreasonable."

New Delhi’s decision comes amid US President Donald Trump's threat to impose reciprocal tariffs on trading partners, including India, from April 2.

During Prime Minister Narendra Modi's visit last month to the United States, the leaders set a new “Mission 500” goal to double bilateral trade to $500 billion by 2030.

A US delegation led by Brendan Lynch, Assistant US Trade Representative for South and Central Asia, is in India this week for discussions with officials.

Harsh Bhuta, Partner at Bhuta Shah and Co LLP, said, "This step is expected to lower the cost of digital advertising in India. If implemented, it will benefit global digital platforms such as Google, Meta, Amazon, etc., and significantly reduce their compliance burden."

The move is in line with India with the OECD’s global tax framework and is seen as a step towards strengthening trade ties with the US.

Last year, New Delhi scrapped a 2% levy on non-resident e-commerce firms providing online services to reduce compliance complexity and address ambiguities.