In a major move as in Budget 2025, the Indian Government proposed removing the 6% equalization levy on online advertisement also known as the ‘Google Tax.’ Let’s understand this important update in detail.
What is the Google Tax?
The government introduced the Equalisation Levy in 2016 to tax non-resident digital companies providing services to Indian customers. Earlier it was targeting online advertising payments made to companies like google and Facebook. However, it eventually expanded to cover other e-commerce activities. As a result, digital business became complicated.
Why is Google Tax being removed now?
The government’s decision to eliminate the tax from April 1, 2025, aligns with global efforts to create a uniform tax framework for digital companies. This comes as per the OECD’s international tax reforms. Additionally, this move serves as a defensive response since the United States plans to impose retaliatory tariffs on Indian exports. Removing the levy may help ease trade tensions and promote better diplomatic and economic relations.
Impact on Businesses & ITR Filing as Google Tax is removed
There will be lower costs for businesses and freelancers who rely on foreign digital platforms for online marketing. Currently, businesses have to face 6% tax levy or face compliance hurdles. However, now the levy is gone so ITR Filing will become simpler and there will be less documentation for equalization levy.
What’s next for India’s Digital Tax Policy?
While the removal of the Google Tax is a relief for many, it signals a transition toward a more comprehensive and globally accepted tax framework. It is expected from the Indian Government to participate in ongoing international discussions to ensure fair and efficient digital taxation while supporting innovation and foreign investment.
Conclusion
In Conclusion, removal of the Google Tax in Budget 2025 is a bold and strategic move by the Indian government. It reflects that the government is now flexible, welcoming modernization, and easing taxation for business.
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