India Proposes Abolishing Digital Tax on Online Advertisements

NEW DELHI: In a significant move, the Indian government has proposed to abolish the 6% equalisation levy, commonly known as the digital tax, on online advertisements starting April. This decision is poised to benefit major digital platforms and their advertisers, including global giants like Google and Meta.

Strengthening Bilateral Ties

The proposal comes at a time when India and the US are actively working to enhance their bilateral relations. "The removal of the 6% equalisation levy on online advertising is a step towards showing a more accommodative stance, especially in anticipation of potential tariff retaliations by the US," explained Amit Maheshwari, a tax partner at AKM Global.

Simplifying Tax Laws

Sumit Singhania, a partner at Deloitte India, highlighted the move as part of efforts to simplify tax laws. "This aligns with the global trend of winding back unilateral tax measures to make way for uniform tax rules under the OECD's two pillar solutions," he said.

Additional Tax Amendments

The government has also proposed amendments to ease the tax burden on offshore fund investments and sought parliamentary approval for changes related to tax assessments under search and seizure provisions, aiming to penalize only undisclosed income.