Equalisation Levy: Indian has decided to abolish Google Tax

Learn about the Equalisation Levy (EL), a tax on digital transactions in India aimed at addressing taxation challenges of cross-border e-commerce and digital services.

Context: The central government has proposed to abolish the Equalisation Levy on online advertisements.

What is the Equalisation Levy (EL)?

Equalisation Levy (EL) is a direct tax aimed at ‘equalising’ the tax component of resident and non-resident e-commerce companies.
Introduced in 2016, it initially imposed a 6% tax on digital advertisements provided by offshore companies.
The two conditions to be met to be liable to equalisation levy:
- The payment should be made to a non-resident service provider.
- The annual payment made to one service provider exceeds 1,00,000 in one financial year.
It is informally referred to as the “Google tax” because it affects global tech giants such as Google, Meta and Amazon, requiring them to withhold and remit this tax to the Indian government.

Government’s Proposal to Abolish Equalisation Levy

As part of the 35 amendments to the Finance Bill, 2025, the 6% equalisation levy on digital ads will be abolished from April 1, 2025.
This move follows the earlier repeal of the 2% equalisation levy on e-commerce in 2024.