India to scrap 6% ‘Google Tax’ amid trade tensions with US

India is set to remove the 6% equalisation levy, commonly known as the "Google Tax," on foreign digital service providers from April 1, 2025. The decision, part of amendments to the Finance Bill, comes as a response to ongoing trade tensions, particularly with the United States, which has opposed the tax for years.

Also Read: Bengaluru: Let’s visit Ananta, Google’s 1.6 million-square-foot facility! 

Introduced in 2016, the tax was aimed at ensuring that foreign digital companies generating significant revenue from Indian businesses contributed fairly to the country’s exchequer. However, it led to increased costs for advertisers, as companies like Google and Meta passed on the burden to Indian enterprises.

The removal of this levy is expected to ease trade relations, particularly with the US, which had criticized it as discriminatory against American tech giants. By scrapping the tax, India is aligning its digital taxation policies with global norms and reducing compliance burdens on foreign companies.

For businesses, the change could bring down digital marketing expenses, making online advertising more accessible to startups and enterprises. Additionally, foreign digital firms will benefit from improved profit margins and a more favorable investment climate.

While the tax was initially introduced to boost revenue from global tech firms, its impact remained limited. With this shift, India aims to attract greater investment in the digital economy while strengthening its trade partnerships.