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As part of the amendment, effective from April 1, 2025, 6 percent equation on online advertisements will be abolished. This digital advertisement will reduce tax burden on consumers and costs on platforms such as Google, X and Meta.
The Equisition Levi, which was first imposed on 1 June 2016, was designed to levy online advertising services, digital advertising locations and taxes on related features.
The government on Monday proposed to abolish the levy of 6% equal on online advertisements from April 1, 2025, which is expected to benefit advertisers on digital platforms such as Google, X and Meta. This Finance is part of 59 amendments in the Finance Bill introduced in the Lok Sabha by the Minister of State for Pankaj Chaudhary.
The Equisition Levi, which was first imposed on 1 June 2016, was designed to levy online advertising services, digital advertising locations and taxes on related features. According to the amendments in the Finance Act, 2016, Section 163 will no longer apply from April 1, 2025. The Finance Act, 2020, had extended the levy’s scope at a rate of 2%, but it was abolished on 1 August 2024.
The removal of levy on online advertisements is seen as a strategic move amid American pressure, as Washington has threatened to impose mutual tariffs from April 2.
AKM Global Tax Partner Amit Maheshwari highlighted that while 2% of the levy criticized the US over e-commerce, the government’s decision indicates an attempt to prevent further trade tension. He said, “Removing 6% equipment on online advertisement is a step in that direction. However, it remains to be seen whether this step will cause any softness to be softened by America, together with the already ongoing diplomatic measures,” he said.
Nangia Anderson LLP partner Vishwas Panjiar called the move “a step in the right direction”, as it brings certainty to taxpayers and addresses concerns from fellow nations about the unilateral nature of the levy.
Beyond the equation levy, the government has also proposed changes to simplify offshore fund investments and refine the tax assessment under the search and seizure provisions. Maheshwari said, “Many amendments have been made for the provisions related to search and seizure evaluation … The government has added the total unknown income of the new period to clarify that the intention of searching and seizure is to bring only unknown income to tax,” Maheshwari said.
(With PTI input)
