Introduction
The Indian government has officially withdrawn the 6%
Equalisation Levy (EL)—commonly known as the "Google
Tax"—which was previously imposed on online
advertisement revenues earned by foreign digital companies. This
change, introduced through the Finance Bill 2025, came into effect
on April 1, 2025, following parliamentary approval.
The move marks a significant pivot in India's digital
taxation policy and brings the country more in line with the
emerging global consensus on how to tax digital economies fairly
and efficiently.
Background
India introduced the Equalisation Levy ("Google Tax")
in 2016 to tax non-resident digital companies that earned
advertising revenue from Indian businesses, despite having no
physical presence in India. The original levy imposed a 6% tax on
online ad services and targeted large foreign tech companies
monetizing Indian user data and engagement.
