India may remove digital ad tax to address U.S. trade concerns

Post by: Pratik Kumar

India has decided to remove a 6% tax on digital ads, which mainly affected big U.S. tech companies like Google, Meta, and Amazon. This step is taken to improve trade relations with the United States. The tax, called the equalisation levy, was applied to online ad services from foreign companies. The U.S. had earlier said that this tax was unfair because Indian companies did not have to pay it.

The Indian government plans to make this change in the Finance Bill 2025. The bill is expected to be approved this week, and the tax will be removed from April 1. The finance ministry has not given an official comment yet.

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Last month, Prime Minister Narendra Modi visited the U.S., where both countries agreed to work on a trade deal. They aim to increase trade between them to $500 billion by 2030. The U.S. had warned about imposing extra tariffs on some countries, including India, from April 2. This created worry among Indian businesses.

A U.S. team, led by trade official Brendan Lynch, is visiting India this week for talks with Indian officials. Last year, India also removed a 2% tax on foreign e-commerce companies for online services.

Experts believe removing this tax will help U.S. tech companies and reduce trade tension between the two countries. However, some say it is still unclear whether this step will improve the U.S. position toward India.

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