India to Remove ‘Google Tax’ from April 1 Amid US Tariff Pressure
New Delhi: India will officially withdraw the 2% equalisation levy, commonly known as the ‘Google Tax’, on foreign digital companies from April 1, 2025. The move comes as part of an agreement with the United States, which had earlier threatened to impose trade tariffs on Indian goods in retaliation.
Why India Is Removing the Digital Tax?
The equalisation levy, introduced in 2020, was imposed on foreign tech giants such as Google, Amazon, Facebook, and Netflix, requiring them to pay 2% tax on digital services provided in India. However, the tax became a contentious issue in India-US trade relations, with Washington warning of potential tariffs on Indian exports if the tax remained in place.
India’s decision to withdraw the levy aligns with the global tax framework negotiated by the Organisation for Economic Co-operation and Development (OECD). The agreement ensures a more standardized approach to taxing digital businesses worldwide.
Impact on India’s Digital Economy & Global Trade
✅ Stronger India-US Trade Relations: The move is expected to ease tensions and foster better bilateral trade deals.
✅ Boost to Foreign Investment: The removal of the levy may attract more investment from global tech companies.
✅ Alignment with Global Tax Norms: India joins the OECD framework, ensuring a uniform tax structure for multinational corporations.
✅ Revenue Implications: The government will need to explore alternative taxation strategies to compensate for the lost revenue.
