India Proposes Abolishing Digital Tax Amid US Tensions

The Indian government has proposed abolishing the Equalisation Levy on online advertisements. This move, part of the Finance Bill 2025 amendments, aims to ease tensions with the US, which has threatened retaliatory tariffs. Other proposed changes include amendments for offshore fund investments and tax assessment clarifications.

The Indian government has taken a significant step by proposing the abolition of the Equalisation Levy on online advertisements, as highlighted in the amendments to the Finance Bill 2025 debated in the Lok Sabha.

This move is seen as an attempt to ease potential retaliatory tariffs from the US, set to take effect from April 2. India previously removed a 2 per cent levy on e-commerce transactions, yet the 6 per cent levy on online advertisements persisted. Experts believe this decision reflects an accommodative approach toward the US.

In addition to removing the digital tax, the government has proposed changes to make offshore fund investments less burdensome and clarified tax assessments related to search and seizure proceedings, aligning with its mission to simplify the tax process for taxpayers and businesses.

(With inputs from agencies.)