No more Google Tax: India to finish 6 % on foreign digital ads from April 1

India is scheduled to remove the equation tax by 6 %, which is usually referred to as “Google Tax”, on online advertising services provided by foreign technology companies such as Google and Meta from April 1. This decision is part of amendments to the Finance Law, 2025, with the aim of improving trade relations between India and the United States.

The tax, which was presented in 2016, imposed taxes on payments by Indian companies for foreign companies for digital advertising services.

Eliminating the tax as part of India’s efforts to alleviate trade tensions with the United States, which previously criticized customs duties and threatened with Indian exports such as shrimp and basmati rice. The removal of technology giants is expected to benefit, reducing advertising costs and enhancing their profit margins.

“The removal of the equation tax is a smart step by the government, as the groups were not very high, and it was a source of anxiety for the administration of the United States,” said Sodhair Kabadi, the chief adviser to EY, said to Reuters. The gesture is seen as an attempt to prevent more trade conflicts and maintain a stable trading environment.

It is expected to reduce advertising costs on platforms such as Google and Meta to encourage more spending on digital ads by Indian companies, after which more advertisers attract these platforms and enhance their revenues. In addition, this profitable step for these technology companies is likely to improve.

The decision is also expected to pay more foreign investments to the digital sector in India. By making digital advertising cheaper, the government hopes to stimulate the digital economy and provide opportunities for growth and innovation.

Besides removing the tax, the government plans to cancel some of the previously available tax exemptions for foreign technology companies. While the tax will be canceled, these companies may continue to be subject to tax under other provisions, while maintaining a balanced tax frame.

The financing bill also includes changes to the rules of external fund management, which aims to reduce the transfer of these funds to India.