The 6 % equation tax on online ads is likely to be canceled from April 1

The government is expected to cancel the equation tax on the Internet from April 1 this year.

According to the sources, this step is likely to be part of the amendments to the Finance Law, 2025. In fact, it is imposed on payments for online specializations such as Google and Meta.

The move comes significantly at a time when concerns about this issue were raised by several countries, including the United States.

Vishwas Panjiar, partner, Nangia Andersen pointed out that the equation tax has always been an incomplete solution and symptoms to take digital transactions under the tax, until global consensus and all in countries between countries were reached. In addition to the equation tax, India also presented the concept of the large economic presence (SEP) in its local law to target foreign companies that have a large online presence in India.

He said: “The government’s move to propose completely cancel the equation tax is a step in the right direction because it does not only bring certainty to the taxpayer, but also addresses the concerns raised by the partner countries (such as the United States) regarding the unilateral nature of the tax in the first place.”

The Finance Law, 2020, expanded the scope of this tax to the e -commerce supplies and the services provided in or after April 1, 2020, at a rate of 2 %. However, it was canceled in the Union’s budget in July 2024 as of August.

According to the sources, regardless of the abolition of the equation tax on the online advertisements, the amendments to the 2025 Finance Bill are not very large in nature and only procedurally.

Lok sabha took over the financing law to consider it and passes on March 24.