No More Digital Tax: Modi Govt Removes 6% Levy on Online Ads

2 min read

25 Mar 2025,20:31 PM IST

The Modi government on Monday proposed to abolish the leveling fee or digital tax on online advertisements from April 1 under 59 amendments to the Finance Bill-2025. The bill is being debated in the Lok Sabha. This move will benefit digital platforms like Google,X,and Meta. According to experts,the proposal to remove the leveling fee on online advertisements has been brought to show a liberal attitude towards the US.

It is worth noting that the US has threatened to impose a retaliatory duty on India from April 2. The leveling fee or digital tax was imposed on online advertising services on June 1,2016. Its purpose is to ensure a fair share of tax from the digital economy. Do you also want to know why the government has taken this decision? So let’s know.

There was a 6 percent fee on online advertisements.

Amendments to the Finance Bill-2025 were introduced in the Lok Sabha by Minister of State for Finance Pankaj Chaudhary. The government had removed the 2 percent levelling fee on e-commerce transactions last year,but the 6 percent fee on online advertisements continued.

Amit Maheshwari,tax partner,AKM Global,said that the 2 per cent duty was strongly criticized in the US,but now the government is showing a more liberal attitude to avoid confrontation in case of higher duty imposition. The removal of 6 per cent levelling duty on online advertising is a step in the same direction. However,it remains to be seen whether these steps will soften the US stance.

What experts said

Nangia Andersen LLP partner Vishwas Panjiyar said that the proposal to completely abolish the levelling duty is a step in the right direction,as it increases the confidence of taxpayers and also addresses the concerns of partner countries (such as the US) about the unilateral nature of the duty.

Deloitte India partner Anil Talreja said that the amendments proposed in the Finance Bill-2025 are largely clarifying. These address the doubts and issues of taxpayers and big businesses.

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