The Government of India has made a necessary amendment in the Finance Bill 2025. In which tax burden has been reduced on global companies that make money from digital ads like Google and META. The biggest news in this amendment is that 6% Equalization Levy has been removed. Which is going to be directly benefiting these companies. Come, let us understand what this amendment is, why it is so important, and how will these digital companies benefit.

What was Equalization Levy?

Equalization Levy was a kind of tax, which was introduced by the Government of India in 2016. This tax was imposed on foreign digital companies. Which used to offer digital services (eg AIDS, online shopping, cloud services) to Indian users. Its main manner was that these companies should be taxed in the same way as Indian companies are imposed at local level.

Through 6% Equalization Levy, foreign companies which used to earn money from Google, Meta, Amazon Indian advertisers through digital AIDS. These 6% tax was imposed on those companies. It was directly imposed so that these companies should be brought into Indian tax system and tax on the business done by them in India.

How will these companies benefit?

• After this amendment, these companies will now have to pay less tax on income from their digital services in India. This will reduce their total tax bill and they will be able to use more part of their income for their investment or growth.
• Due to lack of tax, these companies will get a chance to increase their Indian operations further. They can now bring more flexibility to the prices of their services. Apart from this, the Indian can strengthen her hold in the market.
• Earlier, foreign companies were somewhat damaged due to Equalization Levy. Local companies used to benefit from competition. Now that tax has been reduced, foreign companies will be able to present their services better. This can be a major change for the Indian digital market.
• These companies may increase investment in the Indian market. This can give more investment and growth in digital AIDS, e-commerce, and other sectors, which will also benefit the Indian economy.