In a significant move aimed at reducing the tax burden on digital advertising, the government on Monday proposed the removal of the 6 per cent equalisation levy on online advertising, a report by CNBC TV18 said. The tax was introduced in 2016 and was imposed on payments made by Indian businesses to foreign digital advertising platforms.
If the proposal is implemented, it will reduce the tax burden on businesses and advertisers in India on running ads on global platforms such as Google, Meta and others. This move is expected to benefit startups, small businesses, and large corporations alike.
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Earlier, reports had stated that Finance Minister Nirmala Sitharaman will present the Finance Bill 2025 in the Lok Sabha today for discussion and approval. The bill is crucial for implementing the government’s financial proposals for the year 2025-26. Further details on the implementation timeline are awaited.
The equalisation levy was introduced by the Finance Act, 2016 on online advertisement services, provision for digital advertising space, or any other facility or service for the purpose of online advertisement only. The Finance Act, 2020, has extended the scope of this levy to e-commerce supply and services made/provided/facilitated on or after 01-04-2020.
The equalisation levy is charged in respect of the following:
(a) Sum received or receivable by a non-resident for online advertisement services: Equalisation levy is charged at the rate of 6 per cent from the consideration paid or payable for the services in the nature of online advertisement, provision for digital advertising space, any other facility or service for the purpose of online advertisement.
(b) Sum received or receivable for e-commerce supply of goods or services made or facilitated on or after 01-04-2020 but before 01-08-2024: Equalisation levy is charged at the rate of 2 per cent from the consideration received or receivable for the e-commerce supply or services made or facilitated on or after 01-04-2020 but before 01-08-2024 by an e-commerce operator.
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