Washington – The Indian government officially eliminated its 6 percent tax on digital advertisements after India’s Parliament passed the 2025 Finance Bill. The move, introduced via amendment by the Finance Minister, will come into effect on April 1.
The tax, which was introduced in 2016, has long been viewed as a discriminatory measure, given its exclusive focus on non-resident service providers. By generating up to $400 million a year, the bulk of which was reportedly from U.S. firms, this levy was one the most egregious digital services taxes in effect.
A parallel 2 percent equalization levy on sales of foreign e-commerce sites targeting India was repealed in 2024 after being identified as “discriminatory and unreasonable” by the U.S. government. In recent years, other countries have increasingly adopted similar measures, typically targeting predominantly U.S. digital service providers as a means of extracting revenue from foreign companies while shielding domestic competitors. CCIA has long advocated for the U.S. government to engage with foreign governments to remove such barriers, given their disproportionate effect on U.S. firms.
The following can be attributed to CCIA Vice President of Digital Trade Jonathan McHale:
“India’s move to scrap its 6 percent tax on digital advertisements is a welcome sign that discriminatory digital services taxes targeting U.S. companies are finally recognized as inconsistent with international trade and taxation principles. The Trump administration’s engagement on this issue reflects a longstanding bipartisan view that such taxes harm the U.S. tax base, businesses, and workers. This development is also a positive sign for the prospects of more comprehensive engagement, including negotiating a bilateral trade agreement. Such engagement could significantly enhance ties between two dynamic markets, bolstering innovation and investment, and establishing guardrails against barriers to digital trade.”
