The Union Government has proposed abolishing the Equalisation Levy which will benefit advertisers on digital platforms like Google, X (formerly Twitter), and Meta by reducing tax burdens. 

Equalisation Levy (Digital services tax): 

• About: Equalisation Levy, introduced in 2016, is a direct tax imposed on foreign digital service providers to tax income generated from digital transactions in India. 
• Objective: It aims to ensure fair taxation of digital businesses that do not have a physical presence in India, aligning with the BEPS (Base Erosion and Profit Shifting) Action Plan to curb tax avoidance. 
• Applicability: It is deducted at the time of payment by the service recipient if: 
  • The payment is made to a non-resident service provider. 
  • The annual payment to a single provider exceeds Rs. 1,00,000 in a financial year. 
• Covered Services & Tax Rates: The Equalisation Levy initially applied to online ads (6%) and was expanded in 2020 to cover digital services and e-commerce (2%), with the latter abolished in August 2024. 
• Exemptions: It does not apply if the non-resident has a permanent office in India, payments are below Rs.1 lakh, or the income is covered under Section 10(50) to prevent double taxation.  
  • Income taxed as royalties or fees for technical services is excluded.