From April 1, India Plans to Eliminate the 6% Google Tax

India plans to eliminate the Google tax, a 6% equalisation levy levied on online advertising services provided by Google and Meta, starting on April 1. The action is probably intended to appease US President Donald Trump, who has threatened to impose retaliatory tariffs on nations that, starting on April 2, impose digital taxes on US internet businesses. Nirmala Sitharaman, the finance minister, introduced 59 amendments to the Finance Bill in the Parliament on Monday, including the clause. In order to encourage them to migrate to India, the other major revision suggests eliminating the phrase "indirectly" from a clause controlling offshore funds. In connection with search and seizure evaluation, a new word, "total undisclosed income", is introduced in another modification.

India is Strengthening its Partnership With US

The above development makes it clear that the sole purpose of a search and seizure procedure is to tax unreported income. To allow the Income Tax Department to make modifications while processing a return, a new subclause is being proposed. The planned change to eliminate the equalisation levy follows trade negotiations between the US and India, with New Delhi seeking to avoid the impending announcement of reciprocal duties on April 2. In addition, the government has suggested eliminating the income tax benefits that these businesses currently enjoy in place of the equalisation levy. To please Trump, some other nations, like the UK, are also thinking about eliminating the internet tax.

Experts believe that the government of India (GoI) made a wise decision in eliminating the equalisation charge because the revenue was not very high, and, at the same time, it was raising concerns for the US government by giving the impression that there were "non-tariff" tax obstacles. They added that India might use this action as leverage in talks with the US on trade tariffs. In addition to providing taxpayers with predictability, the ruling allays partner countries' worries about the levy's initial unilaterality, including those of the US.

Amendments in Offshore Funds

Additionally, the government has suggested changes to offshore fund managers' Section 9A. According to the Finance Bill, Indian citizens could not "directly or indirectly" participate in or invest in more than 5% of the corpus. A media report on February 10 stated that the phrase "indirectly" appeared to be impeding foreign fund managers' desire to move to India. Many trade analysts feel that the proposed amendments to the Finance Bill, 2025, are largely clarifying in nature, in line with the government's mission to address doubts and issues being faced by the taxpayers and businesses at large.