The government of India has officially eliminated its 6% tax on digital advertisements following the approval of the 2025 Finance Bill by India's Parliament. This change, which will be effective from April 1, was introduced as an amendment by the Finance Minister. The tax, implemented in 2016, predominantly targeted non-resident service providers and had been a source of contention, particularly among U.S. firms, as it generated up to $400 million annually.
In 2024, another similar levy, a 2% equalization tax on foreign e-commerce sites aimed at Indian consumers, was repealed after being labeled as "discriminatory and unreasonable" by the U.S. government. Over the years, other countries have adopted comparable measures, often impacting U.S. digital service providers while shielding local businesses. The Computer & Communications Industry Association (CCIA) has consistently urged the U.S. government to engage with international governments to dismantle such barriers, highlighting their significant impact on U.S.-based companies.
Jonathan McHale, CCIA Vice President of Digital Trade, stated: “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.”