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India has officially scrapped its 6% digital advertising tax, a move that will reduce costs for U.S. tech giants like Google, Meta, and Amazon while addressing U.S. trade concerns.
Finance Minister Nirmala Sitharaman announced the removal of the equalization levy while presenting amendments to the 2025 Finance Bill in parliament. The tax will be eliminated starting April 1, 2025.
The decision comes as part of India-U.S. trade negotiations, following concerns raised by Washington, with President Trump threatening retaliatory tariffs on trade partners, including India.
Key Takeaways:
🔹 6% Equalization Levy Removed – Previously applied to foreign digital advertising services, criticized as discriminatory by U.S. officials.
🔹 Eases Trade Tensions – Part of a broader effort to strengthen U.S.-India economic ties amid trade talks targeting $500 billion by 2030.
🔹 Follows Prior Tax Cuts – India had already abolished a 2% tax on non-resident e-commerce firms last year.
Analysts view the move as a relief for U.S. tech companies and a strategic step to smooth trade relations. However, whether this leads to a softer U.S. stance on Indian exports remains to be seen.
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