Jai Siya Ram
š¹ Background: What Was Removed
- In early 2025, India scrapped the 6% Equalisation Levy (aka “Google Tax”) and 2% e-commerce levy on foreign tech firms.
- This move aligned with global tax norms and aimed to resolve trade tensions with the U.S.
ā ļø Why Reinstatement Is Being Discussed
- Revenue Pressure: Indiaās digital economy is booming, but tax contributions from global tech giants remain relatively low.
- Level Playing Field: Indian tech companies face domestic GST, while foreign players often avoid equivalent tax burdens.
- Geopolitical Leverage: If U.S. firms dominate without fair contribution, India could reintroduce levies to assert fiscal balance and digital sovereignty.
š§ Whatās Likely to Happen?
| Scenario | Probability | Details |
|---|---|---|
| Reintroduction of Similar Levy | MediumāHigh | Likely renamed or restructured to comply with OECD rules |
| Targeted Sectoral Taxes | Medium | May apply only to digital ads, e-commerce or data monetization |
| No Tax Return Until 2026 | LowāMedium | Unlikely unless under pressure from U.S. or multilateral tax talks |
š FXLive View: Be Prepared
For U.S. Tech Firms:
- Prepare for renewed tax compliance costs in India
- Ad pricing may rise, affecting small Indian businesses and agencies
- Stock reactions possible for Meta, Alphabet, Amazon if policy changes are announced
For Indian Policy Makers:
- Balance between foreign investment attractiveness and domestic revenue needs
- Strategic timing ahead of election-year budget announcements possible
