The government on Monday proposed to abolish the equalisation levy or digital tax on online advertisements from April 1, a move that will benefit advertisers on digital platforms such as Google, X and Meta.

These changes are part of the 59 amendments to the Finance Bill introduced by minister of state for finance Pankaj Chaudhary in the Lok Sabha.

As part of the amendment, effective April 1, 2025, the 6 per cent equalisation levy on online advertisements will be abolished. This will reduce the tax burden on digital ad consumers.

The equalisation levy on online advertisement services was imposed on June 1, 2016.

According to the amendments proposed in the Lok Sabha, Section 163 of the Finance Act, 2016, levying equalisation levy will not apply on or after April 1, 2025.

The levy was introduced by the Finance Act 2016 for online advertisement services, provision for digital advertising space, or any other facility or service for the purpose of online advertisement only.

The Finance Act 2020 had extended the scope of this levy to e-commerce supplies and services made on or after April 1, 2020. This 2 per cent levy on e-commerce transactions was abolished on August 1, 2024.

According to the amendment to the Finance Bill 2025, the levy on online ads will now be abolished from April 1, 2025.