6% digital tax will no longer be levied on online advertisements
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As a first step to avoid US President Donald Trump’s tariff policy, India has decided not to impose 6% tax on online advertisements. This equalization fee, commonly known as Google tax, was implemented in 2016 so that foreign companies pay appropriate tax on the earnings in India. Its removal will benefit big US technology companies like Google, Meta and Amazon.
The Lok Sabha on Tuesday passed the Finance Bill with 35 amendments, which also includes a proposal to remove digital tax. Finance Minister Nirmala Sitharaman said, a strong economy is necessary to build a developed India. Our emphasis is on tariff rationalization and promoting domestic manufacturing. Under this, customs duty rates are being reduced on seven items. The bill ensures that either cess or surcharge will be levied on imports, not both.
High share in service exports beneficial for India: S&P
According to the report of rating agency S&P Global, despite the trade tensions arising from Trump’s threats, India’s economy is not likely to be adversely affected much, as it has a high share in service exports. According to S&P, tariffs are mainly imposed on goods. Therefore, tariff measures will have little effect on economies with a significant share in service exports. This can be considered beneficial for countries like Philippines and India. Fitch Ratings says that there is a risk regarding America’s trade policy, but the Indian economy will be safe due to less dependence on external demand.
