Is the Equalisation Levy Still Applicable in India? (No — Fully Abolished)
What changed — 1 amendment
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Initial publication.
India's Equalisation Levy is fully abolished — 2% e-commerce ended 1 Aug 2024, 6% digital ads ended 1 Apr 2025. What foreign sellers do instead.
No — the Equalisation Levy is fully abolished in India. The 2% levy on non-resident e-commerce operators ended 1 August 2024, and the 6% levy on online advertising ended 1 April 2025. In 2026 there is nothing left to pay or withhold under it. If a legacy article, advisor or platform still references a 2% or 6% charge on your gross India revenue, that information is out of date.
What the Equalisation Levy was
India introduced the Equalisation Levy in 2016 to tax digital revenues earned by foreign companies with no physical presence in India:
- 6% on online advertising (the original “Google Tax”) — applied to payments by Indian businesses to non-resident companies for digital ad space and related services.
- 2% on e-commerce supply/services — added in 2020, applied to revenues of foreign e-commerce operators from Indian users.
Both were gross-revenue levies, charged outside the normal income-tax system, introduced as interim measures while global digital-tax rules were negotiated.
Why it’s gone
India withdrew the levy in two steps:
- 2% e-commerce levy → abolished w.e.f. 1 August 2024.
- 6% advertising levy → abolished w.e.f. 1 April 2025.
With both removed, the Equalisation Levy no longer exists in Indian law for 2026.
What replaces it for foreign sellers
Nothing replaces it as a gross-revenue levy. Instead, two ordinary tax systems apply:
- GST (consumption tax): if you sell digital services to Indian consumers, you fall under OIDAR — register and charge 18% IGST on B2C sales (no threshold). See the OIDAR guide.
- Income tax (on profits): a Significant Economic Presence (₹2 crore India revenue or 3 lakh users) can create a taxable business connection under Section 9(8)(d) of the Income-tax Act 2025 — but a tax treaty (DTAA) usually protects sellers with no permanent establishment in India.
So the practical shift for a foreign digital seller is: stop thinking about the Equalisation Levy, and make sure you’re GST/OIDAR-compliant instead.
General information as of June 2026, not tax advice. BatchWise handles OIDAR registration + monthly filing for foreign sellers.
Frequently asked questions
Is the Equalisation Levy still applicable in 2026?
No. India has fully abolished the Equalisation Levy. The 2% levy on non-resident e-commerce operators was removed with effect from 1 August 2024, and the 6% levy on online advertising was removed with effect from 1 April 2025. Nothing remains in force in 2026.
If I don't pay the Equalisation Levy, what do I pay instead?
For digital sales to Indian consumers, the relevant tax is now GST under the OIDAR regime — register and charge 18% IGST. Separately, income tax can apply if you cross the Significant Economic Presence thresholds (₹2 crore revenue or 3 lakh users), subject to tax-treaty relief. The Equalisation Levy is simply gone; it has not been replaced by another gross-revenue levy.
Do Indian customers still withhold Equalisation Levy on payments to me?
No. With the levy abolished (2% from 1 Aug 2024, 6% from 1 Apr 2025), there is no Equalisation Levy to withhold on payments to non-resident digital businesses. If a customer or platform still references it, that process is out of date.