Here’s a detailed summary of the removal of the Equalisation Levy (EL) in India, including key changes, effective dates, and implications:
1. Overview of Equalisation Levy Removal
The Finance Bill 2025 has abolished the 6% Equalisation Levy (EL) on digital advertising services provided by non-resident companies, effective from April 1, 2025. This follows the earlier removal of the 2% EL on e-commerce transactions in 2024.
2. Key Changes
| ASPECT | PRE-2025 | POST-2025 (FINANCE BILL 2025) |
| 6% EL on Digital Ads | Applied to B2B transactions (e.g., Google, Meta ads) | Abolished from April 1, 2025 . |
| 2% EL on E-Commerce | Applied to non-resident e-commerce operators (e.g., Amazon, SaaS providers) | Already removed in 2024. |
| Compliance | Indian businesses withheld 6% on payments >₹1 lakh/year | No EL deduction required. |
| Tax Treaties | EL was outside Income Tax Act, leading to disputes | Now assessed under Permanent Establishment (PE) or Royalty/FTS rules . |
