Google Tax abolition reveals tax evasion tricks by big tech giants

New Delhi: With the Narendra Modi government abolishing the Equalisation Levy, loosely termed the "Google Tax," analysts downplayed its significance, stating that the amount is unlikely to have any major impact.

“While it stands to benefit US tech giants like Google, Amazon, and Meta, analysts suggest the financial impact on India’s treasury will be minimal,” a media and entertainment industry analyst told BestMediaInfo.com.

The government generated Rs 3,343 crore in the current financial year from companies like Google and Meta through the ‘Google Tax.’

India decided to discontinue its 6 percent equalisation levy on digital advertising services, effective April 1, 2025.

The decision, announced as part of amendments to the Finance Bill 2025 tabled in Parliament on March 24, 2025, marks a significant shift in India’s digital taxation policy and is poised to benefit major US-based tech companies such as Google, Amazon, and Meta.

The move comes amid diplomatic pressure from the United States and aligns with efforts to avoid retaliatory trade measures.

Even as tech giants corner an estimated Rs 70,000–Rs 75,000 crore (USD 8–9 billion) from the total digital advertising spend of Rs 90,000 crore, a significant part of the earnings was not taxable, said an industry analyst.

“The servers of tech giants are not in India. While bookings take place in India, the companies delivering services are not registered in India. It is a very complicated structure to avoid all these taxes,” the analyst said.

“For example, Netflix has a registered company in India named Netflix India. But this company only commissions programmes. The firms collecting subscriptions from Indian subscribers are registered either in the Netherlands or other countries. As a result, they don’t have to pay GST,” the analyst added.

It may not be illegal due to the complex structure of the internet, but they allegedly evade taxes using a mix of companies registered in India and offshore.

When the government pushes for establishing data centres in India for data protection, the move is also aimed at controlling tax evasion.