The Indian government appears to be reducing the balanced tax by 6% on the online advertising services provided by offshore digital businesses to Indian advertisers. This so-called “Google Tax” (because it influenced the U.S.-based web search company, and perhaps someone else like Meta and X) was launched in 2016, but was suddenly withdrawn just a few days before U.S. President Donald Trump’s reciprocity tariffs took effect on April 2.
However, this move is expected to be unclear.
As a gift for large American tech companies making money from the Indian market through borderless businesses, the purpose may be to show flexibility in trade negotiations with the United States, which is expected to revolve around corporate interests. But are we giving up too early?
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This is not India’s first concession. In August, New Delhi imposed a 2% tax on e-commerce transactions, while the 2025-26 union budget cuts import taxes on high-end vehicles known to Trump. Given the threat of the U.S. president to establish steep import barriers to any country that buys oil and gas from Venezuela, we may be forced to stifle Venezuela’s crude oil supply. While Google tax reversal looks like another peaceful product, India must not lower the ball when going this path.
How we still have tariffs on Trump will apply. If the U.S. is in line with Indian interest rates, then we may have little to lose because the items we export to it are not much from imports. As Washington has not yet publicly stated the shape its trade barriers will take and imposes punitive taxes on imports in certain countries, there may be a probation scope, or even large bargains. After all, tariffs on the United States are not priceless, and the United States has been providing leverage to other governments.
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Trump’s expectations for India, besides buying prescribed American goods and weapons, are only clear when negotiations are in progress. Unfortunately, even if a trade agreement is reached, it is difficult to figure out whether large-scale technology tax cuts can make better bilateral relations. While the mutual purpose is to sign a covenant by this fall, it seems likely that India’s sweeteners will take effect soon.
While a temporary approach to policy can only reflect what the United States is doing, India’s autonomy requires us to resist a framework that reshapes the image of the United States. To do this, we must stick to the principles we advocate before Trump rises.
Recall that Google tax collections are to compensate for the loss of revenue generated by global sellers in digital advertising space to generate value for Indian eyeballs. There is no reason only our vaults are obtained from success. This view is shared by other countries, especially in Europe.
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This is a strong protest against powerful businesses that hover over national borders and pick cherries in tax systems, while the Organization for Economic Cooperation and Development proposed a plan to provide a more equitable tax distribution for multinational corporations (MNCS). It has been recognized by the G20 and has two pillars. The first will allow local economic tax to operate in their markets, with a ratio of tax rights than where they earn their income. The second requires a minimum tax on multinational corporations to prevent their books from flying to tax paradise.
If the first pillar is adopted, the case of Google tax evaporates. However, the proposal encountered resistance from the United States, which seemed to be for the unfair status quo. But for a more fair taxation it should remain on India’s advocacy agenda.
