AS | Ankit Sarawagi|Founder, CFOmatrix·September 2026·8 min read | Startup Tax |
Every founder running paid acquisition asks the same question at some point: when I pay Google, Meta or AWS, do I owe TDS, equalisation levy, GST, or all three? The honest answer is that one thing decides it, and it is not the platform.
The single lens that settles the whole question is which entity invoices you: an Indian entity or a foreign one. Once you know that, the tax treatment falls out cleanly. This guide walks through the three possible charges, why the billing entity decides, what changed when the ad equalisation levy was withdrawn, and a simple decision table you can keep next to your ad accounts.
- The one lens
- Which entity invoices you, Indian or foreign, decides everything else.
- Billed from India
- GST charged on the invoice, domestic treatment, no equalisation levy, no reverse charge, no Section 195.
- Billed from abroad
- Import of service: GST under reverse charge and Section 195 to be tested. Now rare.
- Equalisation levy
- The 6% levy on online ads is withdrawn from the 2025-26 financial year.
- How to tell
- Read the invoice: supplier name, GSTIN and place of supply.
1 The three charges that could apply
Historically, paying a foreign digital platform could trigger up to three separate levies, and founders would tie themselves in knots trying to apply all of them at once.
- Equalisation levy: a levy aimed at foreign digital businesses, including the 6% on online advertising and the 2% on e-commerce supply.
- TDS under Section 195: withholding on a taxable sum paid to a non-resident.
- GST under reverse charge (RCM): where a service is imported, the Indian recipient accounts for the GST.
The good news is that these almost never stack in practice. Which of them applies, if any, is governed by one fact, and once you fix that fact the rest is mechanical.
2 The lens that decides everything: who invoices you
The determining question is whether the invoice comes from an Indian entity of the platform or from a foreign entity.
Google, Meta and most large foreign digital companies now have Indian entities and bill Indian customers from India. When the invoice is from the Indian entity, the payment is a domestic supply: they charge GST directly on the bill, and only ordinary domestic rules apply. There is no equalisation levy, no reverse charge and no Section 195, because you are not paying a non-resident.
3 The equalisation levy has been withdrawn
This is the change that makes older advice actively misleading. The 6% equalisation levy on online advertising has been withdrawn with effect from the 2025-26 financial year. The 2% levy on e-commerce supply had already been withdrawn earlier. Equalisation levy is simply no longer the day-to-day worry it was when your accountant’s checklist was written.
Combine that with the shift to Indian-entity billing, and the once-feared “6% on Google Ads” line has quietly disappeared for most startups. If your books still carry an equalisation levy accrual on ad spend, that is a flag to review.
4 The decision table
Keep this next to your ad and cloud accounts. Read the invoice, find your row, apply the treatment.
| Who billed you | GST | Equalisation levy | Section 195 TDS |
|---|---|---|---|
| Indian entity (Google India, Meta India, AWS India), GST on the invoice | Charged on invoice; claim input credit if eligible | No | No (domestic payment; domestic TDS rules only) |
| Foreign entity, no Indian GSTIN (now rare) | Reverse charge in your hands (import of service) | Ad levy withdrawn from FY25-26; not applicable | Test taxability under Section 195; file 15CA/15CB |
Brewly spends ₹4,00,000 a month on Google and Meta ads. Both bill Brewly from their Indian entities, with an Indian GSTIN and GST charged on the face of the invoice. So Brewly treats the spend as a domestic payment: it takes the GST input credit, deducts no equalisation levy, applies no reverse charge, and does not file 15CA/15CB. The only tax action is normal domestic accounting. A year ago Brewly’s old accountant was still accruing a 6% levy on the same spend, which is no longer correct.
5 When a foreign entity still bills you
The reverse-charge and Section 195 path has not vanished; it has just become rare. If a genuinely foreign entity bills you with no Indian GSTIN, you are importing a service:
6 A note on AWS and cloud bills
Cloud is the same logic with one nuance: it is a service you consume, so input credit matters. Where AWS bills from its Indian entity, it charges GST on the invoice and you claim input tax credit as usual, subject to eligibility. Where a foreign AWS entity bills you, it is an import of service accounted for under reverse charge, with Section 195 tested on taxability. Again, the invoice, not the logo, tells you which case you are in.
7 Your compliance checklist
- For every ad and cloud invoice, first identify the billing entity: Indian or foreign.
- Indian entity with GST on the invoice: treat as domestic, claim input credit, no levy, no reverse charge, no Section 195.
- Do not deduct the 6% ad equalisation levy; it is withdrawn from FY25-26.
- Remove any stale equalisation levy accruals from your books and templates.
- Foreign entity with no Indian GSTIN: account for GST under reverse charge and test Section 195.
- Where Section 195 applies, file 15CA/15CB before remitting.
- Keep the invoices; due diligence will check how you treated ad and cloud spend.
Foreign vendor payments where a foreign entity still bills you?
Use our free FEMA/FDI Filing Checker to see which forms, from 15CA/15CB onward, your cross-border payments trigger and by when.
Check my filings8 FAQs
Do I deduct TDS on Google Ads payments?
Is equalisation levy still applicable on online advertising?
Do I pay GST under reverse charge on Google or Meta ads?
How do I know which entity is billing me?
Does AWS charge GST in India?
Related guides & tools
Section 195: TDS on payments to non-residents →
Form 15CA & 15CB for foreign payments →
LUT & GST on export of services →
FEMA/FDI filing checker (free tool) →
AS | Founder, CFOmatrix | Finance Strategy & Compliance CFOmatrix helps Indian startups build finance, tax and compliance functions that stand up to investor due diligence, from process and controls to the filings and the numbers behind them. |
Disclaimer: This article is general information as of September 2026 and is not tax advice. The treatment of TDS, equalisation levy and GST on cross-border digital payments can change and depends on the billing entity and the facts of each invoice. Confirm your specific position with a qualified professional.