Use of Internet and digital devices has increased exponentially during past decade. Every government and public sector is becoming digitized with increased use of computers. With India’s vast population and geographic dispersion, one of the major challenges of government is to reach every citizen and provide them access to different government services. National E- Governance Plan and Digital India campaign are focused for such an empowering change in our country. The main objective of these government initiatives is to provide transparent government services to citizens through electronic media. Being a developing country, India also faces some political, economic, technological and social challenges in implementing E-Governance. The fact is that some parts of country are still striving of these changes. All the efforts that government is making may not reach each and every person. This situation gave birth to a challenging scenario called Digital Divide. It is a bitter truth of society. A large portion of country population is living in rural, backward area. The people of such area are completely disconnected from the bright world of technology. At one side we talk about high speed internet and the other side people are more worried about their daily needs like food and shelter. This paper presents the situation in detail that how Digital Divide is a challenge to E-Governance in India.