Introduction to the Finance Bill 2025

The Lok Sabha has passed the Finance Bill 2025, which includes 35 significant government amendments aimed at transforming India's fiscal policies. This move aligns with the government's vision of making India a developed country by 2047, as emphasized by Finance Minister Nirmala Sitharaman[1][2]. The bill is expected to have profound impacts on individual taxpayers, businesses, and the overall digital economy in India.

Key Highlights of the Finance Bill 2025

Budget Expenditure and Revenue

• The total budget expenditure for FY 2025-26 has been set at ₹50.65 lakh crore, marking a 7.4% increase from the previous fiscal year. This includes a substantial allocation for capital expenditure at ₹11.22 lakh crore, with an effective increase to ₹15.48 lakh crore to boost infrastructure and development projects[1][2].
• Gross Tax Revenue is projected to reach ₹42.70 lakh crore, while gross borrowing is pegged at ₹14.01 lakh crore[1].

Resource Transfer and Schemes

• The government has allocated ₹25.01 lakh crore for resource transfer to states, focusing on state-level development initiatives.
• Central Sector Schemes have been allocated ₹16.29 lakh crore, with ₹5.41 lakh crore for Centrally Sponsored Schemes[1].

Fiscal Deficit and GDP Projections

• The fiscal deficit is projected to reduce to 4.4% for FY 2025-26, down from 4.8% in the current fiscal year[1].
• GDP is estimated to grow by 10.1% over the previous year, with an estimated value of ₹3,56,97,923 crore for FY 2025-26[1].

Changes in Tax Regimes

New Income Tax Slabs

The new income tax regime will become the default option from April 1, 2025. Taxpayers must explicitly choose to continue under the old regime each year if they prefer not to switch[1].

Revised Income Tax Slabs for the New Regime:

| Income Tax Slabs (Rs.) | Income Tax Rate | |-------------------------|------------------| | 0 to 4,00,000 | 0% | | 4,00,001 to 8,00,000 | 5% | | 8,00,001 to 12,00,000 | 10% | | 12,00,001 to 16,00,000 | 15% | | 16,00,001 to 20,00,000 | 20% | | 20,00,001 to 24,00,000 | 25% | | 24,00,001 and above | 30% |

Enhanced Rebates and Exemptions

• Section 87A Rebate: Enhanced rebates will be available to reduce tax liabilities for low-income groups[1].
• Start-Up Tax Exemptions: Start-ups have until March 2030 to register and claim tax exemptions under Section 80-IAC[1].
• Life Insurance Policies in IFSC: Policies issued by IFSC units to non-residents will enjoy full tax exemption, regardless of premium size[1].

Taxation Changes for Businesses

• Remuneration Deduction for Partners: The limits for remuneration deductions have been clarified based on book profit, now set at up to 3 LPA or 90% of book profit, whichever is higher[1].
• Incentives for IFSC: The deadline for starting operations to claim tax benefits has been extended to March 31, 2030[1].

Impact on the Digital Economy

Removal of Digital Advertising Tax

The removal of the 6% digital advertising tax is expected to significantly benefit online businesses and startups. This move aims to foster a stronger digital economy in India by reducing compliance burdens and encouraging investments in the digital sector[2].

Digital Asset Regulations

The government has strengthened legal provisions to track digital assets, enhancing the ability to investigate financial transactions through communication platforms and enterprise software. This move marks a crucial step in regulating digital assets within the Indian economy[1].

Conclusion

The Finance Bill 2025 is poised to reshape India's economic landscape, offering significant tax relief and investments in key sectors like infrastructure and digital services. As Indians await these changes, the bill's approval by the Rajya Sabha will be crucial for its full implementation. The government's measures aim to enhance economic growth while simplifying tax policies and supporting businesses, particularly in the rapidly expanding digital sector.