The Lok Sabha on Tuesday passed the Finance Bill, 2025 with 35 amendments one of which eliminates the 6 per cent digital tax on online advertisements.
Replying to the debate on the bill, Finance Minister Nirmala Sitharaman said “I have proposed to remove (the) 6 per cent equalisation levy for advertisements. Equalisation levy on online advertisements to be abolished to address uncertainty in international economic conditions.”
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Earlier in the day, the minister presented the amended Finance Bill, 2025 seeking approval for key Budget proposals.
Marking a significant shift in digital taxation policy, the Finance Bill 2025-26 has proposed to withdraw the 6 per cent Equalisation Levy on online advertising services starting April 1, 2025.
The proposal to remove the Equalisation Levy on online advertisements is believed to be aimed at showing an accommodative stance to the US, which has threatened to introduce reciprocal tariffs from April 2.
“Finance Bill, 2025 provides unprecedented tax relief to honour taxpayers,” said Sitharaman.
The Finance Minister informed the House that the new Income Tax Bill will be taken up for discussion in the monsoon session of Parliament.
She said the new income tax bill, which was introduced in the House on February 13, is currently being vetted by the Select Committee. The Select Committee has been mandated to submit its report by the first day of the next session of Parliament.
The monsoon session of Parliament is usually convened in July and runs through August.
With the passage of the Finance Bill 2025, the Lok Sabha has concluded its role in the Budget approval process. The Bill will now move to the Rajya Sabha for consideration. After the Rajya Sabha approves the Bill, the Budget process for 2025-26 will be complete.
According to Budget documents, the total capital expenditure estimated for the financial year 2025-26 is Rs 11.22 trillion. The Budget proposes a gross tax revenue collection of Rs 42.70 trillion and a gross borrowing of Rs 14.01 trillion.
Further, Rs 5,41,850.21 crore has been allocated for Centrally Sponsored Schemes (CSS) for FY26 compared to Rs 4,15,356.25 crore for FY25.
The fiscal deficit for FY26 is projected at 4.4 per cent against 4.8 per cent in the current FY25.
In the lower house, the Finance Minister also revealed that an IT Department nudge campaign led to 11,621 taxpayers revising their returns. Many changed their status from resident to non-resident, declaring Rs 29,208 crore in foreign assets and Rs 1,089 crore in foreign income.
SMS notifications were sent to 19,501 taxpayers in FY25, prompting voluntary disclosures, she said.
The Minister reiterated that the customs duty rationalisation announced in Budget 2025 is crucial. Seven customs tariff rates will be removed, and only a cess or surcharge can apply under customs duties, not both.
