On March 25, the Lok Sabha passed the Finance Bill 2025, marking the completion of its part in the approval process for the Union Budget. The bill, which now moves to the Rajya Sabha for consideration, includes 35 amendments by the government. One of the key amendments was the abolition of the 6% digital tax on online advertisements, often referred to as the “Google tax.” This move aims to reduce the burden on digital advertising companies operating in India.
Seven Customs Tariffs to be Removed
Finance Minister Nirmala Sitharaman, during her discussion, emphasised that the customs duty rationalisation, which was initially introduced in the Union Budget, is progressing as planned. The government has taken steps to remove seven customs tariff rates to reduce duty inversion and lower input costs, aiming to promote a more favourable environment for domestic manufacturers.
As part of the Finance Bill, the government also introduced exemptions on customs duties for certain capital goods. Specifically, 35 capital goods related to electric vehicle (EV) batteries and 28 items used in mobile manufacturing will now be exempted from duties. This move is expected to bolster domestic production in key sectors and promote India’s manufacturing capabilities in the global market.
Finance Bill Seeks to Streamline Trade and Tax Policies
The Finance Bill outlines the government’s broader agenda to align India’s trade policies with global standards while ensuring tax fairness and promoting domestic industries. Sitharaman pointed out that the amendments introduced in the bill are part of a larger effort to streamline the business environment and ensure greater tax certainty for businesses and individuals.
The Union Budget for 2025-26 has estimated a total expenditure of Rs 50.65 lakh crore, marking a 7.4% increase compared to the previous year. It also proposes a capital expenditure of Rs 11.22 lakh crore, with effective capital expenditure reaching Rs 15.48 lakh crore. The gross tax revenue collection for FY26 is projected at Rs 42.70 lakh crore, while gross borrowing is estimated at Rs 14.01 lakh crore.
Rs 5.41 Lakh Crore for Schemes, Fiscal Deficit at 4.4%
In terms of allocations, Rs 5.41 lakh crore has been earmarked for Centrally Sponsored Schemes for the upcoming financial year. The fiscal deficit for FY26 is estimated at 4.4%, a reduction from the previous year’s 4.8%. Additionally, the projected GDP for FY2025-26 is Rs 3.57 lakh crore, reflecting a growth of 10.1% over the revised estimates for the current fiscal year.
These changes reflect the government’s focus on stimulating economic growth while ensuring that India remains competitive in the global economic landscape.
