Finance Bill, 2025: Key Highlights and Implications for Taxpayers

The Finance Bill, 2025, introduced in the Lok Sabha on February 1, 2025, aims to implement the financial proposals of the Central Government for the fiscal year 2025-26. This comprehensive legislation covers amendments across direct and indirect tax regimes, focusing on income tax, customs, excise, and GST. Here are the key highlights:

1. Direct Tax Proposals

• Income Tax Rates: The Bill maintains the existing tax slabs under the new regime (Section 115BAC) while offering marginal relief for senior citizens. The basic exemption limit is set at Rs 3 lakh for those above 60 years and Rs 5 lakh for individuals aged 80 and above.
• Deductions & Exemptions: Amendments to Sections 80CCD and 80-IAC enhance deductions for contributions to the National Pension Scheme and extend tax benefits for startups until 2030.
• Capital Gains Tax: Changes to Section 112A adjust the tax rates on long-term capital gains, impacting equity investments.

2. Indirect Tax Reforms

• GST Amendments: The introduction of Section 122B and 148A in CGST Act focuses on tightening compliance and curbing tax evasion. The Bill also streamlines procedures for GST refunds.
• Customs & Excise: Amendments in Sections 18 and 28 under the Customs Act simplify import-export procedures, while new provisions under Central Excise aim to reduce litigation.

3. Special Provisions

• Crypto-assets: The Bill explicitly defines crypto-assets under Section 47A, bringing clarity to their taxation and compliance requirements.
• International Financial Services: Amendments to Sections 9A and 10 aim to promote investments in International Financial Services Centres (IFSCs), offering tax exemptions up to 2030.

4. Compliance & Penalties

• Stricter Penalties: The omission of Sections 206AB and 206CCA reduces redundant compliance, while new provisions under Section 271DB introduce penalties for non-compliance in digital transactions.
• Advance Tax and Surcharge Adjustments: Revised surcharge rates for high-income individuals and companies to ensure equitable tax distribution.

Implications for Taxpayers

The Finance Bill, 2025, reflects the government's focus on simplifying tax structures, encouraging digital transactions, and boosting investments in emerging sectors like fintech and crypto. Taxpayers, especially businesses and high-net-worth individuals, need to reassess their tax planning strategies to align with the new provisions.

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