PTI New Delhi

Finance Minister Nirmala Sitharaman on Tuesday said the Finance Bill 2025 provides unprecedented tax relief, and the 13.14 per cent projected growth in personal income tax collection is "realistic" and supported by solid data.

Replying to the discussions on Finance Bill 2025 in the Lok Sabha, Sitharaman also said the customs duty rationalisation announced in the Budget will support manufacturing units, domestic value addition, promote exports, facilitate trade and also provide relief to the common people.

In the 2025-26 Budget, the government has hiked income tax rebate to Rs 12 lakh per annum from Rs 7 lakh earlier. For the salaried class, this rebate will be Rs 12.75 lakh per year after taking into account the standard deduction. The hike in I-T rebate will lead to tax foregone to the tune of Rs 1 lakh crore in FY26.

Sitharaman said the Budget also provides "marginal relief" under the Income Tax law for those taxpayers whose income exceeds Rs 12 lakh per annum by a small margin. "The Finance Bill provides unprecedented tax relief to honour taxpayer... We have recognised the contribution of the middle class," she said.

Collections in personal income tax have shown considerable buoyancy in the last few years and they have been increasing around 20 per cent year-on-year, the minister added. "For the year 2025-26, the personal income tax collection is projected at Rs 13.6 lakh crore. The Revised Estimates for 2024-25 is Rs 12.2 lakh crore. So, Rs 12.2 lakh crore is going to be Rs 13.6 lakh and this is done with a certain realistic calculation," Sitharaman said.

Lok Sabha passes Finance Bill, 2025

The Lok Sabha on Tuesday passed the Finance Bill, 2025 by a voice vote after two days of discussions. The Finance Bill, 2025 contains the tax changes and amendments to legislation proposed in the Budget. With this, the Budget approval process for the new financial year starting April has come to an end in the Lower House.    

On Friday, the Lok Sabha cleared the expenditure in 2025-26 (Apr-Mar) by approving the Demands for Grants and the Appropriation Bill. The Union Budget for FY26 announced a host of tax changes, the most important being the government's decision to raise income tax rebate to effectively mean that income of up to INR 1.2 million will not be taxed.

"The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment," Finance Minister Nirmala Sitharaman had said presenting the Budget. The revised tax structure will lead to the government foregoing revenue to the tune of INR 1 trillion per year. Sitharaman had also announced tweaks to the new income tax slabs to give relief to taxpayers.  

No more ‘Google Tax’

Speaking about the amendments moved to the Finance Bill, Sitharaman said the government wants to introduce a sunset date for the 6% equalisation levy or digital tax on online advertisements. The equalisation levy was imposed on online advertisement services from Jun. 1, 2016. Last year, the government removed the 2% equalisation levy on e-commerce transactions, but the 6% levy on online advertisements continued.

‘New I-T Bill to be taken up for discussion in monsoon session’

The new Income Tax Bill will be taken up for discussion in the monsoon session of Parliament, Finance Minister Nirmala Sitharaman said on Tuesday. Replying to the discussions on the Finance Bill 2025 in the Lok Sabha, Sitharaman 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.