Key Changes Proposed in Finance Bill 2025
Indian TaxationKey Changes Proposed in Finance Bill 2025
(Likely to be notified later Today)
Important updates affecting digital advertising, electronics manufacturing, and ITR processing
📉 Removal of Equalisation Levy on Online Advertising
The Finance Minister proposes to remove the 6% equalisation levy on online advertising under Section 163 of Finance Act, 2016. This change will:
- Take effect from 1st April 2025 (relevant for Assessment Year 2026-27)
- Reduce tax burden on digital ad consumers
- Lower costs for platforms like Google and Meta
Note: Correspondingly, income tax exemption under Section 10(50) for transactions liable for Equalisation Levy has been deleted.
📊 Key timelines /takeaways related to Equalisation levy (Google Tax or GAFA Tax or diverted Profits Tax)
Introduced in 2016 – The Google Tax, or Equalisation Levy, applies to certain digital services provided by non-resident companies in India.
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Covers digital transactions - It applies to payments made for online advertising, e-commerce transactions, and other specified digital services.
- 6% and 2% levy – A 6% tax applies to digital advertising Introduce in 2016, while a 2% Levy applies Introduce 2020 to revenue earned by foreign e-commerce platforms from Indian users.
Aims to prevent tax avoidance – Ensures fair taxation of digital businesses operating without a physical presence in India.
This tax regulation helps ensure that foreign companies earning revenue from India comply with tax obligations, reducing revenue loss for the Indian government.
Budget 2024 scrapped the 2% Equalisation Levy with effect from 1 August 2024.
- 6% and 2% levy – A 6% tax applies to digital advertising Introduce in 2016, while a 2% Levy applies Introduce 2020 to revenue earned by foreign e-commerce platforms from Indian users.
🏭 Clarification for Electronics Manufacturing (Section 44BBD)
For the newly introduced Section 44BBD (25% presumptive income for electronics manufacturing):
- A proviso has been inserted stating that Section 44DA and 115A shall not apply
- Hence no controversy like on 44BB where Revenue still contesting provision of Section 44DA to override section 44BB of the Act.
📊 New Permissible Adjustment for CPC (Section 143(1))
One more clause has been proposed to be added in list of permissible adjustments by CPC under Section 143(1):
- any inconsistency on the basis of previous year ITR can also be subject matter of adjustment by CPC while processing ITR.
- As a matter of fact, ever since the processing of ITR's started since 2008-09, CPC never had the legal power to re-process any previous year ITR, but post this proposed amendment, CPC (Centralized Processing Centre) will get the legal power to re-process any previous year's ITR, if they find any inconsistency in any of the filed ITR.
Great insights! The proposed changes in the Budget Finance Bill 2025 are indeed significant, and your breakdown makes it easy to understand their impact. I appreciate the clarity and depth of your analysis—looking forward to more such valuable perspectives!