The Lok Sabha on Tuesday passed the Finance Bill, 2025, incorporating 35 key amendments, marking an important step in the Budget approval process. Among the major changes, the removal of the 6% equalisation levy on online advertisements, widely known as the ‘Google Tax’, stands out as a significant reform to align India’s tax structure with global economic conditions.
Finance Minister Nirmala Sitharaman, in her response to the discussions in the Lok Sabha, stated that the government decided to abolish the equalisation levy to reduce uncertainty in international trade and investment. The Finance Bill 2025 now moves to the Rajya Sabha for further deliberation, after which it will be enacted, completing the Budget process for 2025-26.
Key Provisions and Budgetary Allocations
The Finance Bill is a crucial component of the Union Budget 2025-26, which proposed a total expenditure of ₹50.65 trillion, reflecting a 7.4% increase over the previous year’s revised estimate of ₹47.16 trillion. The government has allocated ₹5.41 trillion for Centrally Sponsored Schemes (CSS) for FY26, compared to ₹4.15 trillion in FY25.
The fiscal deficit target for FY26 has been revised to 4.4% of GDP, an improvement from 4.8% in FY25, underscoring the government’s efforts to maintain fiscal discipline while supporting economic growth.
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New Income Tax Bill to Be Discussed in Monsoon Session
In addition to passing the Finance Bill, Sitharaman also confirmed that the new Income Tax Bill—which was introduced in Parliament on February 13, 2025—will be taken up for discussion in the Monsoon Session, starting in July. The Bill is currently under review by a Select Committee.
This proposed overhaul of income tax laws is expected to introduce structural changes to simplify the tax regime, promote ease of compliance, and align India’s taxation system with global best practices.
With the passage of the Finance Bill 2025, the Lok Sabha has completed its role in the Budget approval process, and all eyes are now on the Rajya Sabha’s decision. Once approved by the Upper House, the Budget 2025-26 will be fully enacted, setting the course for India’s economic policies and fiscal roadmap for the upcoming financial year.
