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Tax treatment for foreign securities clarified, enhancing investor certainty and tightening compliance obligations for cross border instruments.
The Finance Bill, 2025 amendments clarify tax treatment for securities held by foreign investors by defining covered instruments for FIIs and specified funds under applicable regulatory compliance, expand coverage to include over the counter derivatives while removing ambiguous intermediary language, and strengthen assessment provisions to address inconsistencies and undisclosed income; Part IV validates pension classification authority to distinguish pension entitlements by retirement date.
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IFSC tax incentives expanded to ease fund relocations, clarify exemptions, and simplify non resident taxation.
Amendments relax compliance for investment funds by easing indirect participation thresholds and restoring executive modification powers; expand the relocation regime to include retail schemes and ETFs for tax neutral transfers into the IFSC; introduce a presumptive taxation scheme for non residents providing technology services for electronics manufacturing with exclusions for permanent establishment and royalty rules; correct and align IFSC insurance and specified fund exemptions with IFSCA conditions; extend derivative transaction exemptions to FPIs in the IFSC; refocus Chapter XIV B on undisclosed income and add Section 143(1) checks for return inconsistencies; and broaden the definition of capital asset to include securities held by Alternative Investment Funds under SEBI and IFSCA.
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Section 115BAC tax regime retained as default; surcharge tiers and caps specified, with marginal relief safeguards.
The Finance Bill, 2025 retains existing income-tax rates for assessment year 2025-26 and keeps special concessional regimes unchanged. Section 115BAC operates as the default regime for eligible individuals and similar entities unless an option is chosen, with prescribed slab rates applying. The Bill specifies tiered surcharge rates on tax under section 115BAC for higher incomes, caps surcharge on dividend and certain categorized income and for associations of companies, and provides marginal relief. Part III First Schedule provisions for advance tax and withholding are reallocated to Part I for 2025-26.
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Tax rates: existing graduated income-tax slab structure for individuals and related entities remains unchanged for the assessment year.
Part I of the First Schedule to the Finance Bill, 2025 prescribes graduated income-tax slabs and corresponding percentage rates for assessment year 2025-26 applicable to individuals, HUFs, associations of persons, bodies of individuals and certain artificial juridical persons. It distinguishes three resident-individual categories by age with differing basic-exemption thresholds and applies graduated marginal rates across successive income bands. The schedule for 2025-26 is stated to be unchanged from the prior assessment year.
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Income-tax rates for co-operative societies remain unchanged under the Finance Bill, preserving existing tiered percentage bands.
Income-tax rates for co-operative societies are specified in Paragraph B of Part I of the First Schedule to the Finance Bill and remain unchanged for the assessment year 2025-26, preserving a tiered rate structure that applies different percentage rates to successive income bands and maintaining continuity with the existing tax treatment for such entities.
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Firm tax rate unchanged under Finance Bill, maintaining existing income-tax treatment for partnership entities provision.
Firm taxation for assessment year 2025-26 is governed by the rate specified in Paragraph C of Part I of the First Schedule to the Finance Bill; the statutory rate for firms remains 30%, preserving the existing income-tax treatment of partnership firms as the operative rate for computing liabilities.
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Local authority tax rate remains unchanged for the assessment year, specified in the Finance Bill's First Schedule.
Paragraph D of Part I of the First Schedule to the Finance Bill prescribes the income-tax rate for a local authority and specifies that the rate remains unchanged at 30% for the assessment year 2025-26.
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Corporate tax rate differential maintained between smaller domestic companies and others, with surcharge rules and health and education cess applied.
Rates of income-tax for companies confirm lower rate for domestic companies below the turnover threshold and higher rates for other domestic and non-domestic companies; surcharge framework remains as prior year with exclusions for income of specified funds and capped surcharge treatment for incomes under the special domestic tax regime. Marginal relief is provided where surcharge is imposed. A Health and Education Cess is levied at a fixed percentage on income-tax inclusive of surcharge in all cases, with no marginal relief available for the cess.
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Deduction of income-tax at source: insurance commission TDS rate reduced, other TDS rates and surcharges largely retained
Deduction of income-tax at source for FY 2025-26 is set out in Part II of the First Schedule to the Finance Bill, 2025, with section-specific provisions continuing to govern TDS mechanics. The rate for taxation of insurance commission is reduced pursuant to amendments in the Finance (No. 2) Act, 2024 effective from 1 April 2025. Other TDS rates remain as specified in the prior Act, surcharge treatment is unchanged, and Health and Education Cess is levied at four per cent on income-tax including surcharge where applicable for non-residents and non-domestic companies.
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Income-tax withholding on salaries now set by prescribed rates, also governing advance tax computation and special assessments.
Rates for deduction of income-tax at source from Salaries and for computation of advance tax are prescribed in Part III of the First Schedule; those rates also apply for charging income-tax on current incomes where accelerated or special assessments are required, including provisional assessments, assessments of persons leaving the country, transfers to avoid tax, and short-duration bodies.
News Bills
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New individual tax regime introduces revised slab rates, capped surcharge rules and an option to retain the old regime.
Proposed amendments create a revised new tax regime for individuals, HUFs, AOPs, BOIs and artificial juridical persons, prescribing progressive slab rates to determine income-tax from assessment year 2026-27, while allowing taxpayers to opt instead for rates in Part III of the First Schedule. The Part III schedule contains separate slab structures for general residents and for senior and super-senior residents. Computed tax (including specified capital gains) is subject to a multi-tiered surcharge with caps on surcharge for dividend and certain capital gains incomes, special limits for associations of companies, and marginal relief at thresholds.
News Bills
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Co-operative society tax rates and surcharge structure clarified for FY, with marginal relief and optional concessional tax regime available.
Rates of income-tax for co-operative societies remain unchanged from the prior fiscal year. A tiered surcharge regime applies with marginal relief to smooth threshold effects. Resident co-operative societies that satisfy specified conditions may elect a concessional tax option under the Finance Bill, which attracts a reduced surcharge on the alternative tax.
News Bills
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Firm income-tax rate unchanged; surcharge applies on incomes above the specified threshold, with a cap limiting surcharge impact.
The rate of income-tax for firms remains unchanged from the prior year as set in Paragraph C of Part III of the First Schedule. A surcharge applies on a firm's income-tax where total income exceeds a specified threshold, but the total of income-tax and surcharge on income above the threshold is capped so it cannot exceed the tax on the threshold amount by more than the excess income.
News Bills
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Surcharge on local authorities' income capped above the statutory threshold while base tax rates remain unchanged.
The income-tax rate for local authorities set in Paragraph D of Part III of the First Schedule is unchanged for FY 2025-26; a surcharge applies where total income exceeds one crore rupees, but the aggregate tax and surcharge on income above that threshold is limited so it cannot exceed the tax on one crore rupees by more than the excess income amount.
News Bills
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Corporate tax rate structure revised with differential domestic and foreign company rates, surcharge bands, marginal relief, and a health cess.
Corporate tax rates for FY 2025-26 set differentiated base rates for domestic and non domestic companies, allow domestic companies to opt into a concessional section 115BAA regime, and apply tiered surcharge rates with marginal relief; an additional Health and Education Cess is levied on tax inclusive of surcharge and is not eligible for marginal relief.
News Bills
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Rebate under section 87A expanded for new tax regime, raising eligibility and capping deduction to tax payable.
The proviso to section 87A grants a limited rebate and marginal relief to resident individuals whose income is chargeable under the new tax regime, excluding incomes taxed at special rates. From assessment year 2026-27 the Finance Bill proposes to increase the income limits and the maximum rebate under the proviso, and to add a proviso limit that the deduction cannot exceed the tax payable under the new tax-regime rates.
News Bills
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Incentives to International Financial Services Centre: proposed tax and regulatory amendments to further promote IFSC operations in non rupee currencies
IFSC is a jurisdiction providing financial services to non-residents and permitted residents in currencies other than the Indian Rupee; prior tax concessions have been granted to IFSC units to develop financial infrastructure, and the Union Budget 2025-26 proposes further amendments to provide additional incentives for operations from IFSC units, building on existing concessions to enhance its attractiveness for international financial services.
News Bills
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IFSC tax concession sunset extension extends commencement and relocation deadlines to March 2030, effective April 2025.
The Finance Bill proposes extending sunset dates for tax concessions tied to IFSC units and relocation of funds to IFSC, moving the deadline for commencement and relocation-related benefits to 31 March 2030; these amendments take effect from 1 April 2025.
News Bills
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Life insurance exemption extended to IFSC-issued policies without premium cap, improving parity for non-residents and clarifying scope.
Exemption for amounts received under life insurance policies, including bonuses, will expressly apply to policies issued by IFSC insurance offices; the proposed amendment removes the existing premium-cap condition for IFSC-issued policies to provide parity for non-resident policyholders, while leaving other exemption conditions intact, effective 1 April 2025.
News Bills
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Exemption to capital gains and dividend expanded to ship leasing units in IFSC, aligning tax treatment with aircraft leasing.
The measure extends existing IFSC exemptions applying to aircraft leasing so that non residents or IFSC units engaged in ship leasing are exempt from capital gains tax on transfers of equity shares of domestic companies that are IFSC ship leasing units, and dividends paid by an IFSC ship leasing company to another IFSC ship leasing unit are likewise exempt. The amendment aligns ship leasing with aircraft leasing treatment and specifies an effective commencement under the Finance Bill.

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Review of Customs duty Exemptions - Review of conditional exemption rates of BCD

24 July, 2024

Contents
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Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

(i) The BCD exemption for the goods covered under following serial numbers of the notification are being extended upto 31st March, 2026 unless specified otherwise.

S. No.

S N of 50/17-Cus

Brief Description

1.

17

Specified Planting materials, namely, oilseeds, seeds of vegetables, tubers, etc.

2.

80A

Algal oil for manufacturing of aquatic feed

3.

90

Lactose for use in manufacture of homeopathic medicines

4.

104

Specified goods used in processing of sea-food

5.

133

Gold ores and concentrates

6.

139

Bunker Fuels namely: (i). IFO 180 CST; (ii). IFO 380 CST; (iii). VLSFO (CTH 27)

7.

150

Naphtha for manufacture of Fertilisers (scope of exemption is being reduced only to Naphtha)

8.

155

Liquefied petroleum gases (LPG) received from unit in SEZ and returned by the DTA unit to the SEZ unit

9.

164

Electrical energy supplied from SEZ unit to DTA

10.

165

Electrical energy supplied from SEZ to DTA

11.

172

Specified goods used in manufacture of silicon wafers or solar wafers, for manufacture of solar cell or module

12.

183

Medical use fission Molybdenum-99 (Mo-99) for use in manufacture of radio pharmaceuticals

13.

184

Pharmaceutical Reference Standard

14.

188

Goods for manufacture of ELISA Kits

15.

191

Maltol for manufacture of deferiprone

16.

204

Anthraquinone or 2-Ethyl Anthraquinone for use in manufacture of Hydrogen peroxide

17.

237

Specified material for manufacture of EVA (Ethylene Vinyl Acetate) sheets or backsheet, which are used in the manufacture of solar photovoltaic cells or modules (Scope of materials which can be imported is being increased)

18.

253

Specified Goods for manufacture of Brushless Direct Current (BLDC) motors

19.

257

Tags, labels, stickers, belts, buttons, hangers or printed bags, imported by bonafide exporters

20.

257A

Specified goods used in manufacture of handicraft items for export when imported by bonafide exporter

21.

257B

Specified goods used in manufacture of textile or leather garments for export when imported by bonafide exporter

22.

257C

Specified goods used in manufacture of leather or synthetic footwear or other leather products for export when imported by bonafide exporter

23.

258

Security fibre, threads, Paper based Taggant, M-feature for use in manufacture of security paper by Security Paper Mill, Hoshangabad and Bank Note Paper Mill India Pvt Ltd, Mysore.

24.

259

Raw materials for manufacture of security fibre and security thread for supply to Security Paper Mill, Hoshangabad and Bank Note Paper Mill India Pvt. Ltd, Mysore for use in manufacture of security paper

25.

260

Goods for the manufacture of specified orthopedic implants (902110)

26.

261

Raw material for manufacture of Copper-T Contraceptive

(i) Alatheon

(ii) Copper Wire

27.

265

Capacitor grades polypropylene granules for manufacture of Capacitor grade plastic

28.

269

Super absorbent polymer for manufacture of adult diapers and specified goods

29.

271

Polytetrametylene ether glycol, (PT MEG) for use in manufacture of spandex yarn

30.

276

Ethylene- propylene- non-conjugated diene rubber (EPDM) for manufacture of insulated wire and cables

31.

279

New or retreated Pneumatic tyres of rubber for use in servicing, repair of maintenance of aircrafts used for operating scheduled air transport service or scheduled air cargo service etc

32.

280

New or retreated Pneumatic tyres of rubber for use in servicing, repair or maintenance of aircraft imported or procured by Aero Club of India/ for flying training purpose/ operating non-scheduled (passenger or charter) services/ AAI for flight calibration purpose

33.

290

Wood pulp for manufacture of newsprint, paper or paperboard

34.

292

Goods imported for manufacture of paper, paper boards, newsprint

35.

293A

Newsprint and uncoated paper imported for printing of newsprint

36.

296A

Lightweight coated paper imported by actual users for printing of magazines

37.

326

Hydrophilic /Hydrophobic Non- Woven, imported for use in the manufacture of Adult Diapers

38.

329

Pile fabrics for the manufacture of toys

39.

333

Moulds, tools and dies, for the manufacture of parts of electronic components or electronic equipment

40.

334

(i) Graphite Felt or Graphite pack for growing silicon ingots (ii) Thin Steel wire used in wire saw for slicing of silicon wafers

41.

345A

Simply Sawn Diamonds

42.

364A

Spent catalyst or ash containing precious metals

43.

368

Ferrous Scrap

44.

374

Magnesium Oxide (MgO) coated cold rolled steel coils for use in manufacture of cold rolled grain oriented (CRGO) steel

45.

375

Specified items for manufacture of cold rolled grain-oriented steel (CRGO) steel

46.

378

Metal parts for manufacture of electrical insulators falling under heading 8546

47.

379

Pipes and tubes for use in manufacture of boilers

48.

380

Forged steel rings for manufacture of special bearings for use in wind operated electricity generators

49.

381

Flat copper wire for use in the manufacture of photo voltaic ribbon for manufacture of solar photovoltaic cell or modules

50.

392

Dies for drawing metal, where imported after repairs from abroad

51.

403

Parts and raw materials for offshore oil exploration

52.

404

Specified items including capital goods and raw materials for off shore oil exploration

53.

415

Parts for manufacture of catalytic convertors

54.

415A

Platinum or Palladium for manufacture of Noble Metal Compounds & Noble Metal Solutions

55.

416

Ceria zirconia compounds for use in the manufacture of washcoat for catalytic converters

56.

417

Cerium compounds for use in the manufacture of washcoat for catalytic converters

57.

418

Zeolite for use in the manufacture of washcoat for catalytic converters

58.

422

Machinery, electrical equipment for use in semiconductor wafer and LCD

59.

423

Machinery, electrical equipment for use in marking and packaging of semiconductor chips

60.

426

Specified goods for the manufacture of semiconductor devices, memory card, IC, solar cell

61.

435

Capital goods for printing industry

62.

442

Bushings made of Platinum and Rhodium alloy when imported in exchange of worn out or damaged bushings exported out of India

63.

446

Parts and components for manufacture of tunnel boring machines

64.

451

Evacuated tubes with three layers of solar selective coating for use in manufacture of solar water heater

65.

462

Ball screws for use in the manufacture of CNC Lathes

66.

463

Linear Motion Guides for use in the manufacture of CNC Lathes

67.

464

CNC Systems for use in the manufacture of CNC Lathes

68.

464A

Goods for manufacture of plastic processing machineries

69.

467

Parts and components of cash dispenser or automatic bank note dispenser

70.

468

Parts for manufacture of Micro ATM, Fingerprint reader/scanner, Iris scanner, Miniaturised POS (Scope of exemption is being limited to import of raw materials only)

71.

471

All parts for use in the manufacture of LED lights

72.

472

All inputs for use in the manufacture of LED driver or MCPCB for LED lights

73.

476

Television equipment, cameras etc for taking films, imported by a foreign film unit or television team

74.

477

Filming equipment of foreign origin if imported into India after having been exported therefrom.

75.

480

Goods imported for being tested in specified test centers

76.

489B

Goods for manufacturing of Microphones

77.

504

Parts and Components of Digital Still Image Video Cameras

78.

509

Parts, components and accessories for manufacture of Digital Video Recorder

79.

510

 Parts, components and accessories for use in manufacture of reception apparatus for television

80.

511

Parts, components and accessories for manufacture of CCTV Camera

81.

512

Specified Parts, components and for use in manufacture of Lithium-ion battery and battery pack

82.

512A

Inputs, parts or sub-parts for use in the manufacturing of Printed Circuit Board Assembly

83.

515A

Open Cell for manufacture of TV Panel

84.

516

The following goods for use in the manufacture of Liquid Crystal Display (LCD) /LED TV Panel

85.

517

Magnetrons for manufacture of domestic microwave ovens

86.

519

Raw materials or parts for use in manufacture of e-Readers

87.

523A

Parts, sub-parts, inputs or raw material for use in manufacture of Lithium-ion cells

88.

527

Lithium-ion cell use in manufacture of battery or battery pack

89.

527A

Lithium-Ion Cell for use in manufacture of battery or battery pack of cellular mobile

90.

527B

Lithium-Ion Cell manufacture of battery or battery pack of EV

91.

534

Parts of gliders or simulators of aircrafts (excluding rubber tyres and tubes of gliders)

92.

535

Raw materials for manufacture of aircraft and parts of aircraft

93.

535A

Parts of aircraft for manufacture of aircraft or for manufacture of parts of aircraft by PSU under Min of Defence

94.

536

Parts, testing equipment, tools and tool-kits for maintenance, repair, and overhauling of aircraft, components or parts of aircrafts

95.

537

All goods of Heading 8802 (except 88026000-spacecraft)

96.

538

Components or parts, including engines, of aircraft of heading 8802

97.

539

(a) Satellites and payloads; (b) Ground equipment brought for testing of (a)

98.

539A

Scientific and technical instruments etc for launch vehicles and satellites

99.

540

Specified goods imported by scheduled air transporter

100.

542

Specified goods imported by Aero Club, Flying Training Institutes

101.

543

Specified goods imported by non-scheduled air transporter

102.

544

Parts (other than rubber tubes), of aircraft of heading 8802

103.

546

Parts (other than rubber tubes), of aircraft of heading 8802

104.

548

Barges or pontoons imported along with ships

105.

551

Cruise ships, Excursion ships

106.

553

Fishing vessels, Tugs and Pusher crafts, light vessels excluding vessels and floating structure imported for break up

107.

555

Vessels like warships, lifeboats excluding vessels and floating structure imported for break up

108.

567

Stainless steel tube and wire, for manufacture of Coronary stents /artificial valve

109.

569

Parts required for manufacture of Ostomy products

110.

570

Medical and surgical instruments, apparatus and appliances including spare parts and accessories thereof

111.

575

Specified Hospital Equipment for use in specified hospitals

112.

578A

Raw materials, for the manufacture of Cochlear Implants

113.

580

X-Ray Baggage Inspection Systems and parts thereof

114.

581

Portable X-ray machine / system

115.

583

Parts and cases of braille watches, for the manufacture of Braille watches

116.

591

Parts of electronic toys

117.

593

Parts of video games for the manufacture of video games

Note: Description of entries is indicative. Notification may be referred to for complete description.

(ii) The BCD exemption for the goods covered under following serial numbers of the notification no 50/2017-Customs is being extended upto 31st March 2029.

S. No.

S. No. of 50/2017Cus

Brief Description

1.

212A

Medicines/drugs/vaccines supplied free by United  Nations International Children's Emergency Fund (UNICEF), Red Cross etc

2.

213

Drugs and materials

3.

428

Specified goods imported by accredited press cameraman

4.

429

Specified goods, imported by accredited journalist

5.

549

Capital goods, raw materials and spares for repairs of ocean-going vessels

6.

550

Spare parts and consumables for repairs of ocean going vessels registered in India.

7.

577

Lifesaving medical equipment for personal use

8.

607

Life Saving drugs like Keytruda etc

9.

607A

Lifesaving drugs/medicines for personal use

10.

611

Archaeological artefacts for exhibition in a museum

11.

612

Specified raw material for sports goods

Note: Description of entries is indicative. Notification may be referred to for complete description.


Full Text:

Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

Topics

Acts Income Tax