35 Amendment proposed while moving the Finance Bill 2025 in the Lok Sabha: An overview of key amendment
Continuing the legacy of introducing new amendments at the enactment stage, the Hon’ble Finance Minister, while moving the Finance Bill 2025, for approval by the Lok Sabha on 24 March 2025, introduced about 35 amendments.
Some of the key amendments related to direct tax are:
IFSC related amendments
1. The definition of capital asset shall inter-alia include securities held by investment funds governed vide the International Financial Services Centre (i.e. Category I and Category II IFSC located AIFs). The Budget 2025 had initially restricted the applicability of this provision only to the AIFs governed by SEBI(AIF)regulations, i.e. IFSC located AIFs were not included in the deeming fiction created vide section 2(14) of the Income-tax Act, 1961 (‘the Act’).
2. Further, any income accrued or arisen to, or received by a non-resident as a result of distribution of income on over the counter derivatives entered into with an offshore banking unit of an International Financial Services Centre shall be exempt. As per the extant provisions, only distribution of income on offshore derivatives instruments was exempt.
Other Amendments
3. Finance Act 2016 has been amended to restrict the levy of Equalisation Levy 1.0 (i.e. Equalisation levy in relation to Advertisment services) till 31 March 2025. Further, the application of the exemption under section 10(50) (i.e. exemption from income-tax, in relation to income which was subject to Equalisation levy) has also been correspondingly restricted and as such the section will not be applicable from 01 April 2025 onwards. This move shall provide complete respite to non-residents from the “digital tax” implications in India.
4. Much needed clarity has been provided in relation to the proposed presumptive taxation, introduced vide section 44BBD, in relation to non-resident providing technology for the purposes of setting up an electronics manufacturing facility or in connection with manufacturing or producing electronic goods, article or thing in India.
The provisions of section 115A and section 44DA of the Act, shall not apply in relation to amounts on which provisions of section 44BBD shall be applicable.
5. Section 143(1) has been proposed to be amended to include adjustments on account of inconsistencies with the information in the return of any preceding previous year. This amendment implies that tax authorities will conduct a year-over-year reconciliation, requiring taxpayers to maintain consistency in their filings. For instance, often, the taxpayers update the claim of brought forward losses in relation to previous years in the Income-tax returns, such kind of updates, might invite adjustments.
6. Search and Seizure provisions have also been proposed to be amended as under:
7. FM proposes to remove the 6% equalization levy on online advertising in the FinanceBill2025, reducing the tax burden on digital ad consumers and lowering costs on platforms like Google and Meta. Section 163 of Finance Act, 2016 levying Equalization levy not to apply on or after 1st April,2025 relevant for A.Year 2026-27.Correspondingly, income tax exemption in respect of transaction liable for Equilisation levy has been deleted u/s 10(50).
8. Another change is that in newly introduced s. 44BBD for electronics manufacturing ( 25% presumptive income ) a proviso has been inserted that s. 44DA and 115A shall not be applicable. Hence no controversy like on 44BB where Revenue still contesting provision of Section 44DA to override section 44BB of the Act.
9. 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.
The Copy Of the order is as under:
