Key Points
Sitharaman announces new Income Tax Bill details
Customs tariffs reduced significantly for industrial goods
GST exemption continues for religious prasadams
No pending GST compensation dues for states
"The Budget aims to do reforms to build Viksit Bharat by 2047. It aims to provide tax certainty, reforms on ease of doing business also we will have a new Income Tax Bill which is currently with a special Committee. This Bill is not brought as part of Finance Bill," Sitharaman stated speaking at the discussion on Finance Bill 2025.The lower house on Tuesday passed the Finance Bill, 2025 with 35 government amendments.
Elaborating on tax reforms, she announced a reduction in customs tariff rates on industrial goods, cutting the number of tariff slabs from 21 to just eight. Additionally, she clarified that either cess or surcharge--not both--can be levied on an item under direct tax provisions.
"We have removed seven custom tariff rates on industrial goods, reducing tariff from 21 to 8 per cent. We have ensured that no one item is cess and a surcharge can be applied. Only one can be levied," says FM Sitharaman while speaking on direct taxes.
"Time given to exporters who import some components to produce goods to export has been increased from six months to one year," she added.
Addressing concerns over indirect taxation, the Finance Minister assured that prasadams from temples, mosques, churches, and gurudwaras would remain exempt from GST.
She also mentioned that a Group of Ministers (GoM) is evaluating GST reductions on ingredients used in preparing these prasadams. Furthermore, she announced that imported drugs for rare diseases--whether by individual patients or research organisations--have been exempted from Integrated GST (IGST).
In a move to support exporters, Sitharaman declared that businesses importing components for export production will now have one year instead of six months to use those inputs, providing them greater flexibility.
On the issue of GST compensation, Sitharaman categorically stated that no pending dues remain for states.
"When states submitted auditor-certified claims, all payments were made. The law clearly states that GST compensation cess ended on June 30, 2022," she affirmed.
Clarifying the ongoing collection of cess, she explained that the government is currently repaying loans taken during the COVID-19 pandemic and that this repayment process will conclude by early 2026.
