Finance Bill 2025 offers unprecedented tax relief; collection target realistic: FM Sitharaman

New Delhi: Finance Minister Nirmala Sitharaman on Tuesday said the Finance Bill 2025 provides unprecedented tax relief, and the 13.14 per cent projected growth in personal income tax collection is "realistic" and supported by solid data.

Replying to the discussions on Finance Bill 2025 in the Lok Sabha, Sitharaman also said the customs duty rationalisation announced in the Budget will support manufacturing units, domestic value addition, promote exports, facilitate trade and also provide relief to the common people.

In the 2025-26 Budget, the government has hiked income tax rebate to Rs 12 lakh per annum from Rs 7 lakh earlier. For the salaried class, this rebate will be Rs 12.75 lakh per year after taking into account the standard deduction. The hike in I-T rebate will lead to tax foregone to the tune of Rs 1 lakh crore in FY26.

Sitharaman said the Budget also provides "marginal relief" under the Income Tax law for those taxpayers whose income exceeds Rs 12 lakh per annum by a small margin.

"The Finance Bill provides unprecedented tax relief to honour taxpayer... We have recognised the contribution of the middle class," she said.

Collections in personal income tax have shown considerable buoyancy in the last few years and they have been increasing around 20 per cent year-on-year, the minister added.

"For the year 2025-26, the personal income tax collection is projected at Rs 13.6 lakh crore. The Revised Estimates for 2024-25 is Rs 12.2 lakh crore. So, Rs 12.2 lakh crore is going to be Rs 13.6 lakh and this is done with a certain realistic calculation," Sitharaman said.

The personal I-T revenue is projected to grow by 13.14 per cent in FY26, after taking into account a 7 per cent dip after factoring in the Rs 1 lakh crore revenue foregone.

"So, the projected collections for income tax for 2025-26 are based on solid data," Sitharaman added.

With regard to an amendment regarding the abolition of the 6 per cent Equalisation Levy on online advertisements, Sitharaman said it was done to address "uncertainty in the international economic conditions".

Talking about Customs tariff rationalisation, she said the Budget 2025 aims to boost domestic production and enhance export competitiveness by reducing duties on raw materials and inputs, making domestic products more cost-effective.

Taking forward the comprehensive review of the Customs rate structure announced in the July 2024 Budget, the Union Budget 2025-26 proposes to remove 7 customs tariff rates for industrial goods.

The two tranches of rationalisation of customs tariff carried out so far have reduced the number of tariff rates from 21 to 8, including 'zero' rated goods.

"Many Indian exports will become more competitive as the cost of imported inputs reduces," Sitharaman said.

The finance minister said the tax department carried out a 'nudge' campaign, asking taxpayers to voluntarily disclose their foreign income and assets. SMS and E-mails were sent to around 19,501 select taxpayers, asking them to review their Income Tax Returns filed for the AY 2024-25 based on information available on Income Tax of foreign deposits etc.

As a result of the campaign, out of 19,501 taxpayers, a total of 11,162 taxpayers revised their returns and filled Schedule Foreign Assets Form, declaring total assets of Rs 11,259.29 crore, disclosing foreign income of Rs 154.42 crore.

In addition to the above, 883 taxpayers revised their ITR and corrected their status from resident to non-resident in the revised return for AY 2024-25.

Due to this outreach, there was a ‘ripple effect’, which resulted in an additional 13,516 taxpayers declaring foreign assets of Rs 7,564 crore and foreign income of Rs 353 crore approximately in their revised ITR for AY 2024-25.

Cumulatively, this simple nudge resulted in the declaration of foreign assets worth Rs 29,208 crore and foreign income of Rs 1,089 crore in Schedule FA by 30,161 taxpayers, Sitharaman said.

Stressing that the Modi government has always been sympathetic towards the employee and pensioner issues, Sitharaman said the government has implemented the full parity between pensioners of pre and post-seventh Central Pay Commission.

With regard to amendment, she said the government has restored the March 2008 position of the manner of fixing pensions, which was recommended by the Sixth Central Pay Commission.

"By this amendment, the government is actually restoring that which was accepted in March 2008...the sixth pay commission recommendation," the minister said.

Asked about the 16-year delay in restoring the position, she said, "Several court cases were going on. We had to wait for the verdict to come. Verdicts have been received. We are going back to honouring the decision, which was taken in 2008".