The Finance Act, 2025

What it does

A Finance Act is passed each year after the Union Budget and it enacts the changes the Budget proposed. It does not stand on its own subject. It amends other statutes, so the Finance Act, 2025 (Act No. 7 of 2025) is read through the Acts it amended, and the text of those Acts, as amended, is what a taxpayer applies.

Its commencement is not uniform. The Act received assent on 29 March 2025 and was published in the Gazette of India Extraordinary the same day. Section 1(2) names the provisions that start on 1 April 2025 and those that wait for a notification. On the reading in the site's note, a section in neither list takes effect on assent, which is how the customs amendment discussed below took effect on 29 March 2025.

Who it binds

It binds whoever the amended statute binds. Its direct tax provisions amended the Income-tax Act, 1961, which the Income-tax Act, 2025 repealed from 1 April 2026. Its indirect tax provisions amended the Customs Act, 1962 and other indirect tax statutes.

What has changed, and when

The amendment this practice has examined is in section 92 of the Act, which amended section 18 of the Customs Act, 1962 on provisional assessment. Three things changed. The proper officer now assesses provisionally and is no longer directed to do so. Sub-section (1A) was trimmed so that it speaks of the manner, and no longer the time, in which documents are to be produced. And two sub-sections were inserted.

Sub-section (1B) requires the proper officer to finalise the duty provisionally assessed within two years from the date of assessment. The first proviso lets the Principal Commissioner or Commissioner of Customs extend that by one year, on sufficient cause shown and for reasons recorded in writing. The second proviso says that for any provisional assessment pending on the date the Finance Bill, 2025 received assent, the two years run from that date. Sub-section (1C) lists the reasons that stop the clock.

On the usual rule of computation, under which a period counted from a day excludes that day, two years from 29 March 2025 end on 29 March 2027. The Central Board of Indirect Taxes and Customs gave the same effective date in Circular No. 22/2025-Customs of 12 September 2025. On that day it also made the Customs (Finalisation of Provisional Assessment) Regulations, 2025 by Notification No. 55/2025-Customs (N.T.), which supersede the 2018 Regulations and set an internal timetable that runs inside the two years.

What turns on it in practice

For the taxation and fiscal practice, and for trade clients with imports under special valuation enquiry, the point is that the deadline is the department's and not the importer's. The importer or exporter still carries the bond, the security and the interest until the file is finalised. Each bill of entry or shipping bill assessed provisionally is a separate case with its own clock, so an importer with many provisional bills has many dates. For every bill assessed before 29 March 2025 the date is the same, 29 March 2027.

Two questions recur. Whether a particular file is within one of the reasons in sub-section (1C) that stop the clock, since the two-year limit does not run while the reason subsists. And whether an extension has been granted by the Commissioner, with reasons in writing, since the extension is not automatic. Both are matters of the departmental file.

The Finance Act, 2006 and the Finance Act, 2026 appear as related instruments on the site. Because each Finance Act inserts provisions into older statutes, the question for any provision is which Finance Act inserted it and whether a later one amended it.