Budget 2025 Highlights and Key Updates

Budget 2025 - What it Holds for You?

In line with the Modi government’s aspirations of developing a “Viksit Bharat by 2047”, this budget focuses on the following key domains - taxation, urban development, mining, financial sector, power sector, and, regulatory reforms.

The Viksit Bharat Initiative will encompass -

• Zero poverty
• 100% quality, good school education
• Access to quality, affordable & comprehensive healthcare
• 100% skilled labour with meaningful employment
• 70% women in economic activities farmers making India food basket of world

---

Direct Tax Updates

Mrs. Nirmala Sitharaman said that the middle class provides strength to the country’s economy. In recognition of their contribution, the tax burden has been reduced in Budget 2025. Here are some of the key Direct Tax reforms announced in Budget 2025.

ITR-U (Updated)

The time limit to file updated returns is extended from 2 years to 4 years to encourage voluntary compliance.

No Tax Upto Annual Income of Rs.12.75 lakhs

The government has increased the tax rebate available under Section 87A. Due to this, an individual having net taxable income up to Rs 12 lakh will not be required to pay any tax.

In addition to this, the existing standard deduction under the new tax regime will continue to apply, making the total tax-free income to be Rs.12.75 lakhs.

Note:

• This increased rebate will only be available unde the new tax regime.
• This rebate will not be applicable on special grade incomes such as capital gains.

Big Relief in Income Tax Slabs

The new tax slabs as per Budget 2025 are as follows -

• If your income is Rs. 12,75,000, you won’t have to pay any tax, whereas earlier, you paid Rs. 80,000.
• If your salary is Rs. 15.75 lakh, your tax will be Rs. 1.05 lakh instead of Rs. 1.4 lakh, saving you Rs. 35,000.
• If your salary is Rs. 25,75,000, your tax will be Rs. 3.3 lakh, down from Rs. 4.4 lakh earlier, saving you Rs. 1.10 lakh.

Presumptive Taxation Scheme Extended to NRIs

The presumptive taxation scheme has been extended to Non-resident Indians involved in establishing or operating electronics manufacturing facilities in India.

Boost for Indian Startups

The tax holiday for eligible startups extended by 5 years (applicable to startups incorporated before 1st April 2030).

---

TDS and TCS Reforms

• The limit for tax deduction on interest for senior citizens has been doubled from Rs 50,000 to Rs 1,00,000.
• The annual limit for TDS on rent has been raised from Rs 2.40 lakh to Rs 6 lakh.
• The threshold to collect Tax Collected at Source (TCS) on remittances under the RBI's Liberalised Remittance Scheme (LRS) has been increased from Rs 7 lakh to Rs 10 lakh.
• TCS on remittances for education purposes have been removed (if the remittance is funded through a loan taken from a specified financial institution).
• TCS on transactions related to the sale of goods have been omitted to reduce compliance difficulties.

---

Indirect Tax Reforms

• Seven tariff rates will be removed, in addition to the seven eliminated in the 2023-24 Budget.
• Only one cess or surcharge will be applied, and the social welfare surcharge will be exempted on 82 tariff lines.
• To support patients with cancer, rare diseases, and chronic conditions, the government will fully exempt 36 life-saving drugs from basic customs duty.
• Six life-saving medicines will be added to the list of drugs subject to a concessional 5% customs duty.
• Full exemption and concessional duty will apply to bulk drugs used in manufacturing these medicines.
• Patient Assistance Programs: Pharmaceutical companies’ patient assistance programs will be fully exempt from Basic Customs Duty (BCD) if medicines are provided free of cost. Additionally, 37 new medicines and 13 patient assistance programs will be added to the exemption list.
• The government will fully exempt BCD on cobalt powder, lithium-ion battery waste, scrap, and 12 other critical minerals to ensure material availability for manufacturing in India and boost job opportunities for the youth.

---

Budget 2025 - Sectoral Reforms

Agriculture

• An Agricultural District Program has been launched under PM Krishi Yojana, targeting 100 low-productivity districts to improve crop diversification, irrigation, storage, and credit access. This initiative will benefit 1.7 crore farmers.
• A six-year mission for self-reliance in pulses has been introduced, focusing on tur and masoor. NAFED and NCCF have been prepared to procure these pulses from registered farmers over the next four years.
• A comprehensive program for fruits and vegetables has been introduced to support the growing demand for nutritious food and improve accessibility.
• The Kisan Credit Card (KCC) scheme has been expanded to continue short-term loans for 7.7 crore farmers, fishermen, and dairy farmers. The loan limit under the interest subvention scheme has been increased from ₹3,000 to ₹5,000.
• A Makhana Board has been established in Bihar to boost production, processing, and marketing, enhancing the state’s agricultural economy.

MSME Sector

• The MSME sector, comprising 5.7 crore businesses and employing 7.5 crore people, has been prioritized for growth. Investment and turnover limits have been increased by 2.5 times and 2 times, respectively, to help MSMEs scale, innovate, and create more jobs.
• A focused scheme for footwear and leather has been introduced to enhance design capacity, component manufacturing, and machinery for both leather and non-leather footwear. This initiative is expected to generate 22 lakh jobs, ₹400 crore in revenue, and ₹1.1 lakh crore in exports.
• A new toy sector scheme has been launched to establish India as a global toy manufacturing hub. It will focus on developing clusters, skill-building, and a sustainable ecosystem to promote high-quality "Made in India" toys.

Food and Nutrition Sector

• A National Institute of Food Technology, Entrepreneurship, and Management will be established in Bihar to boost food processing, increase farmers' incomes, and create jobs and entrepreneurship opportunities in the region.
• The Sashakt Anganwadi and Poshan 2.0 programs have been strengthened to provide nutritional support to over 8 crore children, pregnant women, lactating mothers, and 20 lakh adolescent girls in aspirational districts and the Northeast. Cost norms for these programs will be enhanced.

Education and Innovation

• Atal Tinkering Labs will be set up in 50,000 government schools over five years to promote innovation and scientific thinking. Broadband connectivity will be extended to all government schools for better digital learning access.
• Medical education expansion continues, with 10,000 new medical seats to be added this year and 75,000 seats planned over five years to strengthen healthcare infrastructure.

Health and Welfare

• Daycare cancer centers will be established in all district hospitals over the next three years, with 200 centers set up in FY 2025-26 to improve cancer care access.
• Urban livelihoods initiatives will continue to support the urban poor and vulnerable groups by enhancing economic stability and employment opportunities.
• A ₹1 lakh crore Urban Challenge Fund has been launched to transform cities into growth hubs, improve infrastructure, and support redevelopment. The fund will cover up to 25% of project costs, with at least 50% funding from bonds, bank loans, or PPPs. An initial ₹10,000 crore has been allocated for FY 2025-26.

Power and Energy

• States will be incentivized to improve electricity distribution and intrastate transmission, enhancing power companies' financial health and efficiency. An additional borrowing allowance of 0.5% of GSDP will be granted based on reform progress.
• The Energy Mission aims to develop 100 GW of nuclear power by 2047. Amendments to the Atomic Energy Act and Civil Liability for Nuclear Damage Act will encourage private sector participation.
• A ₹20,000 crore R&D initiative for Small Modular Reactors (SMRs) has been launched, with five indigenously developed SMRs expected to be operational by 2033.

Infrastructure

• The Modified UDAAN Scheme will be launched, adding 120 new destinations and accommodating 4 crore additional passengers.
• A national framework will be developed to help states promote Global Capability Centers (GCCs) in Tier-2 cities by improving talent availability, infrastructure, bylaws, and industry collaboration.
• Air cargo infrastructure and warehousing will be enhanced, focusing on high-value perishable horticultural produce, with streamlined cargo screening and customs protocols for greater efficiency.

---

What the Budget 2025 Means for You?

Budget 2025 brings several key benefits, including lower taxes for middle-class taxpayers, leading to more savings. Senior citizens will enjoy higher tax exemptions, while landlords and businesses will face fewer compliance burdens. Startups and tech companies will benefit from extended tax incentives, fostering growth and innovation. This budget aims to create a more favorable financial environment for individuals and businesses alike.

---