Introduction :
The Budget for 2025-2026, presented by the Hon’ble Minister of Finance, Nirmala Sitharaman, marks a pivotal moment in India’s economic journey as the nation strives towards achieving a Viksit Bharat (Developed India). This budget reflects the government’s unwavering commitment to accelerate growth, secure inclusive development, and invigorate private sector investments, all while uplifting the sentiments and spending power of India’s burgeoning middle class.
In the face of ongoing geopolitical challenges and a dynamic global economic landscape, this budget aims to unlock India’s tremendous potential through transformative reforms across key sectors, including agriculture, MSMEs, Urban Development, and the financial sector. By fostering a robust framework for sustainable growth, the government envisions a future where every citizen can contribute to and benefit from the nation’s prosperity, ensuring that the aspirations of all Indians are met with tangible opportunities and support.
As we embark on this journey, the budget serves as a roadmap for comprehensive development, emphasizing the importance of collaboration between the government, private sector, and civil society to realize the vision of a thriving and equitable economy for all.
The whole Budget 2025 is divided into two major sections Part-(A) & Part-(B) ;
Part – (A) covers all the Economical Growth and Development Strategies of Govt
Part – (B) covers all the Tax Reforms and Amendments (Indirect and Direct Tax)
Part – (A) of the budget outlines the government’s strategic vision for economic growth, focusing on key sectors that drive development and enhance the quality of life for citizens.
Key Themes :
- Agriculture as the 1st Engine Enterprise Development: Initiatives to catalyze employment and financial independence for rural women. Youth Engagement: Programs aimed at creating new employment opportunities for young farmers and rural youth. Modernization of Agriculture: Focus on improving productivity and warehousing for marginal and small farmers. Diversification: Efforts to create opportunities for landless families through various agricultural initiatives.
- MSMEs as the 2nd Engine
Support for MSMEs: Emphasis on enhancing the competitiveness of micro, small, and medium enterprises through financial assistance and skill development. Technological Upgrades: Encouragement for MSMEs to adopt modern technologies to improve efficiency and productivity. - Investment as the 3rd Engine
Public-Private Partnerships: Each infrastructure ministry to develop a three-year pipeline of projects for implementation in PPP mode. State Support: Provision of interest-free loans to states for capital expenditure and incentives for reforms. - Exports as the 4th Engine
Export Promotion: Establishment of a mission to enhance export capabilities and facilitate access to international markets. Trade Facilitation: Streamlining processes to reduce barriers for exporters. - Reforms as the Fuel
Regulatory Reforms: Introduction of measures to simplify compliance and enhance the ease of doing business. Fiscal Policy: Focus on rationalizing tax structures to support economic growth and social welfare.
Part – (B) , of the budget focuses on amendments related to direct and indirect taxes, outlining significant reforms aimed at enhancing tax compliance, simplifying the tax structure, and providing relief to various sectors, particularly the middle class.
Key Areas of Focus :
- Amendments Relating to Direct Taxes
Personal Income Tax Reforms
New Tax Regime : Introduction of new tax slabs with reduced rates aimed at providing substantial relief to the middle class. Tax Slabs : Income up to ₹4,00,000: Nil ₹4,00,001 to ₹8,00,000: 5% ₹8,00,001 to ₹12,00,000: 10% ₹12,00,001 to ₹16,00,000: 15% ₹16,00,001 to ₹20,00,000: 20% ₹20,00,001 to ₹24,00,000: 25% Above ₹24,00,000: 30% Rebate on Income Tax: Residents with total income up to ₹7,00,000 will not pay any tax due to rebates,
effectively benefiting low-income earners. Rationalization of TDS/TCS
Threshold Adjustments : Increase in TDS/TCS thresholds for various sections to ease compliance burdens. Example: Section 194A threshold for interest increased from ₹5,000 to ₹50,000 for banks and ₹1,00,000 for senior citizens. Rate Reductions : Significant reductions in TDS rates for certain income types to simplify tax compliance. Clarifications and Definitions Unit Linked Insurance Policies: Clarification that profits from the redemption of these policies, where exemption under section 10(10D) does not apply, will be taxed as capital gains. Definition of “Capital Asset: Amendments to clarify the chargeability of income arising from the transfer of capital assets held by investment funds.” - Amendments Relating to Indirect Taxes Customs Duty Changes
Rationalization of Customs Duties: Reduction in customs duties on various goods to reduce input costs, deepen value addition, and promote export competitiveness. Exemptions and Concessions: Specific exemptions for critical imports and concessional duties for certain goods to support domestic manufacturing. Waste and Scrap Management.
Customs Duty on Waste and Scrap: Introduction of specific customs duty rates for waste and scrap of critical minerals to promote recycling and sustainable practices. - Sector-Specific Proposals
Drugs and Medicines: Addition of lifesaving drugs to the list exempt from Basic Customs Duty (BCD) and introduction of concessional customs duty for certain medicines. Patient Assistance Programs: Expansion of the list of medicines under patient assistance programs that are fully exempt from BCD. - Compliance and Administrative Reforms
Provisional Assessment: Introduction of a two-year time limit for finalizing provisional assessments, extendable by the Commissioner of Customs. Voluntary Compliance: New provisions allowing importers/exporters to voluntarily declare material facts and pay duties with interest but without penalties.
Conclusion : The budget for 2025-2026 Presents a comprehensive framework aimed at fostering sustainable economic growth and enhancing the quality of life for all citizens.
Part A , Emphasizes the government’s commitment to driving development through key engines such as agriculture, MSMEs, investment, and exports, while also prioritizing regulatory reforms and fiscal policies that promote inclusivity and resilience. Part B , Complements this vision by introducing significant tax reforms that simplify the tax structure, enhance compliance, and provide substantial relief to the middle class and various sectors, thereby encouraging investment and economic activity. Together, these initiatives reflect a holistic approach to economic development, ensuring that the benefits of growth are widely shared and that India is well-positioned to navigate future challenges while achieving its aspirations for a prosperous and equitable society.