Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman, presented her eighth budget on February 1, 2025. This budget primarily focuses on growth, innovation, and sustainability. Notably, it offers significant benefits to the middle class by exempting individuals with an average monthly income of Rs. 1 lakh from taxation.
Direct Tax Proposal:
Tax Slab Change Under New Regime
The tax structure is change as follow
| Income Tax Slab | Tax Rate |
| Up to Rs. 4,00,000 | 0% |
| RS 4,00,001 to Rs 8,00,000 | 5% |
| RS 8,00,001 to Rs 12,00,000 | 10% |
| RS 12,00,001 to Rs 16,00,000 | 15% |
| RS 16,00,001 to Rs 20,00,000 | 20% |
| RS 20,00,001 to Rs 24,00,000 | 25% |
| Above Rs. 24,00,001 | 30% |
Increase Rebate u/s 87A
Under the new tax Regime, the rebate is increase from 25,000 to 60,000. So that individual who earn Up to Rs. 12,00,000 will now be eligible to complete Tax Rebate.
| Section | Present | Proposed |
| 193 – Interest on securities | NIL | 10,000 |
| 194A – Interest other than Interest on securities | (i) 50,000/- for senior citizen; (ii) 40,000/- in case of others when payer is bank, cooperative society and post office (iii) 5,000/- in other cases | (i) 1,00,000/- for senior citizen (ii) 50,000/- in case of others when payer is bank, cooperative society and post office (iii) 10,000/- in other cases |
| 194 – Dividend, for an individual shareholder | 5,000 | 10,000 |
| 194K – Income in respect of units of a mutual fund | 5,000 | 10,000 |
| 194B – Winnings from lottery, crossword puzzle Etc. & 194BB – Winnings from horse race | Aggregate of amounts exceeding 10,000/- during the financial year | 10,000/- in respect of a single transaction |
| 194D – Insurance commission | 15,000 | 20,000 |
| 194G – Income by way of commission, prize etc., on lottery tickets | 15,000 | 20,000 |
| 194H – Commission or brokerage | 15,000 | 20,000 |
| 194-I – Rent | 2,40,000 (in a financial year) | 6,00,000 (in a financial year) |
| 194J – Fee for professional or technical services | 30,000 | 50,000 |
| 194LA – Income by way of enhanced compensation | 2,50,000 | 5,00,000 |
| 206C(1G) – Remittance under LRS and overseas tour program package | 7,00,000 | 10,00,000 |
Note: The TCS on Purchased of goods Will Be Removed effect on 01/04/2025.
Extension for updated return:
Taxpayer who have to file updated return the time limit is extended to 4 years from 2 years from the end of relevant assessment year. This will make more times for persons to analyze, rectify, and updated. The additional tax has to be paid by filing ITR U.
The additional tax has to be paid as per:
| ITR-U filed within | Additional Tax |
| 12 months from the end of the relevant AY | 25% of additional tax (tax + interest) |
| 24 months from the end of the relevant AY | 50% of additional tax (tax + interest) |
| 36 months from the end of the relevant AY | 60% of additional tax (tax + interest) |
| 48 months from the end of the relevant AY | 70% of additional tax (tax + interest) |
Withdrawal for Amount for NSS:
Withdrawal for Amount for National Saving Scheme is exempt for senior citizen for after withdrawal of august 29,2024. This exemption is only for senior citizen.
Contribution made on NPS Vatsalya upto Rs 50000 is treated as sec 80CCD(1B).
For startup who have to avail benefit of tax holiday have uncorporated before 2030.
Omission of Section 206AB and 206CCA:
In Budget 2025, Sections 206AB and 206CCA, were removed. These sections imposed higher TDS and TCS rates—either twice the prescribed rate or 5%—on non-filers with aggregate TDS/TCS of Rs. 50,000 or more. The removal of these sections aims to reduce the compliance burden and simplify the tax process, with the amendments set to take effect from April 1, 2025.
2. Indirect Tax Proposed
Rationalisation of custom tariff and duty Inversion:
Removal of 7 tariff rate 25%, 30%, 35%, and 40% have been reduced to 20%, while 150%, 125%, and 100% have been reduced to 70%.
Only one cess or surcharge to be levied
Customs proposal for certain Industries:
- Textile Industry: Full exemption on two additional types of shuttle-less looms for technical textiles; Revised BCD on knitted fabrics: Now 20% or ₹115/kg, whichever is higher.
- Electronics: To rectify inverted duty structure, BCD on Interactive Flat Panel Display (IFPD) increased from 10% to 20% and reduced to 5% on open cell and other components; Open cell components on LCD/LED TVs will now stand fully exempted from BCD to boost domestic manufacturing.
- Shipping: : Basic Custom Duty is exempt on raw materials, components, consumables for shipbuilding for another next 10 years.
- Lithium-ion Battery: : BCD on 35 and 28 capital goods for EV battery manufacturing and mobile phone battery manufacturing to exempted.
- Telecommunication: BCD to be reduced to 10% From 20% on carrier grade ethernet switches to make it at par with non-carrier grade ethernet switches
Initiatives For Export Promotion:
Handicraft: Export time is extended for 1 year before it was 6 month.
Leather: Fully Custom Duty exemption on Wet Blue leather to boost Our domestic production and export duty exemption on 20% Crust Leather.
Amendment in CGST Act,2017
- Section 107(6) is being amended to provide for 10% mandatory pre-deposit of penalty amount for appeals before Appellate Authority in cases involving only demand of penalty without any demand for tax.
- Section 112(8) is amended to provide for 10% mandatory pre-deposit of penalty amount for appeals before Appellate Tribunal in cases involving only demand of penalty without any demand for tax.
- Section 122B is being newly inserted to provide penalties for contraventions of provisions related to the Track and Trace Mechanism provided under section 148A.
Key sector Highlighted:
1.Agriculture:
- Agri Districts Programme: Focus on 100 low-productivity districts to boost farm output, benefiting 1.7 crore farmers.
- Pulses Mission: A six-year plan to increase domestic pulses production and ensure remunerative prices.
- Vegetables & Fruits Programme: Improving production, supply chain, and processing in partnership with states.
- Makhana Board in Bihar: Promoting Makhana production, processing, and marketing in Bihar.
- High Yielding Seeds Mission: Strengthening research to develop and commercialize 100 high-yielding seed varieties.
- Kisan Credit Card (KCC) Expansion: Increasing loan limits to ₹5 lakh for 7.7 crore farmers, including those in fishing and dairy.
- Urea Plant in Assam: New plant to reduce fertilizer imports and boost domestic production.
- Fisheries Development: Sustainable fishing initiatives for boosting production and exports, especially in islands.
- Cotton Productivity Mission: Focus on research and development to improve cotton yields and quality.
2. MSME
1. Revised MSME Classification Criteria:
In a move to support the growth and scalability of MSMEs, the government has revised the classification thresholds for investment and turnover across micro, small, and medium enterprises. This revision will help businesses in these categories access better financing options and scale their operations:
- Micro Enterprises: Investment limit has been increased from ₹1 crore to ₹2.5 crore, and turnover limit raised from ₹5 crore to ₹10 crore.
- Small Enterprises: Investment limit enhanced from ₹10 crore to ₹25 crore, with turnover limits expanded from ₹50 crore to ₹100 crore.
- Medium Enterprises: The investment cap is now raised from ₹50 crore to ₹125 crore, and turnover limits have increased from ₹250 crore to ₹500 crore.
2. Enhanced Credit Guarantee for MSMEs:
The government has significantly increased the credit guarantee cover available to MSMEs. The limit has been doubled from ₹5 crore to ₹10 crore, ensuring greater access to financing. This move is expected to unlock an additional ₹1.5 lakh crore in credit over the next five years, helping businesses manage their cash flow, invest in growth, and secure financial stability.
3. Customized Credit Cards for Micro Enterprises:
The introduction of customized credit cards for micro-enterprises is set to simplify access to capital. These credit cards, specifically designed for businesses registered under the Udyam portal, will initially have a credit limit of ₹5 lakh. The government plans to issue up to 10 lakh such cards in the first year alone, making it easier for small businesses to access necessary funds without lengthy paperwork.
4. Fund of Funds for Startups:
- The budget has proposed the creation of a “Fund of Funds” to nurture and support the growth of startups across India. This fund aims to provide financial backing to innovative and high-potential startups, helping them scale up their operations, enhance research and development, and contribute to job creation and technological advancements. A Fund will be set up with expanded scope and a fresh contribution of Rs. 10,000.
5. Support for First-Time Entrepreneurs:
Recognizing the need to empower new entrepreneurs, the budget also introduces a support scheme tailored for first-time business owners, particularly those from rural areas or underserved communities,Woman. This initiative aims to provide the term loan upto Rs. 2 crore in the next 5years
6. Focused Support for Key Sectors:
The government is focusing on sectors such as “footwear, leather, toys, and food processing”, all of which have been identified as key drivers for MSME growth. Dedicated schemes and funding will be directed toward these sectors to boost production capabilities, enhance exports, and create job opportunities, particularly in regions with high MSME potential.
3.INVESTMENT:
INVESTMENT IN PEOPLE:
- Enhanced Early Childhood Care: Programs like Saksham Anganwadi aim to improve nutrition and early development for children, laying a strong foundation for their future.
- Innovation in Education: Atal Tinkering Labs are being set up in schools to encourage creativity and hands-on learning in science and technology.
- Improved Digital Infrastructure: Broadband connectivity will be expanded to government schools and public health centers, bridging the digital gap and improving access to services.
- Cultural and Linguistic Promotion: The Bharatiya Bhasha Pustak Scheme supports the creation and distribution of literature in regional languages, preserving India’s linguistic diversity.
- Skill Development Initiatives: National Centres of Excellence are being created to offer high-quality vocational training, aligning with industry needs and improving job prospects.
- Expansion of Medical Education: The budget also focuses on increasing the number of medical colleges and seats to meet the growing demand for healthcare professionals.
- Social Security for Gig Workers: A new social security scheme for online platform workers aims to provide financial stability and welfare for this emerging workforce.
- Support for Street Vendors: The Pradhan Mantri SVANidhi Scheme will continue to provide financial assistance to street vendors, encouraging entrepreneurship at the grassroots level.
These initiatives demonstrate the government’s commitment to building a skilled, healthy, and empowered workforce, driving long-term economic growth and development.
Investment in Economy
- Public-Private Partnership in Infrastructure:
Infrastructure ministries will create a 3-year project pipeline in a Public-Private Partnership (PPP) model to boost development. - Support to States:
States will receive ₹1.5 lakh crore in 50-year interest-free loans for capital projects and reforms. - Second Asset Monetization Plan:
The government plans to unlock ₹10 lakh crore through the second Asset Monetization Plan (2025-30) for new infrastructure projects. - Jal Jeevan Mission Extension:
The Jal Jeevan Mission will be extended until 2028 with an increased budget to improve water supply systems. - Urban Challenge Fund:
A ₹1 lakh crore fund will support projects to redevelop cities, boost economic growth, and improve water and sanitation systems. - Nuclear Energy Mission:
The government will invest ₹20,000 crore into research for Small Modular Reactors (SMRs), aiming to develop 5 operational units by 2033. - Maritime Development Fund:
A ₹25,000 crore fund will be set up to support the maritime sector, with up to 49% government contribution. - Shipbuilding Financial Assistance Policy:
The policy will be revamped to support Indian shipbuilding yards, including credit for shipbreaking and new infrastructure listings. - Modified UDAN Scheme:
The UDAN scheme will be expanded to connect 120 new destinations, adding 4 crore passengers in 10 years, especially focusing on remote and North Eastern areas. - Greenfield and Brownfield Airports:
New greenfield airports will be developed in Bihar, along with the expansion of Patna and Bihta airports. - Western Koshi Canal Project:
The Western Koshi Canal project in Bihar will help irrigate 50,000 hectares of land, benefiting farmers. - Mining Sector Reforms:
A new policy will be introduced for recovering critical minerals from mining waste (tailings). - SWAMIH Fund 2:Special Window for Affordable and Mid-income housing.
The ₹15,000 crore SWAMIH Fund 2 will speed up the completion of 1 lakh pending housing units with contributions from banks, government, and private investors.
- Tourism for Employment-Led Growth:
The government plans to develop the top 50 tourist destinations with state partnerships. Key measures include:- Skill development programs for youth, especially in hospitality.
- MUDRA loans to promote homestays.
- Improving travel and connectivity to tourist destinations.
- Offering performance-linked incentives to states for better destination management.
- Streamlining e-visa facilities and visa fee waivers for select tourist groups.
- FDI in the Insurance Sector:
The FDI limit in the insurance sector will be increased from 74% to 100% for companies that invest the entire premium within India. - Credit Enhancement Facility by NaBFID:
NaBFID will launch a ‘Partial Credit Enhancement Facility’ to support infrastructure projects by improving corporate bonds. - KYC Simplification:
A revamped Central KYC Registry will be launched in 2025 to make KYC processing smoother. - Grameen Credit Score:
Public Sector Banks will create a ‘Grameen Credit Score’ to address the credit needs of SHG members and rural areas. - Pension Sector Development:
A new forum will be established to help in developing and regulating pension products. - Bilateral Investment Treaties (BIT):
The BIT model will be updated in 2024 to encourage long-term foreign investments with a focus on India’s development. - Regulatory Reforms:
A High-Level Committee will be formed to review non-financial sector regulations, certifications, licenses, and permissions. - Jan Vishwas Bill 2.0:
The government will introduce Jan Vishwas Bill 2.0 to decriminalize over 100 legal provisions, making it easier for businesses. - Investment Friendliness Index of States:
In 2025, a new ‘Investment Friendliness Index’ will be introduced to encourage cooperative federalism and attract investments to states.
INVESTMENT IN INNOVATION:
- R&D and Innovation Funding:
The government has allocated ₹20,000 crore to support private sector-led research, development, and innovation. - Deep Tech Fund of Funds:
A new fund will be created to support the next generation of deep-tech startups. - PM Research Fellowship Scheme:
10,000 fellowships will be offered over the next 5 years to encourage technological research at IITs and IISc. - National Geospatial Mission:
This mission will focus on developing important geospatial data and infrastructure for various applications. - Gyan Bharatam Mission:
A mission to survey, document, and preserve over 1 crore manuscripts to protect India’s cultural heritage. - Second Gene Bank:
A second Gene Bank will be set up with 10 lakh germplasm lines to ensure food and nutritional security for the future.
EXPORT
- Export Promotion Mission:
A new mission will help businesses access cross-border financing, export credit, and support to tackle trade barriers in foreign markets. It will focus on MSMEs, with targets set by the Ministries of MSME, Commerce, and Finance. - BharatTradeNet (BTN):
BTN is a digital platform designed to simplify trade documentation and financing, making it easier for businesses to connect with global markets. It will work alongside the Unified Logistics Interface Platform and follow international standards. - Integration with Global Supply Chains:
The government plans to focus on key industries to help integrate them into global supply chains, boosting local manufacturing. Senior officials and industry leaders will work together to support these efforts. - National Framework for Global Capability Centres (GCC):
A framework will be set up to attract Global Capability Centres (GCCs) to tier-2 cities, improving talent and infrastructure in these regions. - Modernized Warehousing Facilities:
To improve efficiency, the infrastructure for air cargo will be upgraded, especially for high-value perishable goods like horticultural products. Customs and cargo screening processes will be streamlined for faster processing.
Senior Citizen
- Received bank interest up-to Rs.1,00,000 per annum is No TDS deduction. This limit was previously Rs.50,000.
- Withdrawals from National Savings Scheme (NSS) after 29 Aug 2024 is exempt only for senior citizen.
