Union Budget 2025 – Key Insights and Proposals

The Union Budget 2025, presented by the Finance Minister, has outlined a series of proposals to stimulate economic growth, support key sectors, and improve business and tax compliance. Below are the key highlights:

1. Strengthening Fertilizer and MSME Sectors

• A new urea plant with a 127,000-tonne capacity will be set up in Namrup, Assam, to enhance domestic fertilizer production.
• MSMEs will be promoted as the second growth engine for India’s development, with significant financial support and regulatory reforms.
• Credit guarantee cover for startups has been increased from ₹10 Cr to ₹20 Cr, offering more financial backing.
• Investment and turnover limits for MSMEs will rise by up to 2.5 times, fostering their growth and expansion.
• New initiatives will be rolled out for labor-intensive industries to generate more employment.

2. Sector-Specific Initiatives

• Focus Product Scheme: Aimed at boosting the footwear and leather sectors, increasing competitiveness and growth.
• India will work to become a global hub for toy manufacturing, with enhanced domestic production and exports.
• The Finance Minister introduced six key reforms across Power, Mining, Urban Development, Financial Sector, Regulatory Reforms, and Taxation.

3. Agricultural and MSME Support

• Dhan Dhanya Krishi Yojna: The Kisan Credit Card limit has been raised to ₹5 lakh; a six-year pulses mission and an agricultural plan for 100 low-productivity districts will be implemented.
• MSME Growth: Focus on 5.7 crore MSMEs, with increased loan guarantees, 1% guarantee fee loans for startups, ₹20 crore term loans for export MSMEs, customized credit cards, and a ₹10,000 crore Fund of Funds.
• Credit Boost: MSME credit guarantees have been raised to ₹5 crore, and well-run MSMEs are eligible for ₹20 crore.

4. Maritime, Shipbuilding, and Tourism

• Expansion of shipbuilding clusters to strengthen the maritime ecosystem.
• Maritime development with a ₹25,000 crore investment, where the private sector will contribute 50%.
• PLI scheme for leather and toys to be enhanced in FY 2026, aimed at reducing imports and boosting domestic manufacturing.
• The UDAN scheme will be expanded, covering 120 new destinations to improve regional air connectivity.
• Top 50 tourism destinations will be developed, with hotels in these locations included in the infrastructure harmonization list.
• Special focus on religious tourism, particularly on destinations related to Bhagwan Buddha to attract more visitors.

5. Infrastructure, Research, and Export Boost

• 4 crore additional passengers expected as greenfield airports are set up in Bihar to enhance regional connectivity.
• 10,000 research fellowships will be offered at IITs to promote innovation and research.
• PM Gatishakti data will be made available to the private sector, helping improve infrastructure development.
• Tourism-led employment growth will be targeted with the development of 22 top destinations in collaboration with state governments.
• A Geo-spatial Mission will be launched to enhance the usage of geographic data for development purposes.
• Exports Promotion Mission to be established to ensure smooth access to credit for exporters.
• Mudra loans will be extended for home stays, promoting rural tourism.

6. Healthcare and Tech Innovations

• Medical tourism and Heal in India initiatives will be promoted under PPP mode to boost healthcare and tourism.
• A Digital Repository of Knowledge will be enhanced to facilitate easier access to resources.
• Incentives will be provided for reforms in the power distribution sector.
• A new Deep Tech Fund of Funds will be established to support emerging technologies.

7. Taxation and Investment Reforms

• FDI in insurance will be raised to 100% from 74%, opening up greater investment opportunities.
• The Export Promotion Mission will focus on sectoral and ministerial targets to boost export performance.
• The Direct Tax Code (DTC) proposal will be introduced next week, aiming to simplify the tax structure.
• Investment Friendliness Index for states will be developed in 2025 to promote favorable investment climates at the state level.
• The Finance Minister has proposed new income tax bill next week to streamline and simplify the tax system.

8. Major Taxation and Compliance Reforms

• Company mergers will be rationalized to simplify the process.
• Fast-track mergers will be made more accessible and streamlined.
• Bilateral Investment Treaties (BIT) will be revamped to improve international investment standards.
• A high-level committee will be formed to drive regulatory reforms in non-financial sectors.
• The government will introduce the Central KYC Registry to standardize the KYC process.
• The Jan Vishwas Bill 2.0 will be introduced to decriminalize 100 provisions across various laws.
• The fiscal deficit for FY 2025-26 is projected at 4.4%.

9. Customs and Duty Reforms

• Seven tariff rates will be removed to enhance trade efficiency.
• FM revokes the social welfare surcharge on 80 items, reducing financial burdens on consumers and businesses.
• BCD exemption for cobalt and lithium-ion batteries to promote green energy.
• BCD on displays increased, but reduced on open-cell displays to support tech manufacturing.
• The shipping sector will benefit from a 10-year extension of its BCD exemption.
• A 2-year time limit for finalizing provisional assessments to streamline tax procedures.

10. Specific Tax Proposals

• The Crushed leather BCD has been withdrawn to boost the leather industry.
• Flat panel display BCD reduced from 20% to 10% to make electronics more affordable.
• Patient Assistance Programs run by pharma companies will be fully exempt from BCDs if medicines are provided free of cost.
• 37 additional medicines and 13 new patient assistance programs will be introduced.
• The social welfare surcharge on 82 tariff lines has been waived.

11. Tax Rate Changes and TDS/TCS Proposals

• Rationalization of TDS and TCS: The number of rates and thresholds will be reduced to simplify compliance.
• TDS exemptions raised for senior citizens’ interest to ₹1 lakh and ₹6 lakh for rental income.
• LRS limit increased; no TDS on education remittances.
• TCS on foreign expenses is set at ₹10 lakh.
• No TCS on education-related remittances.
• Section 206C(1H) (TCS on the sale of goods) proposed to be removed.
• ALV (Annual Letting Value) for self-occupied properties is now nil.
• NSS (National Savings Scheme) exemption extended until 29/08/2024.
• ALP for block period of 3 years proposed for better consistency in business pricing.

12. Tax Relief for NRIs and Income Tax Proposals

• Presumptive tax schemes for NRIs to simplify tax compliance.
• No income tax on income up to ₹12 lakh to provide relief to middle-income earners.

New Income Tax Slabs Proposed:

Disclaimer:
The points mentioned above are based on the proposals made by the Finance Minister in the Union Budget 2025 speech. These proposals are subject to approval and enactment by the Parliament and may undergo modifications before becoming law. The information is directly taken from the live speech of the Finance Minister and is intended for informational purposes only.

Click Here for The Finance Bill 2025 

Click Here for MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL, 2025