Union Budget 2025: Recording, Key Updates and PM Modi's Remarks

MSMEs as the Second Engine of Growth​

Strengthening Credit Access for MSMEs and Startups​

Boosting Credit Access for Micro-Enterprises & Startups​

Strengthening Startup Funding​

Empowering Women & SC/ST Entrepreneurs​

Boosting Employment in Labor-Intensive Sectors​

Strengthening India's Toy Industry​

• Developing toy manufacturing clusters
• Enhancing skills and craftsmanship
• Creating a robust manufacturing ecosystem
  The initiative aims to produce high-quality, innovative, and sustainable toys that proudly represent the Made in India brand.
  With exports already surpassing ₹1 lakh crore, this sector will drive economic growth and employment while boosting India’s global competitiveness in toy manufacturing.

Boosting Food Processing in Eastern India​

• Higher incomes for farmers through value addition to their produce.
• Skilling, entrepreneurship, and employment opportunities for the youth.

National Manufacturing Mission​

• Policy support
• Execution roadmaps
• Governance and monitoring frameworks for Central ministries and states
  This initiative aims to drive industrial growth, enhance competitiveness, and establish India as a global manufacturing powerhouse.

Clean Tech Manufacturing Under the National Manufacturing Mission​

• Solar PV cells
• EV batteries, motors, and controllers
• Electrolysis for green hydrogen production
• Wind turbines
• Ultra-high voltage transmission equipment
• Grid-scale battery storage solutions
  This strategic push aims to make India a global leader in renewable energy technology and sustainable industrial growth while reducing dependency on imports.

Investment as the Third Engine of Growth​

Strengthening Nutritional Support – Saksham Anganwadi & Poshan 2.0​

• 8 crore children
• 1 crore pregnant and lactating mothers
• 20 lakh adolescent girls in aspirational districts and the Northeast region
  To improve the effectiveness of these programs, cost norms for nutritional support will be appropriately enhanced, ensuring better health outcomes for beneficiaries.

Boosting Innovation and Digital Connectivity​

• 50,000 Atal Tinkering Labs will be established in government schools over the next five years.
• The initiative aims to cultivate curiosity, encourage innovation, and foster scientific temper among young minds.

• Under the BharatNet project, broadband connectivitywill be provided to:
  • All government secondary schools in rural areas.
  • All Primary Health Centers (PHCs) in rural regions.
• This move will ensure better access to digital education and enhance healthcare services through improved connectivity.

Promoting Education & Skill Development​

• The government will implement the Bhartiya Bhasha Pustak Scheme to provide digital Indian language books for schools and higher education.
• This initiative aims to help students better understand their subjects in their native languages, promoting inclusive and accessible education.

• Building on the July 2024 Budget initiative, the government will establish five National Centers of Excellence for Skilling.
• These centers will collaborate with global experts and industry partners to equip youth with the skills needed for "Make for India, Make for the World" manufacturing.
• The initiative will focus on:
  • Curriculum design
  • Training of trainers
  • Skill certification frameworks
  • Periodic reviews to ensure effectiveness

Expansion of IIT Capacity & Infrastructure​

• Over the past 10 years, the total number of students across 23 IITs has doubled, increasing from 65,000 to 1.35 lakh.
• To accommodate further growth, additional infrastructure will be developed in the five IITs established after 2014, enabling education for 6,500 more students.

• The hostel and other infrastructure capacity at IIT Patna will be expanded to support its growing student population and enhance campus facilities.

Advancing AI & Medical Education​

• Building on the three AI Centers of Excellence announced in 2023 for agriculture, health, and sustainable cities, the government will now establish a Center of Excellence in Artificial Intelligence for Education.
• The center will have a total outlay of ₹500 crore, aiming to integrate AI-driven innovations into the education sector for enhanced learning outcomes.

• In the past 10 years, the government has added 1.1 lakh undergraduate and postgraduate medical seats, marking a 130% increase.
• Next year, 10,000 additional medical seats will be introduced in medical colleges and hospitals.
• The government is committed to adding 75,000 more medical seats over the next five years, ensuring a stronger healthcare workforce and improved medical education access.

Strengthening Healthcare & Urban Livelihoods​

• The government will facilitate the establishment of daycare cancer centers in all district hospitals over the next three years.
• In 2025-26 alone, 200 cancer centers will be set up, ensuring better access to cancer treatment across the country.

• A new scheme for the socio-economic upliftment of urban workers will be implemented.
• The initiative aims to increase incomes, provide sustainable livelihoods, and improve the quality of life for the urban poor and vulnerable groups.

• The PM SVANidhi scheme, which has benefited over 68 lakh street vendors, providing relief from high-interest informal sector loans, will now be revamped.
• Key improvements include:
  • Enhanced loan amounts from banks.
  • UPI-linked credit cards with a ₹30,000 limit for street vendors.
  • Capacity-building support to help vendors grow their businesses.

Social Security Scheme for Online Platform Workers​

• Gig workers on online platforms play a key role in the New Age services economy by bringing dynamism and flexibility to various sectors.
• To acknowledge their contribution, the government will:
  • Issue identity cards for gig workers.
  • Facilitate their registration on the e-Shram portal for better access to welfare schemes.

• Nearly 1 crore gig workers will receive healthcare benefits under the PM Jan Arogya Yojana (PM-JAY), ensuring better medical coverage for those engaged in platform-based work.

Public-Private Partnership (PPP) in Infrastructure​

• Each infrastructure-related ministry will prepare a three-year project pipeline for implementation under the PPP (Public-Private Partnership) model.
• States will also be encouraged to develop their own PPP project pipelines and can seek support from the India Infrastructure Project Development Fund, which helps in structuring and preparing PPP proposals.

• A ₹1.5 lakh crore outlay has been proposed for 50-year interest-free loans to states.
• This funding will support capital expenditure and provide incentives for infrastructure-related reforms, ensuring sustainable growth and long-term development.

Asset Monetization & Infrastructure Investment​

• Building on the success of the first Asset Monetization Plan launched in 2021, the government will introduce a new plan for 2025-30.
• The initiative aims to reinvest ₹10 lakh crore into new infrastructure projects by leveraging existing public assets.
• Regulatory and fiscal measures will be fine-tuned to maximize returns and ensure efficient capital deployment.

Jal Jeevan Mission – Expanding Clean Water Access​

Urban Sector Reforms & Development​

• Building on the July Budget proposals, the government will incentivize urban sector reformsfocused on:
  • Governance improvements
  • Municipal service enhancements
  • Urban land management and planning
• These reforms aim to strengthen city administration and improve infrastructure planning for sustainable urban growth.

• A new Urban Challenge Fund worth ₹1 lakh crorewill be launched to support:
  • Developing cities as growth hubs
  • Creative urban redevelopment
  • Water and sanitation projects
• The fund will finance up to 25% of bankable project costs, with a requirement that at least 50% of the funding comes from bonds, bank loans, and PPPs (Public-Private Partnerships).
• An allocation of ₹10,000 crore is proposed for 2025-26 to kickstart the initiative.

Power Sector Reforms & Nuclear Energy Mission​

• The government will incentivize states to undertake electricity distribution reforms and augment intra-state transmission capacity.
• These measures aim to improve the financial health and operational capacity of electricity companies.
• To encourage these reforms, states will be allowed additional borrowing of 0.5% of GSDP, contingent on successful implementation.

• A dedicated mission for research and development of Small Modular Reactors (SMRs) will be launched with a ₹20,000 crore outlay.
• At least five indigenously developed SMRs will be operationalized by 2033, supporting India’s clean energy transition.

• To achieve 100 GW of nuclear energy by 2047, the government will actively expand nuclear power capacity.
• To facilitate private sector participation, amendments will be made to:
  • The Atomic Energy Act
  • The Civil Liability for Nuclear Damage Act

Strengthening India's Maritime & Shipbuilding Industry​

• The shipbuilding financial assistance policy will be revamped to address cost disadvantages faced by Indian shipbuilders.
• The policy will also introduce credit incentives for shipbreaking in Indian yards, promoting the circular economy and sustainable recycling practices.
• Large ships above a specified size will now be included in the Infrastructure Harmonized Master List, granting them better access to financing and policy support.

• The government will facilitate shipbuilding clusters to expand ship categories, enhance production capacity, and improve competitiveness.
• These clusters will focus on:
  • Developing additional infrastructure
  • Skilling workers
  • Integrating advanced shipbuilding technology
  • Building a full-fledged shipbuilding ecosystem

• To provide long-term financing and enhance competition in the maritime industry, a ₹25,000 crore Maritime Development Fund will be established.
• Up to 49% of the fund will be government-backed, while the rest will be mobilized from ports and private sector investments.

Strengthening Regional Connectivity – Revamped UDAN Scheme​

• The UDAN (Ude Desh Ka Aam Nagrik) Regional Connectivity Scheme has enabled 1.5 crore middle-class travelers to enjoy affordable and faster air travel.
• The scheme has successfully connected 88 airports and operationalized 619 routes, boosting regional air connectivity.

• Inspired by its success, a revamped UDAN schemewill be launched to:
  • Enhance connectivity to 220 new destinations
  • Accommodate 4 crore additional passengers over the next 10 years
• The scheme will also provide support for helipads and small airportsin:
  • Hilly regions
  • Aspirational districts
  • Northeastern states

• The government will facilitate the development of Greenfield airports in Bihar to meet the state’s growing air travel demand.

Mining Sector Reforms​

• Sharing of best practices among states.
• Establishment of a State Mining Index to assess performance and promote efficiency.
• Introduction of a policy for recovering critical minerals from tailings, ensuring sustainable resource utilization.

Boosting Affordable & Mid-Income Housing – SWAMIH Initiative​

• 50,000 dwelling units in stressed housing projects have already been completed and handed over to homebuyers.
• In 2025, another 40,000 units will be completed, benefiting middle-class families struggling with loan EMIs and rental expenses.

• Building on the success of SWAMIH, a new blended finance facilitywill be launched, with contributions from:
  • The government
  • Banks
  • Private investors
• This ₹15,000 crore fund will accelerate the completion of another 1 lakh housing units, further supporting homebuyers and reviving the real estate sector.

Strengthening Infrastructure & Tourism for Employment-Led Growth​

• To promote Public-Private Partnerships (PPPs) and assist the private sector in project planning, access to relevant data and maps from the PM Gati Shakti portal will be made available.
• This initiative aims to enhance efficiency, optimize infrastructure development, and attract private investment.

• The Top 50 tourist destinations across India will be developed in partnership with states through a challenge-mode selection.
• States will provide land for key infrastructure development, ensuring smooth execution.
• Hotels in these destinations will be included in the Infrastructure Harmonized Master List, granting them better access to financing and policy support.

• Facilitating Employment Growth:
  • Organizing intensive skill development programs for youth, including specialized training in institutes of hospitality management.
• Supporting Local Entrepreneurs:
  • Mudra loans will be provided to individuals for homestay businesses, promoting community-driven tourism.
• Enhancing Travel & Connectivity:
  • Improving ease of travel through better transport links and infrastructure.
• Performance-Linked Incentives for States:
  • States will receive incentives for effective tourism management, including:
    • Tourist amenities & cleanliness
    • Destination marketing efforts
• Simplified Travel Policies:
  • Introduction of streamlined e-visa facilities.
  • Visa fee waivers for select tourist groups to attract more foreign visitors.

Boosting Tourism – Spiritual, Medical & Wellness Tourism​

• Building on the July Budget’s emphasis on religious and spiritual sites, the government will place a special focus on destinations associated with the life and times of Lord Buddha.
• This initiative aims to promote cultural tourism, attract global visitors, and boost heritage-based economic growth.

• To position India as a global medical tourism hub, the ‘Heal in India’ initiative will be expanded.
• This will be done in partnership with the private sector, focusing on:
  • Capacity building in healthcare infrastructure.
  • Simplified visa norms to facilitate international patient access.
• These measures will enhance India’s global reputation in affordable, high-quality healthcare services.

Investing in Innovation & Future Technologies​

• To accelerate private-sector-led R&D and innovation, the government is allocating ₹20,000 crore to support cutting-edge advancements.
• A Deep Tech Fund of Funds will be explored to catalyze next-generation startups, ensuring India's leadership in emerging technologies.

• Over the next five years, 10,000 research fellowships will be provided under the PM Research Fellowship Scheme.
• These fellowships will support technological research at IITs & IISc, with enhanced financial support, fostering India’s scientific excellence.

• A second Gene Bank with 10 lakh germplasm lines will be established to preserve genetic resources for future food and nutrition security.
• This facility will provide conservation support for both public and private sectors, ensuring sustainable agricultural biodiversity.

Strengthening Research, Knowledge, and Infrastructure Development​

• A second Gene Bank will be established, housing 10 lakh germplasm lines to preserve genetic resources for future food and nutritional security.
• This facility will support both public and private sectors, ensuring the conservation of agricultural biodiversity and long-term sustainability of food systems.

• A National Geospatial Mission will be launched to develop foundational geospatial infrastructure and data.
• Using PM Gati Shakti, this mission will help:
  • Modernize land records
  • Improve urban planning
  • Enhance infrastructure project design
• This initiative aims to streamline governance, boost efficiency, and support future infrastructure growth.

• The Gyan Bharatam Mission will be launched to survey, document, and conserve India’s manuscript heritage.
• This initiative will collaborate with academic institutions, museums, libraries, and private collectors, covering over one crore manuscripts.
• A National Digital Repository of Indian Knowledge Systems will also be established for knowledge sharing and academic research.

Exports as the Fourth Engine of Growth​

• To boost India's global trade competitiveness, a dedicated Export Promotion Mission will be launched.
• This mission will focus on sectoral and ministerial export targets, ensuring strategic growth and expansion in key industries.

Strengthening Exports, MSMEs & Digital Trade Infrastructure​

• The Export Promotion Mission will be jointly driven by the Commerce, MSME, and Finance Ministries.
• Key initiatives include:
  • Facilitating easy access to export credit for businesses.
  • Cross-border factoring support to improve financial flexibility.
  • Helping MSMEs tackle non-tariff barriers in international markets.

• The government will establish Bharat Trade Net (BTN) as a unified platformfor:
  • Trade documentation management
  • Financing solutions for exporters
• BTN will be aligned with international best practices and will complement the Unified Logistics Interface Platform (ULIP), ensuring seamless trade facilitation.

• To enhance India’s role in global supply chains, the government will:
  • Identify key sectors for growth using objective criteria.
  • Provide targeted support to boost domestic manufacturing capacities.
  • Establish facilitation groups with senior government officials and industry representatives to strengthen select supply chains.

• India has immense potential in Industry 4.0, which requires advanced skills and a highly talented workforce.
• The government will actively support the domestic electronics and equipment industryto:
  • Capitalize on emerging technological opportunities.
  • Create high-value jobs for India's youth.

Boosting Global Capability Centers & Air Cargo Infrastructure​

• A National Framework will be formulated to guide states in promoting Global Capability Centers (GCCs) in emerging Tier-2 cities.
• The framework will include:
  • Measures to enhance talent availability in these cities.
  • Infrastructure development guidelines to support the growth of GCCs.
  • Legal frameworks and collaborative mechanisms for seamless industry engagement.

• To strengthen India’s logistics and export ecosystem, the government will upgrade air cargo infrastructure, focusing on:
  • Improved warehousing facilities, particularly for high-value and perishable horticultural produce.
  • Modernizing cargo screening processes to enhance efficiency.
  • Streamlining customs protocols to ensure a user-friendly experience for exporters and logistics providers.

Tax Reforms – Strengthening Trust & Transparency​

• The government has implemented key tax reforms to improve ease of compliance and reduce bureaucracy, including:
  • Faceless assessments to minimize direct interactions with tax officials.
  • Introduction of the Taxpayer Charter, ensuring greater transparency and trust.
  • Faster refunds, with 99% of tax returns now processed through self-assessment.
  • Resolution schemes like Vivad se Vishwas to settle disputes efficiently.

• Reaffirming the principle of ‘Trust First, Scrutinize Later,’ the government will introduce a new Income Tax Bill next week, further simplifying tax compliance.
• More details on indirect tax reforms and changes will be outlined in Part B of the Budget speech.

Financial Sector Reforms – Expanding FDI in Insurance​

• The Foreign Direct Investment (FDI) limit in the insurance sector will be increased from 74% to 100%.
• However, this enhanced limit will only apply to companies that invest the entire premium within India, ensuring domestic capital retention.
• The current regulatory frameworks and conditions on foreign investments will also be reviewed and simplified to attract more global investors.

Expanding Rural Financial Services & Strengthening Credit Access​

• The services of India Post Payments Bank (IPPB) will be deepened and expanded to enhance financial inclusion in rural regions.
• This initiative aims to provide accessible banking services, improve digital financial literacy, and increase credit access for underserved communities.

• NaBFID (National Bank for Financing Infrastructure and Development) will establish a partial credit enhancement facility to support corporate bonds for infrastructure projects.
• This will boost investor confidence, encourage private sector participation, and facilitate long-term financing for critical infrastructure.

• Public Sector Banks (PSBs) will develop a Grameen Credit Score Frameworkto:
  • Improve credit access for Self-Help Group (SHG) members and rural borrowers.
  • Enable better financial assessment of individuals without formal credit histories.
  • Promote affordable rural financing, particularly for small entrepreneurs and farmers.

• A forum for regulatory coordinationwill be created to:
  • Enhance the development of pension products.
  • Improve retirement security and financial planning options for individuals.

• The Central KYC Registry will be revamped and rolled out in 2025to:
  • Simplify Know Your Customer (KYC) processes.
  • Streamline periodic updates, reducing compliance burdens.
  • Ensure greater transparency and ease of financial transactions.

Simplifying Corporate Mergers & Enhancing Foreign Investment​

• The requirements and procedures for company mergers will be rationalized to ensure speedier approvals.
• The scope of fast-track mergers will be expanded, making the process more efficient and business-friendly, reducing bureaucratic delays.

• As proposed in the Interim Budget, India signed Bilateral Investment Treaties (BITs) with two countries in 2024 to encourage sustained foreign investment.
• In the spirit of ‘First Developed India’ (Viksit Bharat 2047), the current model BIT will be revamped to be more investor-friendly, ensuring:
  • Stronger investor protection mechanisms.
  • Simplified dispute resolution frameworks.
  • Enhanced ease of doing business to attract long-term foreign capital.

Modernizing Regulatory Frameworks & Enhancing Ease of Doing Business​

• Over the past 10 years, the government has demonstrated a steadfast commitment to improving the ease of doing business, covering both financial and non-financial aspects.
• The government is determined to align regulations with technological advancements and global policy trends.
• A light-touch regulatory framework will be introduced, based on principles of trust, to enhance productivity and employment.

• A committee will be established to review all non-financial sector regulations, certifications, licenses, and permissions.
• The committee is expected to submit recommendations within a year, leading to a modern, flexible, and people-friendly regulatory framework.

• The focus will be on transformational measures to reduce bureaucratic hurdles in inspection and compliance processes.
• States will be encouraged to adopt simplified regulatory frameworks to enhance business efficiency.

• To foster competitive cooperative federalism, the government will launch an Investment-Friendliness Index of States in 2025.
• This will incentivize states to create a more investor-friendly business environment.

• The Financial Stability and Development Council (FSDC)will establish a mechanism to:
  • Assess the impact of current financial regulations and subsidiary rules.
  • Enhance regulatory responsiveness to support financial sector development.

Strengthening Legal & Fiscal Policy Frameworks​

• Building on the Jan Vishwas Act 2023, which decriminalized over 180 legal provisions, the government will now introduce Jan Vishwas Bill 2.0.
• This new bill will decriminalize over 100 additional provisions across various laws, reducing legal uncertainties and enhancing the ease of doing business.

Fiscal Policy & Deficit Management​

• The government remains committed to fiscal discipline, ensuring that central government debt follows a declining trend as a percentage of GDP.
• The six-year fiscal roadmap has been detailed in the Fiscal Responsibility and Budget Management (FRBM) Statement.

• Total Receipts (excluding borrowings): ₹31.47 lakh crore
• Net Tax Receipts: ₹25.57 lakh crore
• Total Expenditure: ₹47.16 lakh crore
• Capital Expenditure: ₹10.18 lakh crore
• Revised Fiscal Deficit: 4.8% of GDP

• Total Receipts (excluding borrowings): ₹34.96 lakh crore
• Net Tax Receipts: ₹28.37 lakh crore
• Total Expenditure: ₹50.65 lakh crore
• Fiscal Deficit Estimate: 4.4% of GDP

• Net Market Borrowings from Dated Securities: ₹11.54 lakh crore
• Balance Financing: From small savings and other sources
• Gross Market Borrowings: Estimated at ₹14.82 lakh crore

Indirect Tax Reforms – Simplifying Customs & Supporting Domestic Industry​

• The government’s customs policy reformsaim to:
  • Streamline tariff structures.
  • Address duty inversion issues.
  • Boost domestic manufacturing & value addition.
  • Promote exports while facilitating trade.
  • Provide relief to consumers.

• As part of the comprehensive customs rate review announced in the July 2024 Budget:
  • Seven tariff rates will be removed, simplifying the structure.
  • This follows the seven tariff rates removed in the 2023-24 Budget.
  • After these changes, only eight tariff rates will remain, including a zero-rate.

• Appropriate cess adjustments will be applied to ensure effective duty incidence remains stable.
• Some items will see a marginal reduction in duty incidence to support affordability.

• The Social Welfare Surcharge will be exempted on 82 tariff lines that are currently subject to a cess.
• This move aims to simplify tax compliance and reduce indirect tax burdens.

Sector-Specific Tax Relief & Support for Domestic Manufacturing​

• To provide relief to patients, particularly those suffering from cancer, rare diseases, and severe chronic illnesses, the government proposes:
  • 36 additional life-saving drugs to be fully exempted from Basic Customs Duty (BCD).
  • 6 more life-saving medicines to be added to the list attracting concessional 5% customs duty.
  • Full exemption/concessional duty to apply to bulk drugs used in the manufacturing of these medicines.

• Pharmaceutical companies running Patient Assistance Programs (PAPs) currently receive BCD exemptions if medicines are provided free of cost to patients.
• The government now proposes to add 37 more medicines and 13 additional PAPs under this scheme to support affordable healthcare access.

Strengthening Domestic Manufacturing & Critical Minerals Access​

• In the July 2024 Budget, the government:
  • Fully exempted BCD on 25 critical minerals that are not available domestically.
  • Reduced BCD on two other minerals to support domestic processing, especially for MSMEs.

• The government now proposes to fully exempt:
  • Cobalt powder & waste
  • Scrap of lithium-ion batteries
  • Lead, zinc, and 12 more critical minerals
• These measures will:
  • Ensure availability of essential materials for domestic industries.
  • Support India’s clean energy and electronics sectors.
  • Create more jobs for Indian youth in advanced manufacturing.

Supporting Domestic Manufacturing – Textiles, Electronics & Lithium-Ion Batteries​

• To promote domestic manufacturing of technical textiles like agro-textiles, medical textiles, and geotextiles, the government proposes:
  • Adding two more types of shuttle-less looms to the list of fully exempted textile machinery to enhance production efficiency.
  • Revising Basic Customs Duty (BCD) rates on knitted fabrics covered under nine tariff linesfrom:
    • 10% or ₹20/kg → 20% or ₹115/kg, whichever is higher.
  • This aims to strengthen India’s competitiveness in high-value textile products.

• To align with ‘Make in India’ and correct inverted duty structures, the following changes are proposed:
  • BCD on interactive flat panel displays will increase from 10% to 20% to encourage local production.
  • BCD on open cell components for LCD/LED TVs will be reduced from 5% to 2.5% (previously reduced in Budget 2023-24).
  • To further boost manufacturing of open-cell displays, BCD on these parts will now be fully exempted.

• To support India’s push for clean energy & electric mobility, the government proposes:
  • Adding 35 capital goods to the list of exempted items for EV battery manufacturing.
  • Adding 28 capital goods for mobile phone battery manufacturing.
  • This will enhance domestic production of lithium-ion batteries for both mobile phones and electric vehicles (EVs).

Boosting Shipping & Telecommunications Sectors​

• Recognizing the long gestation period of shipbuilding, the government will:
  • Extend the exemption of Basic Customs Duty (BCD) on raw materials, components, consumables, and parts used for ship manufacturing for another 10 years.
  • Apply the same duty exemption to the shipbreaking industry, ensuring cost competitiveness and promoting sustainable recycling practices.

• To prevent classification disputes and promote a level playing field, the government proposes:
  • Reducing the BCD on carrier-grade Ethernet switches from 20% to 10%, aligning it with the duty structure for non-carrier grade Ethernet switches.
• This move will reduce costs for telecom infrastructure, encourage investment in network expansion, and support India’s digital connectivity goals.

Export Promotion Measures – Boosting Handicrafts, Leather & Marine Products​

• To facilitate handicraft exports, the government proposes:
  • Extending the export time period from six months to one year, with a further three-month extension if required.
  • Adding nine new items to the list of duty-free inputs for handicraft production.

• To boost domestic value addition & employment, the following customs duty changes are proposed:
  • Full exemption on Basic Customs Duty (BCD) for wet blue leather, easing raw material imports.
  • Removal of the 20% export duty on crust leather, enabling small tanneries to expand exports.

• To enhance India's global competitiveness in the seafood market, the government proposes:
  • Reducing BCD on frozen fish surimi from 30% to 5% to support manufacturing & export of its analog products.
  • Reducing BCD on fish hydrolysates from 15% to 5%, benefiting fish & shrimp feed manufacturers.

Strengthening Trade & Compliance – MROs, Railways, and Customs Reforms​

• In the July 2024 Budget, the government extended the time limit for the export of foreign-origin goods imported for repairs in Maintenance, Repair, and Overhaul (MRO) facilities for aircraft and ships:
  • From six months to one year, further extendable by another year.
• Now, the same extension will apply to railway goods, ensuring flexibility for businesses engaged in rail sector repairs and overhauls.

• Currently, the Customs Act, 1962 does not specify a time limit for finalizing provisional assessments, leading to uncertainty and increased costs for businesses.
• To promote Ease of Doing Business, a time limit of two years will now be set for finalizing provisional assessments, extendable by one year if needed.

• A new provision will allow importers and exporters to voluntarily declare material facts and pay duty with interest, but without penalties, if done after the clearance of goods.
• However, this will not apply in cases where the department has already initiated an audit or investigation.
• This measure aims to incentivize transparency, reduce litigation, and improve trade compliance.

Enhancing Trade Flexibility – Import Rules & Reporting Simplifications​

• To help industries better plan their importsand reduce operational challenges, the government proposes to:
  • Extend the time limit for the end-use of imported inputs under the relevant rules from six months to one year.
  • This will provide greater operational flexibility to businesses and reduce supply chain disruptions.

• Recognizing the cost and uncertainty of supply chains, the government will ease compliance requirements:
  • Importers will now file quarterly statements instead of monthly statements.
  • This will reduce paperwork, lower administrative burdens, and streamline regulatory compliance.

Direct Tax Reforms – Introducing a New Income Tax Bill​

• As part of the government’s vision for Viksit Bharat, taxation reforms have been identified as a key pillar of governance.
• In alignment with recent criminal law reforms (Bhartiya Nyaya Sanhita replacing Bhartiya Dand Sanhita), the new Income Tax Billwill:
  • Carry forward the spirit of justice and fairness (Nyaya).
  • Be clear, direct, and simplified, reducing the number of chapters and words by almost half compared to the existing law.
  • Improve tax certainty and reduce litigation, benefiting both taxpayers and administrators.

• The government recognizes that reforms are a continuous process and not just a destination.
• Citing the wisdom of Thirukkural (Verse 542):
  • “Just as living beings depend on the rains, citizens depend on good governance.”
• The government remains committed to:
  • Ensuring fair and responsive governance.
  • Balancing national development with economic stability.
  • Keeping policies aligned with the needs of the people while strengthening India's taxation framework.

Direct Tax Proposals – Addressing Citizens' Needs​

• The government is committed to understanding and addressing the needs of taxpayers, ensuring that tax policies are:
  • Fair and transparent
  • Aligned with economic growth
  • Focused on reducing compliance burdens

• Detailed proposals on personal income tax reforms will be presented towards the end of the tax policy section.

TDS & TCS Rationalization – Easing Compliance for Taxpayers​

• The government proposes to rationalize TDSby:
  • Reducing the number of TDS rates and thresholds, making the system simpler and more uniform.
  • Increasing threshold amounts for tax deduction to ensure better clarity and ease of compliance.

• Higher TDS Exemption for Senior Citizens:
  • The limit for TDS on interest earned by senior citizens will be doubled from ₹50,000 to ₹1 lakh.
  • This will reduce tax deductions on small savings, benefiting retirees.
• TDS Threshold on Rent Increased:
  • The annual threshold for TDS on rent will be raised from ₹2.4 lakh to ₹6 lakh.
  • This will reduce the number of rental transactions subject to TDS, benefiting small landlords and individual taxpayers.

• These changes aim to minimize unnecessary tax deductions on small payments, making tax compliance easier and fairer for individual taxpayers, particularly those with low-to-moderate incomes.

Rationalizing Tax Collection at Source (TCS) & Easing Compliance​

• The threshold for collecting TCS under the RBI’s Liberalized Remittance Scheme (LRS) will be increased from ₹7 lakh to ₹10 lakh.
• This will reduce the tax burden on individuals making foreign remittances and provide greater flexibility for overseas transactions.

• TCS on remittances for education purposes will be removed where the remittance is made using a loan taken from a specified financial institution.
• This ensures students studying abroad and their families are not unnecessarily taxed on educational expenses funded through loans.

• Currently, both TDS and TCS are applied on transactions related to the sale of goods, creating compliance difficulties for businesses.
• To simplify tax obligations, TCS on such transactions will be omitted, reducing unnecessary tax collection processes.

• The provision for higher TDS deduction will now apply only to individuals who do not have a PAN (Permanent Account Number).
• This ensures that taxpayers with a valid PAN are not subjected to higher TDS rates, simplifying compliance.

TDS & TCS Compliance Relief, Strengthening Voluntary Tax Compliance​

• In July 2024, the delay in TDS payments up to the due date of filing the statement was decriminalized.
• To provide equal relief, the government now proposes to extend this relaxation to TCS (Tax Collected at Source) provisions as well.
• This reform aims to ease compliance and reduce penalties for minor delays in tax payments.

• The government, following the principles of ‘Sabka Saath, Sabka Vikas, Sabka Vishwas, and Sabka Prayas’, introduced the Updated Return Facility in 2022.
• This facility allows taxpayers who omitted to report their correct income to voluntarily update their returns and pay additional taxes.
• The initiative has been hugely successful, with nearly 90 lakh taxpayers voluntarily updating their incomes.

• To further encourage voluntary tax compliance, the time limit for filing updated returns will be extended from two years to four years.
• This will allow taxpayers more flexibility to correct unreported incomes and avoid penalties or legal scrutiny.

Reducing Compliance Burden & Strengthening Taxpayer Benefits​

• To reduce compliance burdens for small charitable trusts and institutions, the registration period will be increased from 5 years to 10 years.
• Additionally, minor defaults, such as incomplete applications, will not lead to disproportionate penalties or unfair consequences.

• Currently, taxpayers can only claim the annual value of self-occupied properties as nil if certain conditions are met.
• Considering the challenges faced by homeowners, the government proposes to allow the benefit for up to two self-occupied properties without any conditions.
• This will reduce tax burdens on homeowners, particularly those who own multiple properties for personal use.

• New Transfer Pricing Scheme:
  • To simplify the process of determining Arm’s Length Price (ALP) for international transactions, a new scheme will be introduced.
  • Instead of yearly assessments, ALP will now be determined for a block period of three years, aligning with global best practices.
• Expanding Safe Harbor Rules:
  • To reduce tax litigation and provide certainty in international taxation, the scope of safe harbor rules will be expanded, benefiting multinational businesses operating in India.

• The government recognizes that many senior and very senior citizens have old National Savings Scheme (NSS) accounts.
• Measures will be introduced to ensure ease of access, continuity, and appropriate tax treatment for such accounts.

Relief for Senior Citizens – National Savings Scheme (NSS) & NPS Withdrawals​

• Many senior and very senior citizens hold old National Savings Scheme (NSS) accounts where interest is no longer payable.
• To provide relief, withdrawals made from NSS accounts on or after August 29, 2024, will be allowed without penalty or restrictions, ensuring financial flexibility for retirees.

• Currently, National Pension System (NPS) Swavalamban accounts do not receive the same tax treatment as regular NPS accounts.
• The government proposes to extend similar tax benefits to NPS Swavalamban accounts, subject to overall limits, bringing parity in pension withdrawals.

Advancing Tax Digitalization & Dispute Resolution​

• In July 2024, the government committed to fully digitizing tax processes, including implementing appellate orders within two years.
• Now operational, this digital transformationwill:
  • Enhance transparency in tax administration.
  • Speed up dispute resolution and order processing.
  • Reduce physical paperwork and manual interventions.

• Launched in July 2024, the Vivad Se Vishwas scheme was designed to resolve pending income tax disputes efficiently.
• The scheme has received an overwhelming response, with nearly 33,000 taxpayers opting for settlement.
• This initiative has helped reduce litigation, ease tax compliance, and increase tax collections.

Investment & Employment Promotion – Tax Incentives​

• To encourage foreign investments in India’s electronics manufacturing sector, the government proposes:
  • A new presumptive taxation regime for non-residents who provide services to Indian companies setting up or operating electronics manufacturing units.
  • Safe harbor provisions to ensure tax certainty for non-residents who store components for supply to specified electronics manufacturers.
• These measures will boost India’s role in global supply chains and attract high-value investments.

• Currently, the Tonnage Tax Scheme is only applicable to seagoing ships.
• To promote inland water transport, the benefits of the tonnage tax scheme will now be extended to inland vessels registered under the Indian Vessels Act, 2021.
• This move will support domestic shipping, improve logistics efficiency, and encourage sustainable water-based transport.

Boosting Startups & International Financial Services​

• To continue supporting India's startup ecosystem, the government proposes to:
  • Extend the incorporation period by five years for startups to qualify for existing tax incentives.
  • Now, startups incorporated before April 1, 2030, will be eligible for these benefits.
• This move will encourage more entrepreneurs, attract venture capital, and foster innovation-driven growth.

• To attract global financial activities to India’s GIFT IFSC (Gujarat International Finance Tec-City), the government proposes:
  • New tax benefits for ship leasing units, insurance offices, and treasury centers of global companies that set up operations in the IFSC.
  • Extending the deadline for IFSC entities to claim tax benefits by five years, now applicable to companies commencing operations before March 31, 2030.
• This initiative will enhance India’s competitiveness in global finance, attract multinational corporations, and boost foreign investments in the IFSC.

Enhancing Tax Certainty & Infrastructure Investments​

• Category I and Category II Alternative Investment Funds (AIFs) are actively investing in infrastructure and key sectors.
• To provide clarity and stability in taxation, the government proposes to:
  • Ensure tax certainty on gains from securities for these investment funds.
  • This move will enhance investor confidence and streamline tax treatment for AIF investments.

• To attract long-term capital for India’s infrastructure sector, the government will:
  • Extend the deadline for eligible investments by sovereign wealth funds and pension funds by five more years, up to March 31, 2030.
• This extension aims to increase foreign capital inflow, ensuring continued funding for critical infrastructure projects and boosting India's economic growth.

Personal Income Tax Reforms – Major Relief for the Middle Class​

• India’s democracy, demography, and demand are driving its journey toward Viksit Bharat (Developed India).
• The middle class has been a key contributor to India's economic growth, and the government under Prime Minister Modi recognizes their energy and ability in nation-building.

• Since 2014, the government has periodically lowered income tax burdens:
  • 2014: Nil tax slab raised to ₹2.5 lakh.
  • 2019: Further raised to ₹5 lakh.
  • 2023: Increased to ₹7 lakh under the new tax regime.

• Now, income up to ₹12 lakh will be fully exempt from income tax, providing significant relief to the middle class.
• This historic tax relief reflects the government’s trust in middle-class taxpayers and aims to boost disposable income, drive consumption, and strengthen economic growth.

Major Overhaul of Personal Income Tax Structure – Relief for Middle-Class Taxpayers​

• Under the new tax regime, the tax-free income limit will be:
  • ₹12 lakh for all taxpayers with normal income (excluding capital gains).
  • ₹12.75 lakh for salaried taxpayers, considering the standard deduction of ₹75,000.
• This effectively means that individuals earning ₹1 lakh per month will pay no income tax.

• The new tax rate structure aims to reduce tax burdens and boost disposable income:

• Taxpayers earning up to ₹12 lakh (excluding capital gains) will pay zero tax due to a new rebate, in addition to slab rate reductions.
• This ensures maximum tax relief for middle-income earners.

• Taxpayer earning ₹12 lakh → ₹80,000 tax savings (100% of tax eliminated).
• Taxpayer earning ₹18 lakh → ₹70,000 tax savings (30% reduction).
• Taxpayer earning ₹25 lakh → ₹1.10 lakh tax savings (25% reduction).

• More money in the hands of taxpayers, leading to higher savings, consumption, and investment.
• Simplified tax structure with fewer slabs and lower rates, making tax compliance easier.

Conclusion:​

• As required under Section 3(1) of the FRBM Act, 2003, the following documents are being laid on the table:
  • Medium-Term Fiscal Policy and Fiscal Strategy Statement
  • Macroeconomic Framework Statement

• With the Speaker's permission, Finance Minister Nirmala Sitharaman moves for leave to introduce the Finance Bill, 2025.

Budget 2025 Live: PM Modi's remarks on Union Budget​