Union Finance Minister Nirmala Sitharaman presented her eighth budget on February 1, 2025, introducing major reforms aimed at benefiting the middle class, MSMEs, startups, and various industries. Key measures include tax exemptions, credit availability expansion, and sector-specific initiatives.
New Tax Regime: Incomes up to ₹12 lakh are now tax-free, providing significant relief to taxpayers.
Tax Deduction for Senior Citizens: Deduction limit doubled from ₹50,000 to ₹1 lakh.
Increase in TDS on Rent: Annual limit for TDS on rent increased from ₹2.4 lakh to ₹6 lakh.
Extended Time for Filing Updated Returns: Time extended from 2 years to 4 years.
| Income Range (₹) | Tax Rate (%) |
|---|---|
| 0 – 4 lakh | 0% |
| 4 – 8 lakh | 5% |
| 8 – 12 lakh | 10% |
| 12 – 16 lakh | 15% |
| 16 – 20 lakh | 20% |
| 20 – 24 lakh | 25% |
| Above 24 lakh |
Credit Cards for Micro Enterprises: Micro enterprises registered on the Udyam portal will receive customized credit cards with a ₹5 lakh limit.
Credit Guarantee Expansion: Cover for MSMEs increased from ₹5 crore to ₹10 crore, aiming to provide ₹1.5 lakh crore in credit over five years.
| Category | Investment Limit (Current/₹ Cr) | Revised (₹ Cr) | Turnover Limit (Current/₹ Cr) | Revised (₹ Cr) |
| Micro | 1 | 2.5 | 5 | 10 |
| Small | 10 | 25 | 50 | 100 |
| Medium | 50 | 125 | 250 | 500 |
First-Time Entrepreneurs Scheme: Term loans of up to ₹2 crore for 5 lakh new entrepreneurs, including women and marginalized groups.
Support for Labour-Intensive Sectors:
Footwear & Leather: Aiming to create 22 lakh jobs with a ₹4 lakh crore turnover.
Toy Industry: Positioning India as a global hub for sustainable toy manufacturing.
Food Processing: Establishment of a National Institute of Food Technology in Bihar.
National Manufacturing Mission: Focus on Ease of Business, Workforce Development, MSME Growth, Technology, and Quality Products.
Clean Tech Manufacturing: Emphasis on domestic production of solar PV cells, EV batteries, wind turbines, and grid-scale batteries.
Export Promotion Mission: Easier access to export credit and support for MSMEs in tackling non-tariff barriers.
BharatTradeNet (BTN): A unified digital platform to streamline international trade documentation.
Industry 4.0 & Global Capability Centres (GCC): Establishing a framework to promote tech talent and employment in Tier-2 cities.
Warehousing for Air Cargo: Streamlining customs and logistics for high-value exports.
Customs Duty Rationalization: Seven tariff rates removed, leaving only eight.
GST Amendments:
Reverse Charge Mechanism (RCM): Input Service Distributor (ISD) can distribute input tax credit on RCM supplies.
Extended Compliance Timelines:
Time limit for export of handicrafts increased from 6 months to 1 year.
Export of repaired foreign-origin goods extended from 6 months to 1 year.
Sector-Specific Duty Reductions:
Pharmaceuticals: 36 lifesaving drugs exempt from Basic Customs Duty.
Electronics: BCD on Interactive Flat Panel Displays increased to 20%, with exemptions for Open Cell TV parts.
Shipping & Telecommunications: Extended BCD exemptions for shipbuilding and reduced BCD on Ethernet switches.
Higher Thresholds:
Senior Citizens: Interest income exemption doubled from ₹50,000 to ₹1 lakh.
Rental Income: TDS threshold increased from ₹2.4 lakh to ₹6 lakh.
TCS Changes:
Higher LRS Remittance Limit: Increased from ₹7 lakh to ₹10 lakh.
TCS Exemption for Education Loans: No TCS on education remittances funded by loans.
| Section | Description | Current Rate | Proposed Rate |
| 194LBC | Income from securitization trust | 25% (Individual/HUF), 30% (Others) | 10% |
| 206C(1) | TCS on timber/forest produce | 2.5% | 2% |
1. Streamlining Transfer Pricing Regulations: A new scheme will determine the arm’s length price of international transactions for a block period of three years instead of yearly examinations.
2. Expansion of Safe Harbour Rules (SHR): Predefined margins for international transactions will be expanded to reduce litigation and provide tax certainty.
3. Relief for Senior Citizens with Old National Savings Scheme (NSS) Accounts:
Withdrawals made on or after August 29, 2024, will be tax-exempt.
4. NPS Vatsalya accounts will receive similar tax treatment as regular NPS accounts, subject to overall limits.
5. Digitalization of Appellate Order Processing: Within two years, all tax-related appellate orders will be fully digitalized and paperless, as promised in the July 2024 Budget.
1. Grameen Credit Score Framework: A new framework for rural India’s credit scoring.
2. FDI in Insurance: Limit raised to 100% for foreign direct investment.
3. Housing Fund: ₹15,000 crore allocated for completing 1 lakh housing units.
4. Atmanirbharta in Oil Seeds: Six-year mission to boost domestic oil seed production.
5. Cotton Yield Improvement: Aiming for better cotton yields with a five-year initiative.
6. Kisan Credit Card: Loan limit raised to ₹5 lakh for farmers.
7. Atal Tinkering Labs: To be set up in schools for innovation and skill development.
8. Broadband Internet: Provision for internet access in government secondary schools.
9. IIT Infrastructure: Expansion of IIT infrastructure, including IIT Patna.
10. Daycare Cancer Centres: 200 centres to be set up in district hospitals by 2026.
11. Duty on Life-Saving Drugs: Duty on six life-saving drugs reduced to 5%.
12. MSME Credit Guarantees: Coverage for MSME loans raised from ₹5 crore to ₹10 crore.
13. PPP Mode Projects: Three-year projects to be implemented in public-private partnership (PPP) mode.
14. Interest-Free Loans: ₹1.5 lakh crore allocated for infrastructure reforms in states.
15. Regional Airports: Over 100 new regional airports planned.
16. UDAN 2.0: Connecting 120 new airports, with a focus on Northeast and Bihar.
17. Export Promotion Mission: Easier access to export credit through a new mission.
18. Tariff Rates: Removal of seven tariff rates, leaving eight remaining.
19. Investment-Friendly Index: New index to promote state-level competition for investments.
20. Fiscal Deficit: Target set at 4.8% of GDP for FY 2025.
21. Capital Expenditure: ₹10.18 lakh crore allocated for capital expenditure.
22. Term Loan for Women Entrepreneurs: Loans up to ₹2 crore available for first-time entrepreneurs.
23. Nutritional Support: Nutritional aid for over 8 crore children and 1 crore lactating mothers
24. National Manufacturing Mission: New policy support for manufacturing.
25. Clean Technology Manufacturing Mission: Initiative to boost clean technology.
26. Nuclear Energy Mission: Focus on nuclear energy research and development.
27. Jal Jeevan Mission: Extended until 2028 to ensure water access.
28. Centre of Excellence in AI: ₹500 crore allocated to set up AI research centre.
29. EV Battery Manufacturing: Additional capital goods for EV battery production.
30. Visa Fee Waivers: Certain tourist groups exempt from visa fees.
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