Budget 2025 Highlights: Will old tax regime get scrapped? Government clarifies

The government plans to impose a maximum of one cess or surcharge, while exempting the social welfare surcharge on 82 tariff lines.

– 7 additional tariff rates will be eliminated, following the seven removed in the 2023-24 Budget

– This reduction will result in only eight remaining tariff rates, including one set to zero.

– Duty rates will largely remain unchanged, with only slight reductions for a select few items.

Finance Minister Nirmala Sitharaman emphasised that the government plans to manage the fiscal deficit in a way that ensures a steady decline in central government debt as a percentage of GDP. The roadmap for the next six years is outlined in the FRBM statement. For 2024-25, the revised estimate for total receipts (excluding borrowings) is ₹31.47 lakh crore, with net tax receipts at ₹25.57 lakh crore. The revised total expenditure is ₹47.16 lakh crore, including ₹10.1 lakh crore allocated for capital expenditure. The fiscal deficit for the year is projected at 4.8% of GDP.

FM Nirmala Sitharaman said that FDI limit in insurance sector will be hiked from 74% to 100%.

– Commitment to strengthening the domestic electronic equipment industry and creating youth employment opportunities

– Development of a national framework to guide states in promoting Global Capability Centers (GCCs) in emerging Tier-2 cities.

– Focus on talent availability, infrastructure upgrades, bylaw reforms, and industry collaboration.

– Enhancement of infrastructure and warehousing for air cargo, particularly for high-value perishable horticultural products

– Streamlining of cargo screening and customs protocols to improve efficiency

– Emphasis on reforms as a driving force behind the government’s policies over the past decade.

The Finance Minister stated that the tax department will adopt a “trust first, scrutinize later” approach. Sitharaman also revealed plans to introduce a new Income Tax Bill next week, signaling significant reforms in the tax system.

The government has launched an Export Promotion Mission with sector-specific and ministerial targets to enhance India’s global trade presence, Sitharaman said in her speech.

A digital public infrastructure will be established to provide financing solutions for international trade.

Additionally, support will be extended to domestic manufacturers, facilitating their integration into global supply chains.

A national framework will also guide states in promoting Global Capability Centers (GCCs) in tier-two cities, fostering balanced regional growth and strengthening the economy.

India will launch a National Geospatial Mission to develop spatial data aimed at modernizing land records across the country.

The PM GatiShakti initiative will grant the private sector access to essential data and maps, facilitating better planning and infrastructure development. Additionally, the government is focusing on tourism as a driver of employment, with plans to develop the top 22 destinations in collaboration with state governments. These efforts aim to stimulate economic growth and create job opportunities in both sectors.

The UDAN scheme has successfully connected 1.5 crore middle-class passengers across 88 airports through 619 routes, with plans to expand by launching a modified UDAN to 120 new destinations. In addition, the government will restart the shipbuilding financial assistance scheme to promote the sector, along with establishing shipbuilding clusters. A Maritime Development Fund with a corpus of ₹25,000 crore will also be set up to further enhance the maritime industry and strengthen the country’s infrastructure. These initiatives aim to boost both air and maritime connectivity while driving economic growth.

The Finance Minister outlined significant reforms in the power sector to strengthen electricity distribution and transmission. The government plans to incentivize states to undertake reforms in electricity distribution and expand intrastate transmission capacity, improving the financial stability and operational efficiency of power companies. To aid states in implementing these reforms, a 0.5% increase in borrowing allowance of their Gross State Domestic Product (GSDP) will be granted, based on their progress in the sector. These steps aim to enhance the overall performance of the power sector across the country.

The Finance Minister unveiled a Rs 1 lakh crore Urban Challenge Fund aimed at transforming cities into dynamic growth hubs, supporting innovative redevelopment, and improving water and sanitation infrastructure, as detailed in the July Budget. The fund will cover up to 25% of the cost for bankable projects, with a mandate for at least 50% of funding to come from bonds, bank loans, or public-private partnerships (PPPs). For fiscal year 2025-26, an initial allocation of Rs 10,000 crore has been proposed to launch this ambitious initiative.

The Finance Minister revealed plans to establish daycare cancer centers in district hospitals nationwide over the next three years, with 200 centers set to open in FY 2025-26 alone, improving accessibility to cancer care. Furthermore, the government is dedicated to strengthening urban livelihoods by supporting the urban poor and vulnerable communities through initiatives that focus on economic stability and job creation.

The Finance Minister emphasised the government’s commitment to expanding medical education, revealing that nearly 1.1 lakh undergraduate and postgraduate medical seats have been added over the past decade, marking a 130% increase. To further enhance healthcare infrastructure, an additional 10,000 medical seats will be introduced in colleges and hospitals next year, as part of a larger plan to add 75,000 seats over the next five years.

The Finance Minister outlined plans to enhance the productivity, quality, and global competitiveness of India’s footwear and leather sector through targeted policy measures and facilitation. A new scheme will support non-leather footwear production, focusing on design, component manufacturing, and machinery, alongside strengthening leather footwear production. This initiative aims to create 22 lakh jobs, generate over Rs 400 crore, and boost exports to Rs 1.1 lakh crore. Additionally, the toy industry will benefit from a new scheme built upon the National Action Plan for Toys, aiming to establish India as a global toy hub. This will involve developing manufacturing clusters, enhancing skills, and promoting sustainable, high-quality toy production under the ‘Made in India’ brand.

Sitharaman during her speech said that investment is the third engine of growth. She also highlighted the role of Saksham Anganwadi and Poshan 2.0m programme which will provide support to 8 crore children.

Sitharaman in he budget speech said that the government has introduced the Bharatiya Bhasha Pustak Scheme to promote mother tongue languages through books and educational resources. The National Manufacturing Mission will focus on clean tech manufacturing, specifically to enhance domestic production of electric vehicle batteries and solar panels. To boost skill development, five National Centres of Excellence for skilling will be established. Additionally, infrastructure will be expanded at five IITs set up after 2014, increasing capacity to accommodate 6,500 more students. These initiatives are designed to drive innovation, sustainability, and skill development across key sectors.

Sitharaman announced that a food processing institute will be set up in Bihar . She announced National Manufacturing Mission to further the ‘Make in India‘ initiative.

A new scheme will be launched to provide term loans to 5 lakh women and first-time entrepreneurs over the next five years, aiming to support their business ventures. The Credit Guarantee Scheme for Startups has also been enhanced, with the limit increased to ₹20 crore. Additionally, India is set to become a global hub for the toy industry, with initiatives to boost production and export in this sector.

Finance Minister Nirmala Sitharaman announced that a new urea plant will be established in Namrup, Assam, with an annual production capacity of 12.7 lakh metric tons to enhance urea supply. This move is part of efforts to boost agricultural support in the region. Additionally, three dormant urea plants in the Eastern region have been reopened, further strengthening the country’s urea production capabilities.

FM Sitharaman called MSMEs the second engine of growth, calling them responsible for 45% of India‘s exports. The FM said that for micro enterprises, customised credit cards will be issued.

The Finance Minister confirmed that Kisan Credit Cards (KCC) will remain a key tool for providing short-term loans to 7.7 crore farmers, fishermen, and dairy farmers. To further support agricultural production, the loan limit under the revised interest subvention scheme will be increased from Rs 3,000 to Rs 5,000 for loans availed through the KCC, offering enhanced financial assistance to the farming community.

– The Dhan Dhanya Krishi Yojana will focus on improving agricultural productivity in 100 districts with low output, benefiting 1.7 crore farmers.

– A National Mission for Edible Oils and Seeds will drive self-reliance in the sector, while a six-year mission will work towards achieving Aatmanirbharta in pulses.

– Over the next four years, central agencies will procure tur, urad, and masur.

– Additionally, a Makhana Board will be established in Bihar to enhance processing and value addition in the state’s Makhana industry.

– These measures aim to strengthen India’s agricultural sector and improve farmers’ livelihoods.Loan income under new kisan Scheme to be raised to 5 lakh under kisan creditloasn scheme

The Finance Minister highlighted agriculture as a key focus in the Budget, introducing the Prime Minister Krishi Yojana. This new initiative, inspired by the success of the Aspirational District Programme, will launch an agricultural district program in collaboration with state governments. Targeting 100 districts with low productivity, moderate crop intensity, and poor credit access, the program aims to enhance agricultural output. Key measures include crop diversification, sustainable farming practices, improved post-harvest storage at local levels, better irrigation, and easier access to credit. The initiative is expected to benefit 1.7 crore farmers.

Sitharaman said that the Union Budget addresses crucial sectors such as taxation, power, urban development, mining, the financial sector, and regulatory reforms. These areas are integral to the government’s strategy to foster economic growth, improve infrastructure, enhance governance, and promote sustainable development across diverse industries.

While presenting the Union Budget 2025-26, Sitharaman said that it builds on the government’s ongoing efforts to drive economic growth. As the fastest-growing major economy, India is poised for continued progress. This budget focuses on fostering inclusive development, improving household sentiment, and empowering India’s middle class for a stronger future.

Finance Minister Nirmala Sitharaman has begun the Budget 2025 speech amid uproar by the Opposition in the Parliament.

Samajwadi Party chief Akhilesh Yadav said that more than the budget, people who are looking for their loved ones in Maha Kumbh are more important. He said the govt has failed to provide the numbers of deceased and those who are missing.

Hemant Jain, President of PHD Chamber of Commerce and Industry (PHDCCI), stated that in recent years have seen a decline in growth, and it’s crucial to boost the growth rate. He said that this can be achieved by putting more money in the hands of the people and improving the ease of doing business. He said that he is hoping for better income tax policies for the middle class and increased investments in infrastructure and manufacturing sectors.

There is growing anticipation for income tax cuts or adjustments in the upcoming budget, aimed at alleviating the financial pressure on the lower and middle classes, who have been grappling with rising prices and stagnant wages. The budget may also include tax rationalization and reductions in customs duties to boost local manufacturing.