2025 Budget Overview: Key Highlights, Important Takeaways
- Animesh Kurbetti
- Feb 1, 2025
- 6 min read
The highly anticipated Union Budget 2025, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, marks a pivotal moment in India's economic journey. With a focus on fostering inclusive growth, the budget aims to empower the poor, youth, farmers, and women. It seeks to drive long-term, sustainable growth through reforms in key areas like taxation, infrastructure, agriculture, and digitalization. Read on to explore the major highlights and key takeaways from Budget 2025.
Budget 2025: Download Budget 2025
Click on the link to download Finance Bill 2025: Download here
Click on the link to download the Budget 2025 speech: Download here
1. Direct Tax Proposals
Introduction of a New Tax BillNext week, the government will introduce a new Income Tax Bill, aiming to replace the 1961 Income Tax Act. This new bill is designed to simplify tax compliance and reduce the complexity of existing tax laws by up to 60%.
Changes in Tax Structure Under the New RegimeThe New Tax Regime will feature revised income tax slabs as follows:
Income Range | Tax Rate |
Upto ₹4,00,000 | NIL |
₹4,00,001 - ₹8,00,000 | 5% |
₹8,00,001 - ₹12,00,000 | 10% |
₹12,00,001 - ₹16,00,000 | 15% |
₹16,00,001 - ₹20,00,000 | 20% |
₹20,00,001 - ₹24,00,000 | 25% |
Above ₹24,00,000 | 30% |
Increase in Rebate Under Section 87AThe rebate under section 87A has been increased from ₹25,000 to ₹60,000, allowing individuals with an income up to ₹12,00,000 to receive a full rebate and incur zero tax liability.
Rationalisation of TDS/TCS for Easing ComplianceSeveral threshold limits for Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) have been raised, simplifying tax compliance, particularly for middle-income earners. Some notable changes include:
Section | Present Threshold | Proposed Threshold |
193 - Interest on Securities | NIL | ₹10,000 |
194A - Interest other than on securities (for banks, cooperative societies, post offices) | ₹40,000 (others: ₹5,000) | ₹50,000 (others: ₹10,000) |
194D - Insurance Commission | ₹15,000 | ₹20,000 |
194-I - Rent | ₹2,40,000 | ₹6,00,000 |
194J - Fee for Professional Services | ₹30,000 | ₹50,000 |
206C - Remittance under LRS | ₹7,00,000 | ₹10,00,000 |
Additionally, TCS on remittances for educational purposes funded via loans and TCS on goods purchases will be removed, starting April 1, 2025.
Extension of Time-Limit for ITR-UThe deadline for filing updated income tax returns has been extended from 2 to 4 years after the relevant assessment year, offering more flexibility for taxpayers to file and correct returns. A graduated additional tax will apply based on when the return is filed.
Introduction of Arm's Length Price SchemeThe government is introducing a scheme for determining the arm’s length price of international transactions over a 3-year block period, simplifying transfer pricing regulations.
NSS Withdrawals Exempt from TaxWithdrawals from National Savings Scheme (NSS) accounts will be exempt from tax starting August 29, 2024.
Extension of Tax Benefits for NPS Vatsalya AccountsThe same tax benefits available for NPS contributions under Section 80CCD(1B) will now also apply to NPS Vatsalya accounts, allowing an additional ₹50,000 deduction.
New Section 44BBD – Presumptive Taxation for Non-ResidentsA new section will introduce a presumptive taxation scheme for non-residents providing services or technology to electronics manufacturers in India. This will encourage the growth of India’s electronics sector.
2. Indirect Tax Proposals
Rationalisation of Customs Tariffs and Duty InversionA further simplification of tariff rates is proposed, with the removal of 7 additional rates, leaving only 8 main rates. There will also be adjustments to cess and surcharge applications.
Healthcare Relief – Duty Exemptions on Medicines36 lifesaving drugs, including those for cancer and rare diseases, will receive full Basic Customs Duty (BCD) exemptions. Additionally, 6 other drugs will be granted a 5% concessional duty.
Boosting Domestic Manufacturing
Critical Minerals: BCD exemption on 25 critical minerals, such as lithium and cobalt, not available domestically.
Textiles: Full exemption for shuttle-less looms used for technical textiles and a revised BCD for knitted fabrics.
Electronics: Reversed inverted duty structure to support local manufacturing of components, including open-cell panels for LCD/LED TVs.
Lithium-Ion Batteries: BCD exemptions for certain capital goods related to electric vehicle (EV) and mobile phone battery manufacturing.
Export Promotion Initiatives
Handicrafts, Leather, Marine, and MRO: Extended export timelines and exemptions for several sectors like handicrafts, leather, and marine products to boost exports.
Customs Reforms for Trade Facilitation
Provisional Assessment: New time limits will be set to finalize provisional assessments.
Voluntary Compliance Initiative: Importers and exporters can now voluntarily declare material facts post-clearance, paying duty with interest but without penalties.
3. Sector-Specific Highlights
Agriculture
National Mission on High-Yielding Seeds to promote 100 climate-resilient seed varieties.
PM Dhan-Dhaanya Krishi Yojana will help 1.7 crore farmers in 100 low-productivity districts.
Increased focus on urea supply with new plants and the reopening of dormant urea plants.
MSMEs
Expanded credit guarantee schemes for MSMEs, including a ₹10 lakh crore MSME credit guarantee cover.
New Fund of Funds with ₹10,000 crore to support MSMEs.
Initiatives to make India a hub for toys manufacturing and promote sustainable footwear production.
Investment in People and Economy
Saksham Anganwadi & Poshan 2.0 to improve nutrition for 8 crore children and 1 crore pregnant women.
Atal Tinkering Labs to be set up in government schools for innovation.
Jal Jeevan Mission extended until 2028 with an increased outlay.
Urban Challenge Fund of ₹1 lakh crore for redeveloping cities.
Investment in Innovation
₹20,000 crore allocated for private sector-led R&D.
New National Geospatial Mission and Gene Bank to focus on future food and nutritional security.
Exports
BharatTradeNet platform to streamline export documentation and financing.
Export Promotion Mission to support MSMEs and integrate key sectors into global supply chains.
Product/Service | Old Price | New Price | Change (%) | Reason for Change |
Petrol (per litre) | ₹100.00 | ₹102.50 | 0.025 | Increase in excise duties and taxes on petroleum products. |
Diesel (per litre) | ₹90.00 | ₹92.00 | 0.0222 | Increase in excise duties on diesel fuel. |
Cigarettes (per pack) | ₹200.00 | ₹220.00 | 0.1 | Higher excise duties on tobacco products. |
Gold (per 10 grams) | ₹50,000 | ₹52,000 | 0.04 | Increase in customs duties on gold imports. |
Silver (per kg) | ₹55,000 | ₹56,500 | 0.0272 | Rise in customs duties on silver imports. |
Luxury Cars (price) | ₹10,00,000 | ₹10,50,000 | 0.05 | Increased customs duties on luxury and high-end vehicles. |
Smartphones | ₹15,000 | ₹14,500 | -3.33% | Reduction in import duty on electronic goods and mobile phones. |
Laptops/Computers | ₹50,000 | ₹48,000 | -4% | Lower customs duty to promote IT and tech sector. |
Electric Vehicles (EVs) | ₹25,00,000 | ₹24,50,000 | -2% | Reduced customs duty on EV components to boost domestic EV manufacturing. |
Textiles (per metre) | ₹500 | ₹550 | 0.1 | Increased GST on high-end textile products. |
Electricity Charges (per unit) | ₹5.00 | ₹5.25 | 0.05 | Higher taxes and levies on power generation and distribution. |
Fertilizers (per kg) | ₹25.00 | ₹24.00 | -4% | Increase in fertilizer subsidy to promote agricultural production. |
Urea (per bag) | ₹300 | ₹320 | 0.0667 | Price hike due to reduced government subsidies on urea. |
Airline Tickets (Domestic) | ₹5,000 | ₹5,200 | 0.04 | Revision in airport charges, taxes, and aviation fuel levies. |
Railway Tickets (AC) | ₹1,000 | ₹1,050 | 0.05 | Increase in fuel surcharges and operational cost adjustments. |
Healthcare Medicines (Imported) | ₹500 | ₹450 | -10% | Reduction in customs duties for healthcare-related products. |
Solar Panels (per unit) | ₹25,000 | ₹24,500 | -2% | Customs duty reduction on solar panels to promote renewable energy. |
Handicrafts (Export) | ₹1,000 | ₹900 | -10% | Exemption of export duties to boost handicrafts export. |
Plastic Goods | ₹50 | ₹55 | 0.1 | Increase in excise duties on plastic items to encourage recycling. |
Packaged Food (processed) | ₹150 | ₹155 | 0.0333 | Higher taxes on processed and packaged foods to promote health. |
Raw Materials (Critical Minerals) | ₹500 | ₹450 | -10% | Full exemption of Basic Customs Duty (BCD) on critical minerals. |
Shipbuilding Materials | ₹2,000 | ₹2,100 | 0.05 | Increased duties on imported materials for shipbuilding to support domestic industry. |
Telecom Services | ₹500 | ₹520 | 0.04 | Increase in taxes and duties on telecom services to support infrastructure. |
Milk and Dairy Products | ₹40 | ₹42 | 0.05 | Minor rise in cost due to GST adjustments on dairy products. |
Topic | Download |
Budget at a Glance (Full) | |
Budget Speech | |
Deficit Statistics | |
Transfer of Resources to States and Union Territories with Legislature | |
Budget Profile | |
Receipts | |
Expenditure | |
Outlay on Major Schemes |
Statement I – Consolidated Fund of India | Download |
• Revenue Account – Receipts | |
• Revenue Account – Disbursements | |
• Capital Account – Receipts | |
• Capital Account – Disbursements | |
Statement IA – Disbursements ‘Charged’ on the Consolidated Fund of India | |
Statement II – Contingency Fund of India – Net |
Statement III – Public Account of India | Download |
Receipts | |
Disbursements | |
Receipts & Expenditure of Union Territories without Legislature | |
Finance Bill | |
Budget Highlights (Key Features) | |
Memorandum to the Finance Bill 2025 | |
Expenditure Budget | |
Receipt Budget |
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