“Together, we aim to unlock India’s full potential under the visionary leadership of Prime Minister Modi,” said Finance Minister Nirmala Sitharaman as she began her Budget speech. “Honourable Speaker, I present the Union Budget for 2025-26, which builds upon our ongoing efforts to accelerate growth,” she added. Emphasizing the key priorities of the budget, the FM stated, “This budget is dedicated to driving growth, fueled by our collective aspirations for a ‘Viksit Bharat.’ Our economy continues to be the fastest-growing among all major economies,” she said.
The key domains covered in the Union Budget include taxation, power, urban development, mining, the financial sector, and regulatory reforms. These areas are central to the government’s focus on driving growth, improving infrastructure, enhancing governance, and ensuring sustainable development across various sectors, Sitharaman said.
Key Highlights from FM Nirmala Sitharaman’s Speech
1. Key Measures for Strengthening MSMEs
Finance Minister Nirmala Sitharaman highlighted the importance of Micro, Small, and Medium Enterprises (MSMEs) as the second engine of growth for India. Addressing the sector, she stated, “The focus will be on the 5.7 crore MSMEs, which include over one crore registered businesses employing 7.5 crore people and contributing 36% to India’s manufacturing.”
She emphasized that MSMEs play a pivotal role in positioning India as a global manufacturing hub, accounting for 45% of the nation’s exports. To further empower this sector, the government will increase the investment and turnover limits for MSMEs by 2.5 times and 2 times, respectively. This move is expected to help MSMEs scale up, innovate, and create more employment opportunities, especially for the youth.
2. Measures to Boost Footwear, Leather, and Toy Sectors, Promoting “Made in India”
In the Union Budget 2025, Finance Minister Nirmala Sitharaman unveiled a series of policy and facilitation measures aimed at enhancing the productivity, quality, and competitiveness of India’s footwear and leather sector. A focused products scheme will be introduced to support design capacity, component manufacturing, and machinery needed for producing non-leather quality footwear, alongside leather footwear and products. This initiative is expected to create employment for 22 lakh people, generate over Rs 400 crore, and drive exports exceeding Rs 1.1 lakh crore.
Furthermore, the FM highlighted plans to strengthen the toy sector, building on the National Action Plan for Toys. A new scheme will establish India as a global hub for toys, focusing on developing clusters, enhancing skills, and creating a robust manufacturing ecosystem. The initiative will foster the production of high-quality, innovative, and sustainable toys, reinforcing the “Made in India” brand on the global stage.
3. Atal Tinkering Labs and Digital Infrastructure to Bridge Skill Gaps and Foster Innovation
In a bid to encourage curiosity, innovation, and scientific temper among students, Finance Minister Nirmala Sitharaman announced the establishment of Atal Tinkering Labs in 50,000 government schools over the next five years. These labs will provide hands-on opportunities for students to explore and experiment with new ideas, fostering creativity and problem-solving skills. Additionally, broadband connectivity will be extended to all government secondary and primary schools, ensuring better access to digital learning resources and helping bridge the skill gap in education.
4. National manufacturing mission to boost India’s ‘atmanirbharta
To further bolster the government’s Make in India scheme, Finance Minister Nirmala Sitharaman announced that the manufacturing mission will be strengthened.
She stated, “Our government will establish a national manufacturing mission that will encompass small, medium, and large industries. This mission will provide policy support, execution roadmaps, and a governance and monitoring framework for both central ministries and states.”
5. New Income tax bill to be introduced next week
Finance Minister Nirmala Sitharaman highlighted the government’s decade-long efforts in implementing tax reforms to enhance taxpayer convenience. Key measures include faceless assessment, the taxpayer charter, and faster processing of returns, with nearly 99% of returns being based on self-assessment.
Reaffirming the tax department’s approach of “trust first, scrutinize later,” she emphasized the continued commitment to easing compliance. Additionally, she announced that a new income tax bill will be introduced next week, furthering the government’s reform agenda.
6. Strengthening the Domestic Electronics Industry and Infrastructure Development
In Budget 2025, Finance Minister Nirmala Sitharaman reaffirmed the government’s commitment to boosting the domestic electronic equipment industry, creating job opportunities for youth. A national framework will guide states in promoting Global Capability Centers (GCCs) in emerging Tier-2 cities, focusing on talent, infrastructure, bylaw reforms, and industry collaboration.
Additionally, the government will enhance air cargo infrastructure, especially for high-value perishable goods, while streamlining cargo screening and customs protocols to improve efficiency. Sitharaman noted that reforms have been the cornerstone of the government’s policies over the last decade.
7. Investment Friendliness Index and Reforms to Foster Competitive Federalism
In Budget 2025, Finance Minister Nirmala Sitharaman announced the launch of an Investment Friendliness Index for states in 2025 to promote competitive cooperative federalism. Under the Financial Stability and Development Council (FSDC), a mechanism will be set up to assess the impact of financial regulations. The initiative aims to enhance the financial sector’s growth and responsiveness. Sitharaman also highlighted the Jan Vishwas Act 2023, which decriminalized over 1,080 legal provisions, fostering a more business-friendly environment.
8. India’s Fiscal Path and Budget Estimates for 2024-25
Finance Minister Nirmala Sitharaman reaffirmed the government’s commitment to maintaining a declining fiscal deficit trajectory, ensuring central government debt remains on a downward path as a percentage of GDP. The roadmap for the next six years is outlined in the FRBM statement. For 2024-25, the revised total receipts (excluding borrowings) are projected at ₹31.47 lakh crore, with net tax receipts at ₹25.57 lakh crore. Total expenditure is estimated at ₹47.16 lakh crore, including capital expenditure of ₹10.1 lakh crore, with the fiscal deficit pegged at 4.8% of GDP.
B) Fiscal Deficit Target Pegged at 4.4% for 2025-26
Finance Minister Nirmala Sitharaman set the fiscal deficit target at 4.4% of GDP for the financial year 2025-26.
9. Full Customs Duty Exemption on Critical Minerals to Boost Manufacturing and Job Creation
Finance Minister Nirmala Sitharaman proposed a full exemption of Basic Customs Duty (BCD) on cobalt powder, lithium-ion battery waste and scrap, and 12 other critical minerals. This move aims to secure the availability of these essential materials for manufacturing in India, while also creating job opportunities for the youth.
10. Tax Reforms to Ease Compliance
A) No Income Tax Up to Rs 12 Lakh to Benefit Middle Class
Union Finance Minister Nirmala Sitharaman announced that there will be no income tax payable on income up to Rs 12 lakh.
“I am happy to announce that there will be no income tax payable on an income of up to Rs 12 lakh,” said Sitharaman. This new tax policy is designed to benefit the middle class, leaving more money in their hands, which is expected to boost household consumption, savings, and investment in the new tax regime.
Under the new structure, individuals earning ₹12 lakh annually will receive a tax benefit of Rs 80,000, with 100% of the tax due under the existing rates being exempted. “A taxpayer in the new regime with an income of Rs 12 lakh will receive a benefit of Rs 80,000 in tax, and the effective income tax rate will be 0%,” Sitharaman said.
B) Big TDS Announcements in Budget 2025
In Budget 2025, Finance Minister Nirmala Sitharaman announced several significant rationalizations in the tax deduction at source (TDS) system. These include reducing the number of TDS rates and increasing the thresholds above which TDS is deducted, providing better clarity and uniformity. The limit for tax deduction on interest for senior citizens has been doubled from ₹50,000 to ₹1,00,000. Additionally, the annual TDS limit on rent has been raised from ₹2.40 lakh to ₹6 lakh, benefiting small taxpayers receiving smaller payments. Furthermore, the threshold for collecting Tax Collected at Source (TCS) on remittances under the RBI’s Liberalized Remittance Scheme (LRS) has been increased from ₹7 lakh to ₹10 lakh.
C) Proposal on Removing TCS in Budget 2025
In Budget 2025, Finance Minister Nirmala Sitharaman proposed removing the Tax Collected at Source (TCS) on remittances for education purposes if the remittance is funded through a loan taken from a specified financial institution. Additionally, TCS will be omitted on transactions related to the sale of goods to reduce compliance difficulties.
D) The time limit to file updated returns is extended from 2 years to 4 years to encourage voluntary compliance.
E) 33,000 Taxpayers Settle Direct Tax Disputes Under Vivad Se Vishwas 2.0 Scheme
The Jan Vishwas Bill 2.0 to decriminalize more than 100 provisions in various laws.
Finance Minister Nirmala Sitharaman announced that 33,000 taxpayers have availed of the Vivad Se Vishwas 2.0 scheme to settle their direct tax disputes.
11. India to Make Shipbuilding and Shipbreaking Sectors More Competitive, said the FM.
Finance Minister Nirmala Sitharaman stated that the Shipbuilding Financial Assistance Policy will be revamped. Large ships above a specified size will be included in the Infrastructure Harmonized Master List (HML).
12. Investing in the Economy with Infrastructure and Tourism Initiatives
A) Public-Private Partnership in Infrastructure
Finance Minister Nirmala Sitharaman announced that infrastructure-related ministries will create a 3-year pipeline of projects in Public-Private Partnership (PPP) mode, with states also being encouraged to participate.
B) Support to States for Infrastructure
An outlay of ₹1.5 lakh crore has been proposed for 50-year interest-free loans to states for capital expenditure, along with incentives for reforms.
C) Asset Monetization Plan 2025-30
The second Asset Monetization Plan for 2025-30 has been unveiled, aiming to generate ₹10 lakh crore for reinvestment in new projects.
D) Tourism for Employment-Led Growth
Top 50 tourist destination sites in India will be developed in collaboration with states through a challenge mode, promoting employment-led growth in the tourism sector.
13. Increases incorporation period to 5 years for startups
Union Finance Minister Sitharaman increases incorporation period to 5 years for startups.
She also announced that the government plans to launch a new ₹10,000 crore Alternate Investment Fund (AIF) of funds for startups.
“AIFs for startups have received commitments of more than ₹91,000 crore, supported by the fund of funds set up with the Government of India’s contribution of ₹10,000 crore. Now, a new fund of funds with an expanded scope and a fresh contribution of another ₹10,000 crore will be established,” said Sitharaman.
14. Cuts Capex Target for FY25
The Capex target for FY25 has been cut to ₹10.18 lakh crore from ₹11.1 lakh crore.
15. FDI Limit in Insurance to Be Increased from 74% to 100%
Finance Minister Nirmala Sitharaman announced that the Foreign Direct Investment (FDI) limit in the insurance sector will be increased from 74% to 100%.
16. India to Launch Export Promotion Mission
Finance Minister Nirmala Sitharaman announced the establishment of an “Export Promotion Mission,” driven by the Commerce and Finance Ministries, to facilitate easy credit. A unified platform, Bharat Trade Net, will also be set up for documentation.
17. 1 Crore Online Gig Workers to Receive Recognition
Budget 2025 Key Highlights: Finance Minister Nirmala Sitharaman announced that 1 crore gig workers will receive official recognition.
“Gig workers on online platforms bring great dynamism to the New Age services economy. Recognizing their contributions, our government will provide identity cards and establish a registration system for their welfare under a social security scheme,” said Sitharaman.
18. Safe Harbour Rules to Simplify International Taxation
Finance Minister Nirmala Sitharaman introduced a new scheme aimed at determining the arm’s length price for international transactions over a block period of three years. This initiative is designed to provide greater clarity and reduce the frequency of annual examinations for international transactions. The scope of the safe harbour rules is being expanded to minimize litigation and provide more certainty in international taxation. These measures are expected to simplify the tax process for multinational companies and promote smoother cross-border trade.
19. Presumptive Taxation Scheme to Non-Residents in Electronics Manufacturing
Finance Minister Nirmala Sitharaman proposed extending the scheme of presumptive taxation to non-residents involved in establishing or operating electronics manufacturing facilities in India. This new regime is designed to support non-residents engaged in setting up or running facilities for the manufacturing or production of electronic goods, articles, or other related products in India.
20. Crypto Reporting Norms, New Compliance Rules from April 2026
The government has introduced stricter compliance requirements for crypto transactions by proposing Section 285BAA in the Income-tax Act, making it mandatory for specified entities to furnish transaction details. These changes, announced as part of the Finance Act 2022, will take effect from April 1, 2026.
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2025-02-01 03:40:54
