Budget 2025: The People’s Budget for Growth

The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, has been called a ‘People’s Budget’ by Prime Minister Narendra Modi due to its strong focus on tax relief, infrastructure development, and economic growth. Addressing Budget 2025 Expectations, the budget aims to meet the evolving needs of taxpayers, businesses, and industries by introducing forward-looking reforms. With a vision to strengthen India’s economic foundation while making it more inclusive, Budget 2025 introduces several key reforms that impact taxpayers, businesses, and industries alike.

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Table of content

Budget 2025: Major Relief for Taxpayers & Direct Taxation Updates

Income Tax Reforms

Introduction of the Direct Tax Code

Indirect Taxation & GST Reforms

Conclusion

Most Asked Questions

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Budget 2025: Major Relief for Taxpayers & Direct Taxation Updates

Income Tax Reforms

One of the most awaited announcements in Budget 2025 was the revision of income tax slabs, providing significant relief to salaried individuals and middle-class taxpayers.

New Income Tax Slabs (Under the New Regime)

Total Income (₹)	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	30%

• Marginal Relief: Ensures that those earning slightly above ₹12 lakh are not disproportionately taxed.

  
  

• Standard Deduction: Salaried taxpayers can claim a standard deduction of ₹75,000 under the new regime.

• Tax deduction limit for senior citizens: Increased from ₹50,000 to ₹1 lakh.

  
  

• Updated Return Filing (ITR U): Time limit extended from 2 years to 4 years from the end of the assessment year.

TDS & TCS Reforms

• Higher TDS Thresholds: Freelancers and small businesses earning up to ₹5 lakh per annum will not be subject to TDS.

  
  

• TCS on Sale of Goods Removed: Effective April 1, 2025, eliminating double taxation issues.

  
  

• Annual limit for TDS on rent: Increased from ₹2.4 lakh to ₹6 lakh.

Transfer Pricing Provisions

• Simplified Compliance: A new safe harbor rule has been introduced to provide certainty in transfer pricing for multinational companies operating in India.

  
  

• Advance Pricing Agreements (APA): The time frame for completing APAs has been reduced from 5 years to 3 years, expediting agreements between businesses and tax authorities.

  
  

• Reduced Documentation: Businesses with inter-company transactions below ₹10 crore annually will now have a reduced compliance burden under new transfer pricing rules.

Introduction of the Direct Tax Code

The Finance Minister announced that the Direct Tax Code (DTC) will be introduced next week to replace existing tax structures, making compliance simpler and tax laws more transparent.

Indirect Taxation & GST Reforms

GST Rate Adjustments

• Essential Items: GST on daily essentials such as packaged food items and household staples reduced from 12% to 5%.

  
  

• Luxury Items: Increased from 18% to 28% for non-essential imported goods like luxury cars and watches.

Customs & Excise Duty Adjustments

• Reduction in Import Duties:

  • Lithium-ion batteries: Reduced from 10% to 5% to boost EV adoption.

    
    

  • Semiconductors: Reduced from 18% to 12% to encourage local chip manufacturing.

• Excise Duty on Fuel: Adjusted to stabilize fuel prices and ease inflationary pressures.

Infrastructure & Urban Development

• Capital Expenditure: ₹11.2 trillion allocated for infrastructure projects, a 12% increase from the previous year.

  
  

• Smart Cities Expansion: 20 new cities to be developed under the Smart Cities Mission.

  
  

• Green Energy Projects: ₹1.5 lakh crore allocated to renewable energy, focusing on solar, wind, and hydrogen power.

  
  

• Jal Jeevan Mission: Extended till 2028 with enhanced total outlay.

  
  

• Asset Monetization Plan: Launched to plough back capital of ₹10 lakh crore in new projects

Social Welfare and Healthcare Initiatives

• Ayushman Bharat Expansion: Additional 50 million people brought under free healthcare coverage.

  
  

• Life-saving Medicines: Customs duty exemption for 36 critical drugs, including those for cancer and rare diseases.

  
  

• Insurance for Gig Workers: New insurance schemes for platform-based workers registered under the e-Shram portal.

  
  

• Day Care Cancer Centres: To be set up in all district hospitals.

Conclusion: A Budget for the People

Budget 2025 is a bold, people-centric budget that delivers tax relief, infrastructure investment, and economic growth strategies. The Direct Tax Code, TDS simplifications, GST rationalization, and higher capital expenditure lay the foundation for India’s long-term prosperity.

With these strategic moves, the government aims to drive consumption, investment, and employment, ensuring that Budget 2025 truly earns its title—The People’s Budget.

FAQs

Q1. What is the maximum rebate available to taxpayers?

The maximum rebate available is ₹60,000, benefiting individuals earning up to ₹12 lakh.

Q2. What are the tax benefits for senior citizens?

The tax deduction limit for senior citizens has been raised from ₹50,000 to ₹1 lakh.

Q3. How has tax filing changed?

The updated return filing time limit has been extended from 2 years to 4 years from the end of the assessment year.

Q4. What are the key GST changes?

Essential items have a lower GST of 5%, while luxury goods now attract 28% GST.

Q5. How does the budget impact MSMEs?

MSME turnover limits have been increased, making more enterprises eligible for benefits.

Q6. Are there new incentives for startups?

The tax exemption for eligible startups has been extended by 5 years under Section 80-IAC.

Q7. What are the new provisions for agriculture?

A 6-year mission focusing on pulses and climate-resilient seeds has been launched.

Q8. How has capital gains taxation changed?

Investment funds will now include securities held by SEBI-regulated Alternative Investment Funds under capital asset classification.

Q9. What is the fiscal deficit target?

The fiscal deficit is targeted at 4.5% of GDP for 2025-26, in line with fiscal consolidation efforts.

Q10. Are there incentives for electric vehicles (EVs)?

The FAME subsidy for EVs has been increased by 20%.

Q11. What are the new FDI policies?

The FDI cap in key sectors like renewable energy and defense has been raised to 100%.

Q12. What changes have been made to real estate taxation?

Tax benefits on interest paid for home loans have been increased to ₹3 lakh for first-time buyers.

Q13. How has corporate tax changed?

Corporate tax for small businesses has been reduced from 25% to 22%.

Q14. What are the new social welfare schemes?

The Ayushman Bharat scheme has been expanded to cover 50 million additional beneficiaries.

Q15. Are there any tax reliefs for renewable energy projects?

A ₹1.5 lakh crore fund has been allocated to solar, wind, and hydrogen energy projects.