Highlights of Union Budget 2025
Union Budget 2025: Key Tax Highlights and Updates
Union Finance Minister Mrs Nirmala Sitharaman has presented the Union Budget 2025-26, her 8th consecutive budget today, aiming for tax cuts and growth. Let’s take you through the tax proposals made by the FM in her budget speech.
Direct Taxes:
- The New Income Tax Bill will be introduced in the coming week. The new bill will reduce the present tax law numbers to half, introduced to provide tax certainty, transparency and reduce litigation.
- A big relief to middle-class taxpayers, there will be no income tax on normal income up to Rs. 12 lakhs (Incomes excluding special rates). The rebate u/s 87A up to Rs. 60,000 will be availed for income not exceeding Rs.12 Lakhs.
- The revised tax slabs under the New Tax Regime are as follows:
| 0-4 lakh rupees | Nil |
| 4-8 lakh rupees | 5 per cent |
| 8-12 lakh rupees | 10 per cent |
| 12-16 lakh rupees | 15 per cent |
| 16-20 lakh rupees | 20 per cent |
| 20- 24 lakh rupees | 25 per cent |
| Above 24 lakh rupees | 30 per cent |
(Now, Income taxpayers with an annual income of Rs.12 lakhs will get a benefit of Rs. 80,000. With an annual income of Rs.18 lakhs, individuals will get a benefit of Rs. 70,000, and with an income of Rs.25 lakh, they will get a benefit of Rs.1,10,000 in tax)
- Rationalization of TDS
- TDS on Interest paid to Senior Citizens – the threshold has been increased from Rs. 50,000 to Rs. 1,00,000
- TDS on Rent – threshold has been increased to Rs. 6,00,000 from Rs. 2,40,000
- TCS on Foreign Remittance under RBI’s LRS scheme – threshold limit has been increased from Rs. 7,00,000 to Rs. 10,00,000.
- TCS on remittances for education purposes is removed if the remittance is funded through a loan taken from a specified financial institution.
- TCS on the sale of goods will be omitted wherever the provision of both TDS and TCS is applied to reduce compliance difficulties
- Provision of higher TDS will be applicable only on No-PAN cases
- Relaxation is TCS provisions, similar to the decriminalization of TDS payment delays
- The time limit for filing an Updated Income Tax Return for an Assessment Year has been increased from 2 years to 4 years
- The validity period of registration of trusts has been increased from 5 years to 10 years
- Taxpayers can now claim two Self-occupied properties with NIL Annual value without any conditions.
- A scheme will be introduced for determining arm’s length price of international transactions for a block period of three years. The scope of safe harbour rules will be expanded.
- Withdrawals from the National Savings Scheme on or after 29/08/2024 will be exempted from tax.
- It is proposed to extend the period of incorporation by 5 years to allow the benefit available to start-ups which are incorporated before 01/04/2030
- As a result of these proposals, revenue of about 1 lakh crore rupees in Direct Taxes and 2,600 crore rupees in Indirect Taxes will be forgone.
Indirect Taxes:
- Rationalization of custom tariff rates – proposed to remove seven tariff rates, only eight tariff rates to remain hereafter
- Around 36 lifesaving drugs and medicines would be added to the list of ‘Medicines fully exempted from Basic Customs Duty’
- Additionally, 37 more medicines and 13 new Patient Assistance Programs would be fully exempted from Basic Customs Duty
- It is proposed not to levy more than one Cess or Surcharge. Therefore, Social Welfare Surcharge will be exempted on 82 tariff lines that are subject to a Cess
- Cobalt powder and waste, the scrap of lithium-ion battery, Lead, Zinc and 12 more critical minerals will be fully exempt from customs duty
- Electronic goods – Basic Custom Duty on Interactive Flat Panel Display (IFPD) is increased from 10% to 20% and BCD on open cells is reduced to 5%.
- 35 additional capital goods for EV battery manufacturing and 28 additional capital goods for mobile phone battery manufacturing are added to the list of exempted capital goods.
- BCD on Wet Blue leather is proposed to be fully exempt
- A time limit of 2 years has been fixed to finalize provisional assessments, which may be extended by a year
To download the budget summary, Click here
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