Budget 2025 Highlights & Announcements: Middle class-friendly Budget focuses on consumption boost, No income tax payable up to income of ₹12 lakh in New Tax regime
M&A
Rajesh Narain Gupta, Founder and Chairman of SNG & Partners, Advocates & Solicitors
Budget looks quite reformative with serious push in Agriculture, Rural, SSME, BFS Sector, Investments, hospitality, housing, payment systems and financial inclusion. Infrastructure bonds and setting up pension products is a good idea. The message to Income Tax department to trust first and investigate later is a new dimension. M & A is proposed to be made easy with simplified procedures. Regulatory reforms committee to consider trust based economic measures and ease of doing business reflect intentions of government to boost trade and commerce. Intention to additional decriminalize more than 100 provisions in various laws is a welcome idea.
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MSME Sector
Dhruv Chopra, Managing Partner at Dewan PN Chopra
As of 2025, India has 164,987 post offices, making it the largest postal network in the world. Of these, **149,164 post offices are in rural areas, ensuring postal coverage in nearly all villages nationwide. It is proposed in budget 2025 to make these post offices logistics hubs and networks to be used by entrepreneurs, women, and micro and MSME businesses. This is an excellent initiative to optimize one of India’s marque asset bases and networks.
Startup Sector
Dhruv Chopra, Managing Partner at Dewan P N Chopra & Co
Fund of funds to support startups in 27 focus sectors. The government will infuse 10000 Cr additional funds into these fund of funds increasing the total allocation to 20,000 Cr, to propel entrepreneurship and growth in startups
DeepTech Fund
Dhruv Chopra, Managing Partner, Dewan P N Chopra & Co
Support innovation with investment of inr 20,000 crores including in a deep tech fund of funds to promote research and development in india. 10,000 fellowships will also be given for research in IITs and their ilk enabling innovation hubs
Parveen Kumar, Partner – Direct Tax at Dewan P N Chopra & Co
Hon’ble Finance Minister Just announced that New Income Tax Bill will be introduced next week. The New Income Tax Bill is expected to revamp the 64 years old Act. The new Inncome tax bill is proposed to make tax compliance easier for taxpayers and make the Income Tax Act easier to read and understand.
Tax reforms
Parveen Kumar, Partner – Direct Tax at Dewan P N Chopra & Co
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.
FDI in Insurance
Dhruv Chopra, Managing Partner, Dewan P N Chopra & Co
FDI in Insurance sector Increased from 74% to 100%, Announces FM. The revised FDI cap will apply to insurance companies that retain their entire premium investment within India. Existing regulations and conditions governing foreign investment in the sector will undergo review and simplification.
Basic Customs Duty
Shivashish Karnani, GST Division at DPNC Global
Social welfare surcharge currently being levied at the rate of 10% on the basic customs duty under customs laws to be removed for 82 tariff line items. Also, 36 life-saving drugs to be fully exempted from basic customs duty. This will give boost to the imports of these life-saving drugs and the consumers.
35 capital goods added to customs duty exemption list relating Lithium ION battery manufacturing and mobile phone battery manufacturing. This will give boost to the domestic manufacturing of EVs & mobile phones and thus contributing to the make in India.
Patient Assistance Programs: Patient assistance programs run by pharmaceutical companies will be fully exempt from Basic Customs Duty (BCD), provided the medicines are supplied free of cost to the patients. Additionally, 37 new medicines and 13 new patient assistance programs will be included in the exemption list. This will give fillip to the health care sector in India
Currently under the Customs laws, there is no time limit under Section 18 dealing with provisional assessment. Proposal is to fix a time limit of 2 yrs extendable by a year to finalise provisional assessment under the Customs law. This will bring the transparency and certainty as no time limit used to leave the taxpayers prone to delayed assessment and risk of heavy duty liabilities
Income Tax Reforms
Abhishek Sharma, Transaction Tax & Regulatory Services, Dewan P N Chopra & Co
The new income tax bill is designed to be clear and direct in its language, ensuring simplicity and ease of understanding for both taxpayers and tax administrators. Its straightforward text aims to eliminate confusion, making it more accessible and user-friendly for all stakeholders involved.
Proposing to remove TCS on remittances for education purposes if the remittance is funded through a loan taken from a specified financial institution. Omitting TCS on transactions related to the sale of goods to reduce compliance difficulties.
The Jan Vishwas 2.0 Bill
Parveen Kumar, Partner – Direct Tax at Dewan P N Chopra & Co
Hon’ble Finance Minister Just announced that ‘The Jan Vishwas 2.0 Bill seeks to decriminalize over 100 provisions across existing laws. To support the “Make in India” initiative, the Government of India has enacted the Jan Vishwas (Amendment of Provisions) Act, 2023. With the primary objective of decriminalising minor offences across 42 Central Acts, the Act eliminates 183 criminal provisions across 19 Ministries/Departments.
Dhruv Chopra, Managing Partner, Dewan P N Chopra & Co
The Hon’ble Finance Minister announced that the merger process will be accelerated through a simplified Fast Track Merger framework, along with an expanded scope to facilitate smoother and more efficient mergers.
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Manufacturing Sector
Dinesh Kumar, Partner, Indirect Tax, BDO India
“The Focus Product Scheme proposed in the Union Budget 2025 for the non-leather footwear sector will help manufacturers, whose competitiveness has been severely curtailed by increasing domestic manufacturing costs and thin margins.”
MSME Sector
Nitesh Mehta, Partner, M&A Tax and Regulatory Services, BDO India
“Significant increase in limits of turnover and investment for classification as MSME would facilitate a lot of companies to get classified as MSMEs and thereby become eligible for MSME benefits, including access to credit. This measure, coupled with setting up of a new Fund of Funds, with additional funding to start-ups is likely to fuel further growth for start-ups/early stage companies”
Loans
Manoj Purohit, Partner & Leader, FS Tax, Tax & Regulatory Services, BDO India
“Proposal to extend the interest cap on interest subvention scheme will enhance the base for banking sector and bring in the smaller lot of consumers. The banks will also benefit by expanding the book size of their small loans.”
MSME
Manoj Purohit, Partner & Leader, FS Tax, Tax & Regulatory Services, BDO India
“Government to increase its commitment by Rs.10,000 crore to setup New Fund of Funds (FoF) to encourage startups in AIF. The FoF for startups with commitments for over Rs 9 lakh crore will encourage the new startups to pool capital via the booming AIF sector.”
“Increase in Credit guarantee for MSME startups from Rs.10 crore to Rs.20 crore will promulgate the much need ask from the startup sector in larger chunk of capital infusion. Also, the banking sector will aid to expand their lending capacity to such startup companies.”
EV Sector
Maulik Manakiwala, Partner, Indirect Tax, BDO India
“National Manufacturing Mission to support domestic clean tech manufacturing of EV batteries, solar PV cells, wind turbines, etc. is a step closer to moving from thermal to green energy. This also aligns with Government’s vision of Make in India and sustainable future solutions like green manufacturing and Electric Vehicles (EVs)”
Taxation
Maulik Manakiwala, Partner, Indirect Tax, BDO India
The Government’s increasing focus on travel and tourism is helping boost the overall economy. Performance Linked Incentives for states will help improve the overall hospitality network and increase focus on medical, spiritual and historic tourism. Such measures will help in increasing the indirect tax collections and forex reserves.
Global Capability Centres
Karthik Mani, Partner, Indirect Tax, BDO India
National framework would be issued for setting up Global Capability Centres (GCCs), which the state governments shall adopt and implement in Tier 2 cities to help in the employment and growth of GCCs in India.
Rationalization of customs tariff structure proposed in the Union Budget to address inverted duty structure to help give fillip to domestic manufacturing and exports.
Custom Duty
Gyanendra Tripathi, Partner & Leader (West), Indirect Tax, BDO India
‘Trust first, scrutinize next’, simplified cargo clearance and customs processes proposed in the Union Budget will help increase India’s export competitiveness.
Rahul Dutia, Partner, Indirect Tax, BDO India
“Export promotion mission focusing on sectors by inter-ministerial co-ordination and providing a unified platform for trade documentation, as well as financial solutions aligned with international practices would act as booster for the export target of the country.”
National Centre for Skilling
Rajitha Boorugu, Partner, Indirect Tax, BDO India
National Centre for Skilling with international collaboration is a much-needed reform to bridge the gap between skills currently possessed by the workforce and skills needed in advanced manufacturing technologies, leading to the furtherance of the ‘Make in India’ initiative and increase India’s share in manufacturing of value-added products.
Santhosh Sivaraj, Partner, Global Employer Services, Tax & Regulatory Services
Budget announcements sound exciting – Simplification of litigation for Aam tax payers – Trust First Scrutinise Later
Prashant Bhojwani, Partner, Corporate Tax, Tax & Regulatory Services
Framework of bilateral investment treaties to be modified to encourage higher foreign investments
FDI in the insurance sector
MANOJ PUROHIT, Partner, FS Tax, Tax and Regulatory Services, BDO India
“The much-awaited reform in the insurance sector has been announced by the Hon’ble FM of extending 100% FDI in the insurance sector. It is a welcome step for opening the insurance sector for foreign players and addressing the stress over solvency of insurance companies. This move will ensure penetration of insurance, thereby paving the path for insurance for all by 2047.”
NCLT Meger
Anish Shah, Partner, M&A Tax and Regulatory Services, BDO India
Relaxation in fast-track merger provisions will help entities to opt for fast-track route which will reduce the timelines and compliance required as compared to NCLT route of merger.
DTC
Mihir Gandhi, Partner, Corporate Tax, Tax & Regulatory Services, BDO India
The Hon’ble Finance Minister, in the Union Budget 2025, has announced that DTC will be released next week. This is a much-awaited reform and should lead to simplification of the existing tax law which is more than 60 years old and has become complex.
Prashant Bhojwani, Partner, Corporate Tax, Tax & Regulatory Services, BDO India
Scope of fast-track mergers to be expanded to reduce timeline for consolidations
E-VISA
Deepashree, Partner, Global Employer Services, Tax & Regulatory Services, BDO India
To boost destination-based and medical tourism in India, streamlining of e-visa scheme and e-visa fee waiver are proposed. This would ease visa norms, promote sustainable travel to India and measures to enhance visa consular services.
Custom Duty
Deepthi Alexander, Partner, Indirect Tax, BDO India
Reduction in customs duty slab rates would lead to reduction in classification related disputes and increase ease of doing business for importers.
Removal of Social Welfare Surcharge on imported goods is expected to reduce cost of import and encourage domestic manufacturing across sectors.
Tax Code & Transfer Pricing
Munjal Almoula, Head of Tax, BDO India
The new tax code will be drafted with a view of removing uncertainties. It is expected to be simpler, crisper and articulated in simple language to avoid ambiguity and interpretation issues. The intent is to avoid needless litigation and provide greater certainty to taxpayers.
“Transfer pricing compliances to be reduced significantly by allowing taxpayers having international transactions to determine the ALP for the international transactions over a block period covering 3 years. This will reduce compliance burdens for taxpayers and ease documentation maintenance.”
Swati Agarwal, Partner, Indirect Tax, BDO India
The ability to declare material facts related to imported goods, if missed at the time of import, with the option to pay duty along with interest and without any levy of penalty voluntarily where tax authorities have not identified them, would reduce litigations and promote ease of doing business.
Nitesh Mehta, Partner, M&A Tax & Regulatory Services, BDO India
“The motto of ‘Trust first and Scrutinise later’ coupled with the announcement of measures for light touch regulatory framework including further decriminalisation of provisions, shows the Government’s continued efforts to improve the ease of doing business.”
Lalit Attal, Partner, Tax & Regulatory Services, BDO India
The tax proposal to conduct transfer pricing audit for a block of three years is a welcome move that has been long overdue. A wider guidance around complex data gathering, inconsistent documentation across jurisdictions, managing fluctuating market conditions, potential for double taxation, disputes over intangible asset valuation, and navigating different tax authority interpretations of the arm’s length principle would pave the way for tax certainly and enhance ease of doing business in India.
