Rationalisation of TDS, TCS, reducing compliance burden in income tax, says Sitharaman
Journalism of Courage
Budget 2025 Important Points Explained Highlights: Union Finance Minister Nirmala Sitharaman unveiled her eighth consecutive Union Budget on Saturday (February 1). The income tax rebates she announced have been the biggest talking point.
Schemes for the MSME sector, women, farmers, the education sector, boosting exports, etc. have also been announced. The initiatives announced aim to boost self-reliance, with an eye on Atmanirbhar Bharat. Given the widespread discontent among the middle class, the announcement of tax relief has been welcomed. Here are five key takeaways from her speech.
Earlier, the Economic Survey was tabled in Parliament. It projected a growth rate of 6.3-6.8 per cent for the next financial year, stating, “Viksit Bharat@2047 envisions India as a developed nation by 2047, the centenary of our independence. This would entail sustained economic growth of close to 8 per cent every year for at least a decade.”
Scroll down for the Explained live blog, where our senior editors for Economy and Business provided updates from the Budget speech with a side-by-side explanation of the provisions and what they mean.
Rationalisation of TDS, TCS, reducing compliance burden in income tax, says Sitharaman
Finance Minister Nirmala Sitharamann emphasized the need of having a light touch regulatory framework based on principles and trust, which could unleash productivity and employment. Through such a framework, regulations made under old laws shall be updated. The government plans to set up a high-level committee for regulatory reforms, which will review all non-financial sector regulations. It will also launch an investment friendliness index of states, in addition to other measures.
Sitharaman’s announcement on having trust-based regulatory frameworks follows Chief Economic Advisor V Anantha Nageswaran’s call for deregulation and wiping out the trust deficit in the country.
“But, ‘get out of the way’ and trust people, we must, for we have no other choice,” the CEA said in the preface to the Economic Survey for 2024-25. Once the trust deficit is addressed, it is a good bet the Indian public will overcome the challenges and turn them into opportunities, he said.
New income tax Bill will have spirit of nyay, will be clear and direct, easy to understand for taxpayers: FM
The Finance Minister announced that a new scheme will be launched for five lakh Scheduled Castes and Scheduled Tribes (SC/ST) women entrepreneurs. This will involve giving term loans of up to Rs 2 crore during the next five years.
Sitharaman said that the new scheme will incorporate lessons from Stand-Up India scheme. The Centre had launched the Stand-Up India scheme on April 5, 2016, as a loan scheme to empower women entrepreneurs, especially from the SC/ST communities. The scheme was extended up to 2025, so it is not yet clear whether the new scheme will dovetail with the existing scheme or will consist of a new design.
Under the Stand-Up India scheme, the objective was to facilitate loans from Scheduled Commercial Banks between Rs 10 lakh and Rs 1 crore to at least one one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and one-woman borrower per bank branch for setting up a greenfield enterprise in the manufacturing, services or trading sector and also for the activities allied to agriculture.
As per data tabled in Parliament by the Ministry of Finance, up to June 2024, loans were sanctioned to 40,002 SC women and 13,424 women under the existing Stand-Up India scheme
An infusion of Rs 20,000 crore to increase tourism-led employment is going to help several states that house top tourist locations build infrastructure and boost connectivity.
The onus has been put on states to acquire land to build hotels and other required facilities. Also, a continued focus to promote India as key destination on the world map for on spiritual tourism gets a boost - especially projecting it as a birthplace of Lord Ram through the Ramayana circuit, and as the birthplace of Buddha through the Buddhist circuit, roping in south east Asian tourist footfall. They are also likely to get visa fee waivers, so will the medical tourism segment, with a focus on Heal in India
The Finance Minister announced that the government will launch the Export Support Mission with sectoral and ministerial targets. The Mission will be driven jointly by the ministries of commerce, MSMEs, and finance. The Export Support Mission will facilitate easy access to export credit, cross-border factoring support, and support to MSMEs to tackle non-tariff measures in overseas markets, Sitharaman said
Finance Minister Nirmala Sitharaman announced that 50,000 Atal Tinkering Labs will be set up in government schools over the next five years to "foster scientific temper among young minds."
The Centre's Atal Innovation Mission introduced Atal Tinkering Labs in 2016-17 and around 10,000 such labs have already been set up in schools across the country. The Centre provides funds to schools to set up the lab and operate and maintain it for five years. These labs contain equipment like 3D printers, and tools and kits for students to learn STEM (science, technology, engineering and math) concepts, including aspects of robotics and artificial intelligence. These labs are meant for students in classes 6 to 12.
The Finance Minister announced that the loan limit under the Modified Interest Subvention Scheme (MISS) will be increased from Rs 3 lakh to Rs 5 lakh. Currently, under MISS, farmers engaged in Agriculture and other allied activities can acquire Kisan Credit Card loans up to Rs 3 lakh at a benchmark rate of 9%. However, the Centre provides 2% interest subvention on the benchmark rate, bringing down the effective rate of interest to 7 per cent. An additional 3% concession for prompt and timely repayment further reduces it to 4% per year.
According to the Agriculture Ministry, the benefit of the interest subvention scheme is also available for post-harvest loans (for six months post-harvest) to small and marginal farmers having Kisan Credit Cards, with the aim of protecting them against distress sale of their produce. The Rs 3-lakh upper limit has remained unchanged since 2006-07, when the Interest Subvention Scheme, the original variant of MISS, was launched by then Finance Minister P Chidambaram. Several states including Uttar Pradesh had demanded an increase of the loan limit under the scheme.
In a major reform announcement FM announces to raise FDI limit in insurance sector from 74% to 100%
The union finance minister Nirmala Sitharaman on Saturday announced that 10,000 medical undergraduate and postgraduate seats will be added over the next year. This, she said, would be towards the goal of expanding the number of medical seats by 75,000 over five years. There has been a massive expansion in the number of medical seats over the last decade — the number of MBBS seats has increased from 51,384 before 2014 to 1,12,112 in 2024 and the number of PG seats has increased from 31,185 to 72,627.
This increase, however, has led to other challenges. Even as the national medical education regulator has been working on tightening staffing norms, colleges have been grappling with severe staff shortage. The geographical distribution of the medical seats has also been skewed with some places like Karnataka and Puducherry having more than their required share. This had prompted the regulator National Medical Commission to bring in a norm of 100 MBBS seats per 10 lakh population. The norm was later put on hold when some states said that they had exceeded the numbers, but owing to private colleges and not government ones. These issues were raised even in the economic survey released on Friday.
The Finance Minister announced revamping of the existing PM-SVANidhi loan scheme, which was launched in 2020 to help street vendors hit by the COVID-19 pandemic get back on their feet. The scheme, which has helped 68 lakh vendors so far, will have enhanced bank loans, UPI-linked credit cards and capacity building support. Under the existing scheme, vendors can avail of loans of Rs.10,000, Rs.20,000 and Rs.50,000.
National mission on High Yielding Seeds to be launched, with focus on
a) strengthening research ecosystem,
b) targeted development and propagation of seeds with high yield, pest resistance & climate resilience
c) commercial availability of 100+ seed varieties released since July 2024
The Finance Minister has announced extension of Jal Jeevan Mission (JJM) till 2028. The JJM, launched in 2019, was the one of the biggest programmes of the Modi 2.0.
So far, over 12 crore rural households have been provided tap water connections. Initially, the scheme was till 2024.
The scheme aims at providing 55 liter drinking water per capita per day . In the next phase of the JJM, the focus will be on operations and maintenance of the infrastructure created during the phase-1. While the pipelines have been laid at many places under the JJM, the households complain of non-availability of drinking water.
With assembly elections likely later this year in Bihar, Finance Minister Nirmala Sitharaman has made two specific announcements so far for the state.
One is the setting up of a ‘Makhana Board’ to help farmers growing makhana, which is the the super food.
Giving the state an infra boost, Sitharaman has also announced an expansion of the Patna airport, and setting up of a new brownfield airport in the state.
Sensex up 0.5 per cent or 380 points to reach 77,884 after the FM announces a series of measures to boost Agri, MSMEs, education and other areas including urban infrastructure, power, ship building among others.
The government will incentivise electricity distribution reforms and augmentation of intra-state transmission capacity by states, FM Sitharaman said. “This will improve the financial health and capacity of electricity companies. Additional borrowing of 0.5 per cent of GSDP will be allowed to states contingent on these reforms,” she said.
In 2022-23, the financial losses of state-owned distribution companies at an all-India level stood at Rs 62,386 crore against Rs 31,000 crore in 2021-22, as per the data provided by Icra.
Alongside 3 centres of excellence for AI announced in 2023, govt will set up another centre of excellence for education with an outlay of Rs 500 crore.
The government will help gig workers get identity cards, register them on the e-shram portal and give them healthcare coverage under PM Jan Arogya Yojana. This is likely to assist 1 crore gig workers, says FM.
FM announces that the Govt will set up Rs 25,000-crore Maritime Development Fund for supporting and promoting competition. Govt will contribute 49% and rest to come from pvt sector.
The Finance Minister announced that the government will launch the second Asset Monetisation Plan for 2025-2030. The Plan is expected to plough back capital of Rs 10 lakh crore in new projects. Sitharaman added that regulations and fiscal measures will be fine-tuned to support the Asset Monetisation Plan.
Finance Minister has announced the setting up of a new urea plant at Namrup (Assam) with an annual production capacity of 12.70 lakh tonnes. If it takes off, that would be the 7th new urea plant to come up in India since 2019. These include plants in Gadepan (Rajasthan), Ramagundam (Telangana), Panagarh (West Bengal), Gorakhpur (Uttar Pradesh), Barauni (Bihar), Sindri (Jharkhand) and Talcher (Odisha). The last plant is yet to be commissioned (about 65% completed), while the other six are up and running.
The proposed National Manufacturing Mission, which will support clean tech manufacturing and improve domestic value addition in solar PV modules, electric vehicle (EV) batteries, high-voltage transmission equipment, wind turbines, and grid-scale batteries, FM Sitharaman said.
China controls most of the clean tech supply chain, from raw materials to intermediate goods. The mission, along with existing Production Linked Incentive (PLI) schemes for solar PV modules and batteries, is likely to help domestic players backward integrate and scale operations.
Sithraman said that the National Manufacturing Mission will also support clean tech manufacturing, given India’s commitment to climate-friendly development. Focus segments will include solar PV cells, EV batteries, motors and controllers, electrolysers, wind turbines, very high voltage transmission equipment, and grid-scale batteries.
The Budget has mentioned about achieving atmanirbharta (self sufficiency) in pulses. The truth is India's pulses imports were valued at 3,275.25 million dollars during April-November 2024, a 56.6% jump over the 2,091.95 million during April-November 2023. India's pulses imports fell from a peak of 4,243.13 million dollars in 2016-17 to 1,943.89 million dollars in 2022-23. But this was reversed in 2023-24, with imports at 3,746.78 million dollars. The current fiscal (2024-25) could see pulses imports scale a new all-time-high. Domestic pulses production is still largely rainfall dependent. The poor 2023 monsoon led to lower domestic production and higher imports this year.
The Finance Minister has announced that a Makhana Board will be established in the state of Bihar for increasing production, processing and value addition of Makhana. The people engaged in Makhana cultivation will be organized in FPOs. This announcement is significant in view of Assembly Elections in Bihar later this year.
About 10 lakh people are directly or indirectly involved in Makhana cultivation and production process in Bihar, with the state accounting for about 85 per cent of the total Makhana production of the country. The Bihar government has been demanding measures from the Central government to promote Makhana cultivation. The state government had also demanded a declaration of the minimum support price of Makhana.
The government will launch the National Manufacturing Mission covering small, medium, and large enterprises for furthering Make in India. Under this Mission, the government will assist with policy support, execution roadmaps, and governance and monitoring frameworks for central ministries and states.
Sitharaman says gareeb, youth, annadata and naari spurring agri growth and productivity,
Budget to focus on:
Furthering Make In India
Supporting MSMEs
Enabling employment led development
Investing in people economy and innovation
Securing energy supplies
Supporting exports
Nurturing innovation
The government will launch a new scheme offering term loans of up to Rs 2 crore to first-time entrepreneurs among women, Scheduled Castes, and Scheduled Tribes.
In a boost to credit to Micro industries, the government will provide customised credit cards with limit of Rs 5 lakh. In the first year, 10 lakh such cards will be issued.
Finance Minister Nirmala Sitharaman has announced a new scheme for agriculture sector—Prime Minister Dhan Dhanya Krishi Yojana (PMDDKY). This scheme will be implemented in partnership with states, across 100 districts in its first phase. The scheme will be on the lines of Aspirational Districts Programme (ADP), which was launched by Prime Minister Narendra Modi in 2018. The ADP is implemented across 112 districts. The PMDDKY will be implemented across agriculture districts.
The Finance Minister said that India Post, along with India Post Payments bank, will be repositioned to be a catalyst for the rural economy. India Post will also be transformed into a large public logistics organization.
