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Key Highlights of Union Budget 2025: Major Reforms in Taxation, MSME Growth, and Export Promotion

The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, introduces several key reforms aimed at stimulating economic growth and enhancing the ease of doing business in India.

  1. Export Promotion Measures:
  • Duty-Free Inputs for Handicraft and Leather Sectors: To support these traditional industries, the budget allows for duty-free import of inputs, aiming to enhance their competitiveness in international markets.
  1. Introduction of a New Income Tax Act: A comprehensive overhaul of the Income Tax Act is scheduled for introduction in next week. This reform aims to simplify tax compliance and create a more transparent tax environment.
  2. Enhanced Income Tax Rebate: The rebate under Section 87A has been increased, resulting in no income tax liability for individuals earning up to ₹12 lakh annually. This measure is designed to boost disposable income and stimulate consumer spending.
    1. Revised Income Tax Slabs: The government has notified new income tax slabs, reducing the tax burden on middle-class taxpayers. This initiative is expected to enhance the spending power of the middle class, thereby supporting economic growth.
    2. Rationalization of TDS/TCS: The budget proposes the rationalization of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions to ease compliance difficulties for taxpayers. This initiative is expected to reduce the administrative burden and improve the efficiency of tax collection.
    3. Increased MSME Classification Limit: The classification limit for Micro, Small, and Medium Enterprises (MSMEs) has been raised, allowing more businesses to benefit from MSME-specific schemes and incentives. This change is anticipated to encourage the growth and formalization of smaller enterprises.
    4. Rationalisation of Customs Tariff Structure for Industrial Goods
      • Application of Cess and Surcharge: The budget introduces a provision to ensure that no more than one cess or surcharge is applied to any tax, simplifying the tax structure and reducing the overall tax burden.
      • Removal of Seven Tariffs: Seven existing tariffs have been removed to streamline the tax system and promote ease of doing business.
    5.  Business & Investment Opportunities
      • Launch of the National Manufacturing Mission: A strategic initiative to enhance industrial output and boost export potential.
      • Support for Startups & MSMEs: Introduction of new incentives, including easier credit accessibility and targeted tax benefits, to foster entrepreneurship and business growth.
      • Real Estate & Infrastructure Development: Increased budget allocations to support affordable housing projects and improve connectivity infrastructure nationwide
    6. Agriculture & Rural Development
      • Strengthening the Agricultural Sector: A national mission launched to promote high-yield crop production and enhance overall farm productivity.
      • Subsidies for Agri-Tech and Irrigation: Expanded support for sustainable agriculture through subsidies for advanced agri-technologies and irrigation infrastructure.

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