MM TAX CLUB

This advisory is to inform taxpayers about recent developments concerning the application process for GST registration. It is advised to keep the following key points in mind during the registration process.

Key Updates:

1. Amendment to Rule 8 of CGST Rules, 2017:

   • Applicants can now be identified on the common portal based on data analysis and risk parameters.

   • The process involves Biometric-based Aadhaar Authentication, taking a photograph of the applicant, and verifying the original copies of documents uploaded with the application.

2. Rollout of New Functionality:

   • The GSTN has developed this functionality, which was rolled out in Maharashtra and Lakshadweep on 8th February, 2025.

3. Document Verification and Appointment Booking Process:

   • After submitting Form GST REG-01, the applicant will receive an email with either of the following links:

     • (a) A link for OTP-based Aadhaar Authentication, OR

     • (b) A link for booking an appointment at a GST Suvidha Kendra (GSK) for Biometric-based Aadhaar Authentication and document verification.

4. Process for OTP-Based Aadhaar Authentication:

   • If the applicant receives the link mentioned in point 3(a), they can proceed as per the existing process.

5. Process for Biometric-Based Aadhaar Authentication:

   • If the applicant receives the link mentioned in point 3(b), they must book an appointment using the provided link.

   • The feature for booking appointments at designated GSKs is available for Maharashtra and Lakshadweep applicants.

6. Appointment Confirmation and Visit to GSK:

   • After booking, the applicant will receive a confirmation email.

   • The applicant must visit the designated GSK on the scheduled date and time.

7. Documents Required at GSK:

   • A copy (hard/soft) of the appointment confirmation email.

   • Jurisdiction details as mentioned in the intimation email.

   • Original Aadhaar Card and PAN Card.

   • Original documents uploaded with the application (as communicated in the intimation email).

8. Biometric Authentication and Document Verification Process:

   • The biometric authentication and document verification will be conducted at the GSK for all individuals required in GST application Form REG-01.

9. Timeframe for Biometric Authentication:

   • The applicant must book an appointment within the maximum permissible period as indicated in the intimation email.

   • The Application Reference Number (ARN) will be generated only after the successful completion of Biometric-based Aadhaar Authentication and document verification.

10. GSK Operational Days and Hours:

• GSKs will operate based on the guidelines provided by the respective state/UT administration.

This advisory aims to facilitate a smooth and efficient GST registration process by ensuring compliance with the latest procedural updates. For any further clarifications, applicants are advised to refer to official GSTN notifications or contact their respective jurisdictional GST officers.

The Reserve Bank of India (RBI) has announced a key monetary policy change following its 53rd Monetary Policy Committee (MPC) meeting held from February 5 to 7, 2025. Under the leadership of Governor Shri Sanjay Malhotra, the MPC decided to reduce the policy repo rate by 25 basis points, bringing it down to 6.25%. This move is aimed at maintaining price stability while supporting economic growth.

Key Monetary Policy Decisions

The primary outcomes of the latest MPC meeting include:

• Repo Rate Reduction: The policy repo rate under the liquidity adjustment facility (LAF) has been reduced to 6.25% from the previous rate of 6.50%.

• Adjustments to Other Key Rates:

  • The Standing Deposit Facility (SDF) rate is now at 6.00%.

  • The Marginal Standing Facility (MSF) rate and Bank Rate stand adjusted to 6.50%.

• Neutral Policy Stance Maintained: The RBI remains focused on keeping inflation aligned with the target while ensuring steady economic growth.

Growth and Inflation Outlook

Economic Growth

India’s economic outlook for FY 2024-25 remains positive despite global challenges. According to the First Advance Estimates (FAE), real GDP is expected to grow at 6.4% year-on-year, driven by a recovery in private consumption and strength in the services and agricultural sectors. However, industrial growth remains subdued, acting as a constraint on overall expansion.

For FY 2025-26, growth is expected to improve further, supported by robust household consumption (aided by tax relief measures in the Union Budget), higher capacity utilization, and continued public sector capital expenditure. The RBI has projected real GDP growth at 6.7%, with quarter-wise estimates as follows:

• Q1: 6.7%

• Q2: 7.0%

• Q3: 6.5%

• Q4: 6.5%

Inflation Trends

Inflation has been showing signs of moderation, with headline inflation easing from 6.2% in October 2024 to lower levels in November-December 2024, thanks to declining food prices. Core inflation remains stable, while fuel prices continue to be in a deflationary phase.

Looking ahead, food inflation is expected to remain in check due to good kharif production, favorable rabi crop conditions, and a seasonal decline in vegetable prices. However, global financial uncertainties and commodity price volatility pose potential risks. The RBI’s inflation projection for FY 2024-25 is 4.8%, while for FY 2025-26, it is expected to be 4.2%, with the following quarterly estimates:

• Q1: 4.5%

• Q2: 4.0%

• Q3: 3.8%

• Q4: 4.2%

Policy Rationale and Future Outlook

The decision to cut the repo rate was influenced by the dual objectives of fostering economic growth and ensuring inflation remains within the target range. The committee acknowledged that while inflation has been moderating, global financial uncertainties and geopolitical risks continue to pose challenges. By maintaining a neutral stance, the MPC retains the flexibility to adjust policy in response to evolving macroeconomic conditions.

The minutes of the MPC meeting will be published on February 21, 2025, and the next meeting is scheduled for April 7 to 9, 2025.

The recent policy changes reflect RBI’s commitment to maintaining financial stability while fostering sustainable economic growth. With a proactive approach, the central bank aims to strike a balance between controlling inflation and stimulating investment-led expansion in the coming fiscal year.

The Reserve Bank of India (RBI) has announced a key monetary policy change following its 53rd Monetary Policy Committee (MPC) meeting held from February 5 to 7, 2025. Under the leadership of Governor Shri Sanjay Malhotra, the MPC decided to reduce the policy repo rate by 25 basis points, bringing it down to 6.25%. This move is aimed at maintaining price stability while supporting economic growth.

Key Monetary Policy Decisions

The primary outcomes of the latest MPC meeting include:

• Repo Rate Reduction: The policy repo rate under the liquidity adjustment facility (LAF) has been reduced to 6.25% from the previous rate of 6.50%.

• Adjustments to Other Key Rates:

  • The Standing Deposit Facility (SDF) rate is now at 6.00%.

  • The Marginal Standing Facility (MSF) rate and Bank Rate stand adjusted to 6.50%.

• Neutral Policy Stance Maintained: The RBI remains focused on keeping inflation aligned with the target while ensuring steady economic growth.

Growth and Inflation Outlook

Economic Growth

India’s economic outlook for FY 2024-25 remains positive despite global challenges. According to the First Advance Estimates (FAE), real GDP is expected to grow at 6.4% year-on-year, driven by a recovery in private consumption and strength in the services and agricultural sectors. However, industrial growth remains subdued, acting as a constraint on overall expansion.

For FY 2025-26, growth is expected to improve further, supported by robust household consumption (aided by tax relief measures in the Union Budget), higher capacity utilization, and continued public sector capital expenditure. The RBI has projected real GDP growth at 6.7%, with quarter-wise estimates as follows:

• Q1: 6.7%

• Q2: 7.0%

• Q3: 6.5%

• Q4: 6.5%

Inflation Trends

Inflation has been showing signs of moderation, with headline inflation easing from 6.2% in October 2024 to lower levels in November-December 2024, thanks to declining food prices. Core inflation remains stable, while fuel prices continue to be in a deflationary phase.

Looking ahead, food inflation is expected to remain in check due to good kharif production, favorable rabi crop conditions, and a seasonal decline in vegetable prices. However, global financial uncertainties and commodity price volatility pose potential risks. The RBI’s inflation projection for FY 2024-25 is 4.8%, while for FY 2025-26, it is expected to be 4.2%, with the following quarterly estimates:

• Q1: 4.5%

• Q2: 4.0%

• Q3: 3.8%

• Q4: 4.2%

Policy Rationale and Future Outlook

The decision to cut the repo rate was influenced by the dual objectives of fostering economic growth and ensuring inflation remains within the target range. The committee acknowledged that while inflation has been moderating, global financial uncertainties and geopolitical risks continue to pose challenges. By maintaining a neutral stance, the MPC retains the flexibility to adjust policy in response to evolving macroeconomic conditions.

The minutes of the MPC meeting will be published on February 21, 2025, and the next meeting is scheduled for April 7 to 9, 2025.

The recent policy changes reflect RBI’s commitment to maintaining financial stability while fostering sustainable economic growth. With a proactive approach, the central bank aims to strike a balance between controlling inflation and stimulating investment-led expansion in the coming fiscal year.

Clarification on E-Way Bill Requirement for Goods under Chapter 71

The movement of goods classified under Chapter 71 of the Harmonized System of Nomenclature (HSN) has been a topic of concern for various stakeholders in the industry. To provide clarity, this advisory outlines the regulatory requirements regarding E-Way Bill (EWB) generation for such goods.

Regulatory Framework

Rule 138(14) of the Central Goods and Services Tax (CGST) Rules, 2017, along with its Annexure S.Nos. 4 and 5, specifies that goods falling under Chapter 71, which include:

• Natural or cultured pearls

• Precious or semi-precious stones

• Precious metals and metals clad with precious metal

• Jewellery, goldsmiths’ and silversmiths’ articles

are exempt from the mandatory requirement of generating an E-Way Bill, except for goods classified under HSN 7117 (Imitation Jewellery).

EWB Facility on NIC Portal

Despite the exemption, an option to generate an EWB for goods under Chapter 71 (excluding HSN 7117) was made available on the National Informatics Centre (NIC) EWB portal under the category "EWB for Gold." This was introduced in response to Kerala’s state-specific mandate for intra-state movement of such goods.

Recent Developments

It has been observed that many industry participants voluntarily generated EWBs for goods under Chapter 71 due to the availability of this option. However, it is now clarified that:

• The facility for generating EWBs for goods under Chapter 71 (except HSN 7117) has been withdrawn.

• Taxpayers and transporters should note that EWB generation is not required for the movement of goods under this category.

• An exception applies to the intra-state movement of such goods within Kerala, where EWB generation is mandated as per Notification No. 10/24-State Tax dated 27/12/2024.

Compliance Advisory

Industry stakeholders are advised to ensure compliance with the applicable provisions and refrain from generating EWBs for goods under Chapter 71 (except HSN 7117), except in cases where it is mandated by state-specific regulations, such as in Kerala.

For further clarifications, stakeholders may:

• Contact the GST Helpdesk.

• Approach their respective jurisdictional tax authorities.

Ensuring adherence to these guidelines will facilitate smooth business operations and compliance with GST regulations.

The Union Budget 2025-26, presented by Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman, outlines a vision for "Sabka Vikas," aimed at balanced growth across all regions. The budget recognizes Agriculture, MSMEs, Investment, and Exports as the four engines of India's economic development, with significant reforms in taxation, urban development, financial sectors, and regulatory frameworks.

Key Highlights

Taxation Relief for Middle-Class and Salaried Individuals

• No income tax for individuals earning up to ₹12 lakh per annum under the new tax regime.

• Salaried individuals earning up to ₹12.75 lakh per annum to pay NIL tax due to a standard deduction of ₹75,000.

• Updated income tax returns filing period extended from two to four years.

• TDS on rent increased from ₹2.4 lakh to ₹6 lakh.

• Delay in TCS payment decriminalized.

Strengthening Economic Growth: The Four Engines

1st Engine: Agriculture

• 'Prime Minister Dhan-Dhaanya Krishi Yojana' to cover 100 low agricultural productivity districts, benefiting 1.7 crore farmers.

• Launch of "Mission for Aatmanirbharta in Pulses" focusing on Tur, Urad, and Masoor.

• Kisan Credit Card (KCC) loan limit increased from ₹3 lakh to ₹5 lakh under the modified interest subvention scheme.

• Investment in post-harvest storage, irrigation, and crop diversification.

2nd Engine: MSMEs

• Credit guarantee cover for MSMEs increased from ₹5 crore to ₹10 crore.

• National Manufacturing Mission to promote "Make in India" initiatives.

• ₹2 crore term loans to be provided to 5 lakh first-time entrepreneurs from SC/ST communities and women.

• Government-backed scheme for India's toy manufacturing industry.

3rd Engine: Investment

• 50,000 Atal Tinkering Labs to be established in government schools over the next five years.

• ₹1 lakh crore Urban Challenge Fund for “Cities as Growth Hubs.”

• ₹20,000 crore allocated for private-sector-driven R&D and innovation initiatives.

• Nuclear Energy Mission launched for Small Modular Reactors with ₹20,000 crore allocation.

• ₹15,000 crore SWAMIH Fund to complete 1 lakh stressed housing units.

• Broadband connectivity to all government schools and rural health centers under BharatNet Project.

• Gig workers to receive identity cards, e-Shram registration, and healthcare under PM Jan Arogya Yojana.

4th Engine: Exports

• Export Promotion Mission launched to help MSMEs expand into global markets.

• FDI limit in insurance increased from 74% to 100%.

• Development of infrastructure and warehousing for air cargo, particularly for perishable goods.

• Boost to domestic electronics manufacturing for Industry 4.0 integration.

Taxation & Fiscal Policy

• Fiscal deficit target for FY25 at 4.8%, with a target to reduce it to 4.4% in FY26.

• Government to maintain fiscal discipline while boosting investments.

• New tax rate structure under the revised tax regime:

  Income Bracket (₹)	Tax Rate
  0 – 4 Lakh	NIL
  4 – 8 Lakh	5%
  8 – 12 Lakh	10%
  12 – 16 Lakh	15%
  16 – 20 Lakh	20%
  20 – 24 Lakh	25%
  Above 24 Lakh	30%

• ₹1 lakh crore revenue loss expected due to income tax cuts, benefiting middle-class taxpayers.

Customs and Manufacturing Boost

• Customs duty exemptions for 36 lifesaving drugs, including those for cancer and rare diseases.

• Exemptions on raw materials for shipbuilding and EV battery manufacturing for 10 years.

• BCD on Interactive Flat Panel Display (IFPD) increased to 20%, while it is reduced to 5% on open cells to support local manufacturing.

Financial Sector Reforms

• Introduction of "Jan Vishwas Bill 2.0" to decriminalize over 100 provisions in various laws.

• Light-touch regulatory framework to ease compliance for businesses.

• Mechanism under FSDC to evaluate financial regulations and enhance responsiveness.

• Introduction of "Investment Friendliness Index of States" in 2025 to encourage cooperative federalism.

Infrastructure & Urban Development

• Modified UDAN scheme to enhance regional air connectivity to 120 new destinations.

• Jal Jeevan Mission extended until 2028 with a focus on quality and rural water infrastructure.

• Expansion of National Geospatial Mission for urban planning and smart cities.

Education & AI Innovation

• Centre of Excellence in AI for Education with ₹500 crore outlay.

• Bharatiya Bhasha Pustak Scheme for digital textbooks in Indian languages.

• Expansion of AI-based education solutions and skilling initiatives for emerging tech jobs.

Conclusion

The Union Budget 2025-26 builds on India's commitment to economic stability, tax rationalization, inclusive growth, and sustainable development. With a strong focus on strengthening the four engines of growth, the government aims to empower the middle class, boost MSMEs, enhance investments, and expand export potential while maintaining fiscal prudence. The proposed reforms, tax reductions, and infrastructure investments are expected to accelerate India's journey towards becoming a $5 trillion economy.

This budget solidifies India's vision for a Viksit Bharat, ensuring a strong, inclusive, and self-reliant economy for the future.

PART A

Union Minister for Finance and Corporate Affairs Smt Nirmala Sitharaman presented Union Budget 2025-26 in the Parliament today. The highlights of the budget are as follows:

Budget Estimates 2025-26

• The total receipts other than borrowings and the total expenditure are estimated at ₹ 34.96 lakh crore and ₹ 50.65 lakh crore respectively.
• The net tax receipts are estimated at ₹ 28.37 lakh crore.
• The fiscal deficit is estimated to be 4.4 per cent of GDP.
• The gross market borrowings are estimated at ₹ 14.82 lakh crore.
• Capex Expenditure of ₹11.21 lakh crore (3.1% of GDP) earmarked in FY2025-26.

AGRICULTURE AS THE 1^ST ENGINE OF DEVELOPMENT

Prime Minister Dhan-Dhaanya Krishi Yojana - Developing Agri Districts Programme

• The programme to be launched in partnership with the states, covering 100 districts with low productivity, moderate crop intensity and below-average credit parameters, to benefit 1.7 crore farmers.

Building Rural Prosperity and Resilience

• A comprehensive multi-sectoral programme to be launched in partnership with states to address under-employment in agriculture through skilling, investment, technology, and invigorating the rural economy.
• Phase-1 to cover 100 developing agri-districts.

Aatmanirbharta in Pulses

• Government to launch a 6-year “Mission for Aatmanirbharta in Pulses” with focus on Tur, Urad and Masoor.
• NAFED and NCCF to procure these pulses from farmers during the next 4 years.

Comprehensive Programme for Vegetables & Fruits

• A comprehensive programme to promote production, efficient supplies, processing, and remunerative prices for farmers to be launched in partnership with states.

Makhana Board in Bihar

• A Makhana Board to be established to improve production, processing, value addition, and marketing of makhana.

 

National Mission on High Yielding Seeds

• A National Mission on High Yielding Seeds to be launched aiming at strengthening the research ecosystem, targeted development and propagation of seeds with high yield, and commercial availability of more than 100 seed varieties.

Fisheries

• Government to bring a framework for sustainable harnessing of fisheries from Indian Exclusive Economic Zone and High Seas, with a special focus on the Andaman & Nicobar and Lakshadweep Islands.

Mission for Cotton Productivity

• A 5-year mission announced to facilitate significant improvements in productivity and sustainability of cotton farming, and promote extra-long staple cotton varieties.

Enhanced Credit through KCC

• The loan limit under the Modified Interest Subvention Scheme to be enhanced from ₹ 3 lakh to ₹ 5 lakh for loans taken through the KCC.

Urea Plant in Assam

• A plant with annual capacity of 12.7 lakh metric tons to be set up at Namrup, Assam.

MSMEs AS THE 2^ND ENGINE OF DEVELOPMENT

Revision in classification criteria for MSMEs

• The investment and turnover limits for classification of all MSMEs to be enhanced to 2.5 and 2 times respectively.

Credit Cards for Micro Enterprises

• Customized Credit Cards with ₹ 5 lakh limit for micro enterprises registered on Udyam portal, 10 lakh cards to be issued in the first year.

Fund of Funds for Startups

• A new Fund of Funds, with expanded scope and a fresh contribution of ₹ 10,000 crore to be set up.

Scheme for First-time Entrepreneurs

• A new scheme for 5 lakh women, Scheduled Castes and Scheduled Tribes first-time entrepreneurs to provide term-loans upto ₹ 2 crore in the next 5 years announced.

Focus Product Scheme for Footwear & Leather Sectors

• To enhance the productivity, quality and competitiveness of India’s footwear and leather sector, a focus product scheme announced to facilitate employment for 22 lakh persons, generate turnover of ₹ 4 lakh crore and exports of over ₹ 1.1 lakh crore.

Measures for the Toy Sector

• A scheme to create high-quality, unique, innovative, and sustainable toys, making India a global hub for toys announced.

Support for Food Processing

• A National Institute of Food Technology, Entrepreneurship and Management to be set up in Bihar.

Manufacturing Mission - Furthering “Make in India”

• A National Manufacturing Mission covering small, medium and large industries for furthering “Make in India” announced.

INVESTMENT AS THE 3^RD ENGINE OF DEVELOPMENT

1. Investing in People

Saksham Anganwadi and Poshan 2.0

• The cost norms for the nutritional support to be enhanced appropriately.

Atal Tinkering Labs

• 50,000 Atal Tinkering Labs to be set up in Government schools in next 5 years.

Broadband Connectivity to Government Secondary Schools and PHCs

• Broadband connectivity to be provided to all Government secondary schools and primary health centres in rural areas under the Bharatnet project.

Bharatiya Bhasha Pustak Scheme

• Bharatiya Bhasha Pustak Scheme announced to provide digital-form Indian language books for school and higher education.

National Centres of Excellence for Skilling

• 5 National Centres of Excellence for skilling to be set up with global expertise and partnerships to equip our youth with the skills required for “Make for India, Make for the World” manufacturing.

Expansion of Capacity in IITs

• Additional infrastructure to be created in the 5 IITs started after 2014 to facilitate education for 6,500 more students.

Centre of Excellence in AI for Education

• A Centre of Excellence in Artificial Intelligence for education to be set up with a total outlay of ₹ 500 crore.

Expansion of medical education

• 10,000 additional seats to be added in medical colleges and hospitals next year, adding to 75000 seats in the next 5 years.

Day Care Cancer Centres in all District Hospitals

• Government to set up Day Care Cancer Centres in all district hospitals in the next 3 years, 200 Centres  in 2025-26.

Strengthening urban livelihoods

• A scheme for socio-economic upliftment of urban workers to help them improve their incomes and have sustainable livelihoods announced.

PM SVANidhi

• Scheme to be revamped with enhanced loans from banks, UPI linked credit cards with ₹ 30,000 limit, and capacity building support.

Social Security Scheme for Welfare of Online Platform Workers

• Government to arrange for identity cards, registration on e-Shram portal and healthcare under PM Jan Arogya Yojna, for gig-workers.

 

2. Investing in the Economy

Public Private Partnership in Infrastructure

• Infrastructure-related ministries to come up with a 3-year pipeline of projects in PPP mode, States also encouraged.

Support to States for Infrastructure

• An outlay of ₹1.5 lakh crore proposed for the 50-year interest free loans to states for capital expenditure and incentives for reforms.

Asset Monetization Plan 2025-30

• Second Plan for 2025-30 to plough back capital of ₹ 10 lakh crore in new projects announced.

Jal Jeevan Mission

• Mission to be extended until 2028 with an enhanced total outlay.

Urban Challenge Fund

• An Urban Challenge Fund of ₹ 1 lakh crore announced to implement the proposals for ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’ and ‘Water and Sanitation’, allocation of ₹ 10,000 crore proposed for 2025-26.

Nuclear Energy Mission for Viksit Bharat

• Amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act to be taken up.
• Nuclear Energy Mission for research & development of Small Modular Reactors (SMR) with an outlay of ₹20,000 crore to be set up, 5 indigenously developed SMRs to be operational by 2033.

Shipbuilding

• The Shipbuilding Financial Assistance Policy to be revamped.
• Large ships above a specified size to be included in the infrastructure harmonized master list (HML).

Maritime Development Fund

• A Maritime Development Fund with a corpus of ₹ 25,000 crore to be set up, with up to 49 per cent contribution by the Government, and the balance from ports and private sector.

UDAN - Regional Connectivity Scheme

• A modified UDAN scheme announced to enhance regional connectivity to 120 new destinations and carry 4 crore passengers in the next 10 years.
• Also to support helipads and smaller airports in hilly, aspirational, and North East region districts.

Greenfield Airport in Bihar

• Greenfield airports announced in Bihar, in addition to the expansion of the capacity of Patna airport and a brownfield airport at Bihta.

Western Koshi Canal Project in Mithilanchal

• Financial support for the Western Koshi Canal ERM Project in Bihar.

Mining Sector Reforms

• A policy for recovery of critical minerals from tailings to be brought out.

SWAMIH Fund 2

• A fund of ₹ 15,000 crore aimed at expeditious completion of another 1 lakh dwelling units, with contribution from the Government, banks and private investors announced.

Tourism for employment-led growth

• Top 50 tourist destination sites in the country to be developed in partnership with states through a challenge mode.

 

3. Investing in Innovation

Research, Development and Innovation

• ₹20,000 crore to be allocated to implement private sector driven Research, Development and Innovation initiative announced in the July Budget.

Deep Tech Fund of Funds

• Deep Tech Fund of Funds to be explored to catalyze the next generation startups.

PM Research Fellowship

• 10,000 fellowships for technological research in IITs and IISc with enhanced financial support.

Gene Bank for Crops Germplasm

• 2^nd Gene Bank with 10 lakh germplasm lines to be set up for future food and nutritional security.

National Geospatial Mission

• A National Geospatial Mission announced to develop foundational geospatial infrastructure and data.

Gyan Bharatam Mission

• A Gyan Bharatam Mission for survey, documentation and conservation of our manuscript heritage with academic institutions, museums, libraries and private collectors to be undertaken to cover more than 1 crore manuscripts announced.

EXPORTS AS THE 4^TH ENGINE OF DEVELOPMENT

Export Promotion Mission

• An Export Promotion Mission, with sectoral and ministerial targets, driven jointly by the Ministries of Commerce, MSME, and Finance to be set up.

BharatTradeNet

• ‘BharatTradeNet’ (BTN) for international trade to be set-up as a unified platform for trade documentation and financing solutions.

National Framework for GCC

• A national framework to be formulated as guidance to states for promoting Global Capability Centres in emerging tier 2 cities.

REFORMS AS FUEL: FINANCIAL SECTOR REFORMS AND DEVELOPMENT

FDI in Insurance Sector

• The FDI limit for the insurance sector to be raised from 74 to 100 per cent, for those companies which invest the entire premium in India.

Credit Enhancement Facility by NaBFID

• NaBFID to set up a ‘Partial Credit Enhancement Facility’ for corporate bonds for infrastructure.

Grameen Credit Score

• Public Sector Banks to develop ‘Grameen Credit Score’ framework to serve the credit needs of SHG members and people in rural areas.

Pension Sector

• A forum for regulatory coordination and development of pension products to be set up.

High Level Committee for Regulatory Reforms

• A High-Level Committee for Regulatory Reforms to be set up for a review of all non-financial sector regulations, certifications, licenses, and permissions.

Investment Friendliness Index of States

• An Investment Friendliness Index of States to be launched in 2025 to further the spirit of competitive cooperative federalism anounced.

Jan Vishwas Bill 2.0

• The Jan Vishwas Bill 2.0 to decriminalize more than 100 provisions in various laws.

 

PART B

 

DIRECT TAX

 

• No personal income tax payable upto income of Rs 12 lakh (i.e. average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime.
• This limit will be Rs 12.75 lakh for salaried tax payers, due to standard deduction of Rs 75,000.
• The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment.
• The new Income-Tax Bill to be clear and direct in text so as to make it simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation.
• Revenue of about ₹ 1 lakh crore in direct taxes will be forgone.

 

• Revised tax rate structure

 

• In the new tax regime, the revised tax rate structure will stand as follows:

 

0-4 lakh rupees	Nil
4-8 lakh rupees	5 percent
8-12 lakh rupees	10 percent
12-16 lakh rupees	15 percent
16-20 lakh rupees	20 percent
20- 24 lakh rupees	25 percent
Above 24 lakh rupees	30 percent

 

 

• TDS/TCS rationalization for easing difficulties

 Rationalization of Tax Deduction at Source (TDS) by reducing number of rates and thresholds above which TDS is deducted.

• The limit for tax deduction on interest for senior citizens doubled from the present Rs 50,000 to Rs 1 lakh.
• The annual limit of Rs 2.40 lakh for TDS on rent increased to Rs 6 lakh.
• The threshold to collect tax at source (TCS) on remittances under RBI’s Liberalized Remittance Scheme (LRS) increased from Rs 7 lakh to Rs 10 lakh.
• The provisions of the higher TDS deduction will apply only in non-PAN cases.
• Decriminalization for the cases of delay of payment of TCS up to the due date of filing statement.

 

 

• Reducing Compliance Burden

 

• Reduction of compliance burden for small charitable trusts/institutions by increasing their period of registration from 5 years to 10 years.

 

• The benefit of claiming the annual value of self-occupied properties as nil will be extended for two such self-occupied properties without any condition.

 

• Ease of Doing Business

 

• Introduction of a scheme for determining arm's length price of international transaction for a block period of three years.
• Expansion of the scope of safe harbour rules to reduce litigation and provide certainty in international taxation.
• Exemption of withdrawals made from National Savings Scheme (NSS) by individuals on or after the 29th of August, 2024.
• Similar treatment to NPS Vatsalya accounts as is available to normal NPS accounts, subject to overall limits.

 

• Employment and Investment

 

Tax certainty for electronics manufacturing Schemes

 

• Presumptive taxation regime for non-residents who provide services to a resident company that is establishing or operating an electronics manufacturing facility.
• Introduction of a safe harbour for tax certainty for non-residents who store components for supply to specified electronics manufacturing units.

 

Tonnage Tax Scheme for Inland Vessels

 

The benefits of existing tonnage tax scheme to be extended to inland vessels registered  under the Indian Vessels Act, 2021 to promote inland water transport in the country.

 

 

• Extension for incorporation of Start-Ups

Extension of the period of incorporation by 5 years to allow the benefit available to start-ups incorporated before 1.4.2030.

 

 

• Alternate Investment Funds (AIFs)

 

Certainty of taxation on the gains from securities to Category I and Category II AIFs which are undertaking investments in infrastructure and other such sectors.

 

 

• Extension of investment date for Sovereign and Pension Funds

 

Extension of the date of making investments in Sovereign Wealth Funds and Pension Funds by five more years, to 31st March, 2030, to promote funding from them to the infrastructure sector.

 

 

INDIRECT TAX

Rationalisation of Customs Tariff Structure for Industrial Goods

Union Budget 2025-26 proposes to:

1. Remove seven tariff rates. This is over and above the seven tariff rates removed in 2023-24 budget. After this, there will be only eight remaining tariff rates including ‘zero’ rate.
2. Apply appropriate cess to broadly maintain effective duty incidence except on a few items, where such incidence will reduce marginally.
3. Levy not more than one cess or surcharge. Therefore Social Welfare Surcharge on 82 tariff lines that are subject to a cess, exempted.

Revenue of about ₹ 2600 crore in indirect taxes will be forgone.

Relief on import of Drugs/Medicines

• 36 lifesaving drugs and medicines fully exempted from Basic Customs Duty (BCD).
• 6 lifesaving medicines to attract concessional customs duty of 5%.
• Specified drugs and medicines under Patient Assistance Programmes run by pharmaceutical companies fully exempted from BCD; 37 more medicines added along with 13 new patient assistance programmes.

Support to Domestic Manufacturing and Value addition

• Critical Minerals :
  • Cobalt powder and waste, the scrap of lithium-ion battery, Lead, Zinc and 12 more critical minerals fully exempted from BCD.

• Textiles:
  • Two more types of shuttle-less looms fully exempted textile machinery.
  • BCD rate on knitted fabrics revised from “10% or 20%” to “20% or ` 115 per kg, whichever is higher.
• Electronic Goods:
• BCD on Interactive Flat Panel Display (IFPD) increased from 10% to 20% .
• BCD reduced to 5% on Open Cell and other components.
• BCD on parts of Open Cells exempted.
• 35 additional capital goods for EV battery manufacturing, and 28 additional capital goods for mobile phone battery manufacturing exempted.
• Exemption of BCD on raw materials, components, consumables or parts for the manufacture of ships extended for another ten years.
• The same dispensation to continue for ship breaking.
• BCD reduced from 20% to 10% on Carrier Grade ethernet switches.
• Lithium Ion Battery:
•  Shipping Sector: 
• Telecommunication: 

Export Promotion

• Handicraft Goods:
  • Time period for export extended  from six months to one year, further extendable by another three months, if required.
  • Nine items added to list of duty-free inputs.

• Leather sector:         
  • BCD on Wet Blue leather fully exempted.
  • Crust leather exempted from 20% export duty.
• Marine products:
• BCD reduced from 30% to 5% on Frozen Fish Paste (Surimi) for manufacture and export of its analogue products.
• BCD reduced from 15% to 5% on fish hydrolysate for manufacture of fish and shrimp feeds.
• Railways MROs to benefit similar to the aircraft and ships MROs in terms of import of repair items.
• Time limit extended for export of such items from 6 months to one year and made further extendable by one year.
• Domestic MROs for Railway Goods: 

Trade facilitation

• Time limit for Provisional Assessment: 
  • For finalising the provisional assessment, time-limit of two years fixed, extendable by a year.
• Voluntary Compliance:
• A new provision introduced to enable importers or exporters, after clearance of goods, to voluntarily declare material facts and pay duty with interest but without penalty.
• Time limit for the end-use of imported inputs in the relevant rules extended from six months to one year.
• Such importers to file only quarterly statements instead of a monthly statement.
• Extended Time for End Use: