Budget 2025 LIVE Update: The new income tax bill will be easy to understand, says FM Nirmala Sitharaman

The Finance Minister's address outlined a series of transformative measures designed to support various sectors, with special focus on the middle class, vulnerable groups, and critical industries. Here’s a detailed breakdown of the key highlights from Budget 2025.

Big Relief for the Middle Class

A major announcement was made regarding income tax relief for the middle class. Under the new tax regime, individuals will pay no income tax up to ₹12 lakh per annum, providing significant relief to the salaried class and others in the income brackets. The tax slabs under the new regime are as follows:

• ₹4 to ₹8 lakh – 5%
• ₹8 to ₹12 lakh – 10%
• ₹12 to ₹16 lakh – 15%
• ₹16 to ₹20 lakh – 20%
• ₹20 to ₹24 lakh – 25%
• ₹24 lakh and above – 30%

This reform is aimed at easing the tax burden on the middle class, which is considered the backbone of India’s economy, fostering consumption, and driving economic growth.

Streamlined Tax Reforms

The Finance Minister also announced various measures to simplify tax compliance and ease the burden on taxpayers. The time limit to file updated tax returns has been extended from 2 years to 4 years, encouraging voluntary compliance. Additionally, the government has proposed the removal of Tax Collected at Source (TCS) on education-related remittances funded through loans from specified financial institutions.

Significant changes to the Tax Deducted at Source (TDS) provisions were also announced, including:

• Rationalizing TDS rates and thresholds.
• Doubling the TDS limit on interest for senior citizens from ₹50,000 to ₹1,00,000.
• Raising the TDS threshold on rent from ₹2.4 lakh to ₹6 lakh.
• Increasing the TCS threshold under the RBI’s Liberalized Remittance Scheme (LRS) from ₹7 lakh to ₹10 lakh.

These measures are designed to make tax compliance easier and more straightforward for individuals and businesses alike.

A New Income Tax Bill

In a move to further enhance taxpayer convenience and continue the government’s decade-long efforts in tax reform, Finance Minister Sitharaman announced that a new income tax bill will be introduced next week. This bill will continue the government's reform agenda, focused on simplifying tax administration and ensuring greater clarity. 

The upcoming bill will introduce a range of measures, including faceless assessments, a taxpayer charter, and faster processing of returns, with nearly 99% of returns now being processed on a self-assessment basis. This aligns with the government's commitment to the principle of "trust first, scrutinize later," making the tax system more user-friendly and efficient.

Critical Mineral and Healthcare Support

In a bid to bolster manufacturing in India, the government proposed full exemption from Basic Customs Duty (BCD) on critical minerals like cobalt powder and lithium-ion battery waste. This initiative is expected to create job opportunities, especially for the youth, and aid the transition to clean energy.

In addition to this, a major boost was provided to the healthcare sector. The government announced a series of tax exemptions for life-saving drugs and medicines, including adding 36 new life-saving drugs to the list of medicines fully exempt from basic customs duty. This move is intended to provide relief to cancer patients, those suffering from rare diseases, and individuals with chronic conditions.

Moreover, patient assistance programs run by pharmaceutical companies will be fully exempt from customs duties, provided the medicines are supplied free of cost to patients.

No More Multiple Cesses

The government proposed a significant simplification in the cess and surcharge structure. Only one cess or surcharge will be levied, and a social welfare surcharge will be exempted on 82 tariff lines, further streamlining the tax system.

A Focus on Ease of Doing Business

Finance Minister Sitharaman emphasized the government's commitment to improving the ease of doing business in India. The newly proposed income tax bill, which will be introduced next week, aims to simplify tax language, ensure greater clarity, and reduce confusion for taxpayers. This aligns with the government’s broader efforts to create a more taxpayer-friendly environment through measures such as faceless assessments, faster processing of returns, and greater trust-based compliance.

Looking Ahead: A Vision for 'Viksit Bharat'

The Union Budget 2025-26 is a blueprint for India's growth aspirations under the leadership of Prime Minister Narendra Modi. In her speech, Sitharaman stated, "This budget is dedicated to accelerating growth, driven by our aspirations for a 'Viksit Bharat.'" She further emphasized that India remains the fastest-growing economy among major economies, and the proposed measures will ensure the nation’s growth continues at an accelerated pace.

With these ambitious reforms, the government aims to unlock India's full economic potential, ensuring that the benefits of growth reach all sectors, especially the middle class, farmers, and businesses.

The Union Budget 2025 is a forward-looking and inclusive plan that prioritizes the needs of the middle class, promotes ease of doing business, supports critical sectors like healthcare and energy, and simplifies tax compliance. With these initiatives, India is poised to continue its trajectory toward becoming a 'Viksit Bharat,' driving economic growth and creating opportunities for all.