Budget 2025-2026

Speech of
Nirmala Sitharaman
Minister of Finance

February 1, 2025

Hon’ble Speaker,
I present the Budget for 2025-26.
Introduction
1. This Budget continues our Government’s efforts to:
a) accelerate growth,
b) secure inclusive development,
c) invigorate private sector investments,
d) uplift household sentiments, and
e) enhance spending power of India’s rising middle class.
2. Together, we embark on a journey to unlock our nation’s
tremendous potential for greater prosperity and global positioning
under the leadership of Hon’ble Prime Minister Shri Narendra Modi.
3. As we complete the first quarter of the 21st century, continuing
geopolitical headwinds suggest lower global economic growth over the
medium term. However, our aspiration for a Viksit Bharat inspires us,
and the transformative work we have done during our Government’s
first two terms guides us, to march forward resolutely.
Budget Theme
4. Our economy is the fastest-growing among all major global
economies. Our development track record of the past 10 years and
structural reforms have drawn global attention. Confidence in India’s
 2

capability and potential has only grown in this period. We see the next
five years as a unique opportunity to realize ‘Sabka Vikas’, stimulating
balanced growth of all regions.
5. The great Telugu poet and playwright Gurajada Appa Rao had
said, ‘Desamante Matti Kaadoi, Desamante Manushuloi’; meaning, ‘A
country is not just its soil, a country is its people.’ In line with this, for us,
Viksit Bharat, encompasses:
a) zero-poverty;
b) hundred per cent good quality school education;
c) access to high-quality, affordable, and comprehensive
healthcare;
d) hundred per cent skilled labour with meaningful employment;
e) seventy per cent women in economic activities; and
f) farmers making our country the ‘food basket of the world’.
6. In this Budget, the proposed development measures span ten
broad areas focusing on Garib, Youth, Annadata and Nari.
1) Spurring Agricultural Growth and Productivity;
2) Building Rural Prosperity and Resilience;
3) Taking Everyone Together on an Inclusive Growth path;
4) Boosting Manufacturing and Furthering Make in India;
5) Supporting MSMEs;
6) Enabling Employment-led Development;
7) Investing in people, economy and innovation;
8) Securing Energy Supplies;
9) Promoting Exports; and
10) Nurturing Innovation.
7. For this journey of development,
a) Our four powerful engines are: Agriculture, MSME, Investment,
and Exports
b) The fuel: our Reforms
 3

c) Our guiding spirit: Inclusivity

d) And the destination: Viksit Bharat
8. This Budget aims to initiate transformative reforms across six
domains. During the next five years, these will augment our growth
potential and global competitiveness. The domains are:
1) Taxation;
2) Power Sector;
3) Urban Development;
4) Mining;
5) Financial Sector; and
6) Regulatory Reforms.
Agriculture as the 1st Engine
9. Now I move to specific proposals, beginning with ‘Agriculture as
the 1st Engine’.
Prime Minister Dhan-Dhaanya Krishi Yojana - Developing Agri Districts
Programme
10. Motivated by the success of the Aspirational Districts
Programme, our Government will undertake a ‘Prime Minister Dhan-
Dhaanya Krishi Yojana’ in partnership with states. Through the
convergence of existing schemes and specialized measures, the
programme will cover 100 districts with low productivity, moderate crop
intensity and below-average credit parameters. It aims to (1) enhance
agricultural productivity, (2) adopt crop diversification and sustainable
agriculture practices, (3) augment post-harvest storage at the
panchayat and block level, (4) improve irrigation facilities, and (5)
facilitate availability of long-term and short-term credit. This
programme is likely to help 1.7 crore farmers.
Building Rural Prosperity and Resilience
11. A comprehensive multi-sectoral ‘Rural Prosperity and Resilience’
programme will be launched in partnership with states. This will
address under-employment in agriculture through skilling, investment,
technology, and invigorating the rural economy. The goal is to generate
ample opportunities in rural areas so that migration is an option, but not
 4

a necessity.
12. The programme will focus on rural women, young farmers, rural
youth, marginal and small farmers, and landless families. Details are in
Annexure A.
13. Global and domestic best practices will be incorporated and
appropriate technical and financial assistance will be sought from
multilateral development banks. In Phase-1, 100 developing agri-
districts will be covered.
Aatmanirbharta in Pulses
14. Our Government is implementing the National Mission for Edible
Oilseed for achieving atmanirbhrata in edible oils. Our farmers have the
capability to grow enough for our needs and more.
15. Ten years ago, we made concerted efforts and succeeded in
achieving near self-sufficiency in pulses. Farmers responded to the
need by increasing the cultivated area by 50 per cent and Government
arranged for procurement and remunerative prices. Since then, with
rising incomes and better affordability, our consumption of pulses has
increased significantly.
16. Our Government will now launch a 6-year “Mission for
Aatmanirbharta in Pulses” with a special focus on Tur, Urad and
Masoor. Details are in Annexure B. Central agencies (NAFED and NCCF)
will be ready to procure these 3 pulses, as much as offered during the
next 4 years from farmers who register with these agencies and enter
into agreements.
Comprehensive Programme for Vegetables & Fruits
17. It is encouraging that our people are increasingly becoming
aware of their nutritional needs. It is a sign of a society becoming
healthier. With rising income levels, the consumption of vegetables,
fruits and shree-anna is increasing significantly. A comprehensive
programme to promote production, efficient supplies, processing, and
remunerative prices for farmers will be launched in partnership with
states. Appropriate institutional mechanisms for implementation and
participation of farmer producer organizations and cooperatives will be
 5

set up.
Makhana Board in Bihar
18. For this, there is a special opportunity for the people of Bihar. A
Makhana Board will be established in the state to improve production,
processing, value addition, and marketing of makhana. The people
engaged in these activities will be organized into FPOs. The Board will
provide handholding and training support to makhana farmers and will
also work to ensure they receive the benefits of all relevant Government
schemes.
National Mission on High Yielding Seeds
19. A National Mission on High Yielding Seeds will be launched,
aimed at (1) strengthening the research ecosystem, (2) targeted
development and propagation of seeds with high yield, pest resistance
and climate resilience, and (3) commercial availability of more than 100
seed varieties released since July 2024.
Fisheries
20. India ranks second-largest globally in fish production and
aquaculture. Seafood exports are valued at ` 60 thousand crore. To
unlock the untapped potential of the marine sector, our Government will
bring in an enabling 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
21. For the benefit of lakhs of cotton growing farmers, I am pleased
to announce a ‘Mission for Cotton Productivity’. This 5-year mission will
facilitate significant improvements in productivity and sustainability of
cotton farming, and promote extra-long staple cotton varieties. The
best of science & technology support will be provided to farmers.
Aligned with our integrated 5F vision for the textile sector, this will help
in increasing incomes of the farmers, and ensure a steady supply of
quality cotton for rejuvenating India’s traditional textile sector.
Enhanced Credit through KCC
22. Kisan Credit Cards (KCC) facilitate short term loans for 7.7 crore
farmers, fishermen, and dairy farmers. The loan limit under the
Modified Interest Subvention Scheme will be enhanced from ` 3 lakh to
5 lakh for loans taken through the KCC.
 6

Urea Plant in Assam

23. For Atmanirbharta in urea production, our Government had
reopened three dormant urea plants in the Eastern region. To further
augment urea supply, a plant with annual capacity of 12.7 lakh metric
tons will be set up at Namrup, Assam.
India Post as a Catalyst for the Rural Economy
24. India Post with 1.5 lakh rural post offices, complemented by the
India Post Payment Bank and a vast network of 2.4 lakh Dak Sevaks,
will be repositioned to act as a catalyst for the rural economy. Details
are at Annexure C.
25. India Post will also be transformed as a large public logistics
organization. This will meet the rising needs of Viswakarmas, new
entrepreneurs, women, self-help groups, MSMEs, and large business
organizations.
Support to NCDC
26. Our Government will provide support to NCDC for its lending
operations for the cooperative sector.
MSMEs as the 2nd engine
nd
27. Now, I move to MSMEs as the 2 engine, which encompasses
manufacturing and services with a focus on MSMEs numbering 5.7
crore.
Revision in classification criteria for MSMEs
28. Currently, over 1 crore registered MSMEs, employing 7.5 crore
people, and generating 36 per cent of our manufacturing, have come
together to position India as a global manufacturing hub. With their
quality products, these MSMEs are responsible for 45 per cent of our
exports. To help them achieve higher efficiencies of scale,
technological upgradation and better access to capital, the investment
and turnover limits for classification of all MSMEs will be enhanced to
2.5 and 2 times respectively. This will give them the confidence to
grow and generate employment for our youth. The details are in
Annexure D.
Significant enhancement of credit availability with guarantee cover
29. To improve access to credit, the credit guarantee cover will be
 7

enhanced:
a) For Micro and Small Enterprises, from ` 5 crore to 10 crore,
leading to additional credit of ` 1.5 lakh crore in the next 5
years;
b) For Startups, from ` 10 crore to 20 crore, with the guarantee
fee being moderated to 1 per cent for loans in 27 focus
sectors important for Atmanirbhar Bharat; and
c) For well-run exporter MSMEs, for term loans up to ` 20 crore.
Credit Cards for Micro Enterprises
30. We will introduce customized Credit Cards with a ` 5 lakh limit
for micro enterprises registered on Udyam portal. In the first year, 10
lakh such cards will be issued.
Fund of Funds for Startups
31. The Alternate Investment Funds (AIFs) for startups have
received commitments of more than ` 91,000 crore. These are
supported by the Fund of Funds set up with a Government contribution
of ` 10,000 crore. Now, a new Fund of Funds, with expanded scope and
a fresh contribution of another
` 10,000 crore will be set up.

Scheme for First-time Entrepreneurs

32. A new scheme will be launched for 5 lakh women, Scheduled
Castes and Scheduled Tribes first-time entrepreneurs. This will provide
term loans up
to ` 2 crore during the next 5 years. The scheme will incorporate
lessons from the successful Stand-Up India scheme. Online capacity
building for entrepreneurship and managerial skills will also be
organized.
Measures for Labour-Intensive Sectors
33. To promote employment and entrepreneurship opportunities in
labour-intensive sectors, our Government will undertake specific policy
and facilitation measures.
Focus Product Scheme for Footwear & Leather Sectors
34. To enhance the productivity, quality and competitiveness of
 8

India’s footwear and leather sector, a focus product scheme will be

implemented. The scheme will support design capacity, component
manufacturing, and machinery required for production of non-leather
quality footwear, besides the support for leather footwear and products.
The scheme is expected 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
35. Building on the National Action Plan for Toys, we will implement
a scheme to make India a global hub for toys. The scheme will focus on
development of clusters, skills, and a manufacturing ecosystem that
will create high-quality, unique, innovative, and sustainable toys that will
represent the 'Made in India' brand.
Support for Food Processing
36. In line with our commitment towards ‘Purvodaya’, we will
establish a National Institute of Food Technology, Entrepreneurship and
Management in Bihar. The institute will provide a strong fillip to food
processing activities in the entire Eastern region. This will result in (1)
enhanced income for the farmers through value addition to their
produce, and (2) skilling, entrepreneurship and employment
opportunities for the youth.
Manufacturing Mission - Furthering “Make in India”
37. Our Government will set up a National Manufacturing Mission
covering small, medium and large industries for furthering “Make in
India” by providing policy support, execution roadmaps, governance and
monitoring framework for central ministries and states. Details are in
Annexure E.
Clean Tech Manufacturing
38. Given our commitment to climate-friendly development, the
Mission will also support Clean Tech manufacturing. This will aim to
improve domestic value addition and build our ecosystem for solar PV
cells, EV batteries, motors and controllers, electrolyzers, wind turbines,
very high voltage transmission equipment and grid scale batteries.
Investment as the 3rd engine
39. Now, I move to Investment as the 3rd engine, which
 9

encompasses investing in people, investing in the economy and

investing in innovation.
A. Investing in People
Saksham Anganwadi and Poshan 2.0
40. The Saksham Anganwadi and Poshan 2.0 programme provides
nutritional support to more than 8 crore children, 1 crore pregnant
women and lactating mothers all over the country, and about 20 lakh
adolescent girls in aspirational districts and the north-east region. The
cost norms for the nutritional support will be enhanced appropriately.
Atal Tinkering Labs
41. Fifty thousand Atal Tinkering Labs will be set up in Government
schools in next 5 years to cultivate the spirit of curiosity and innovation,
and foster a scientific temper among young minds.
Broadband Connectivity to Government Secondary Schools and PHCs
42. Broadband connectivity will be provided to all Government
secondary schools and primary health centres in rural areas under the
Bharatnet project.
Bharatiya Bhasha Pustak Scheme
43. We propose to implement a Bharatiya Bhasha Pustak Scheme to
provide digital-form Indian language books for school and higher
education. This aims to help students understand their subjects better.
National Centres of Excellence for Skilling
44. Building on the initiative announced in the July 2024 Budget, five
National Centres of Excellence for skilling will 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. The
partnerships will cover curriculum design, training of trainers, a skills
certification framework, and periodic reviews.
Expansion of Capacity in IITs

45. Total number of students in 23 IITs has increased 100 per cent
from 65,000 to 1.35 lakh in the past 10 years. Additional infrastructure
 10

will be created in the 5 IITs started after 2014 to facilitate education for
6,500 more students. Hostel and other infrastructure capacity at IIT,
Patna will also be expanded.

Centre of Excellence in AI for Education

46. I had announced three Centres of Excellence in Artificial

Intelligence for agriculture, health, and sustainable cities in 2023. Now a
Centre of Excellence in Artificial Intelligence for education will be set up
with a total outlay of ` 500 crore.

Expansion of medical education

47. Our Government has added almost 1.1 lakh UG and PG medical
education seats in ten years, an increase of 130 per cent. In the next
year, 10,000 additional seats will be added in medical colleges and
hospitals, towards the goal of adding 75,000 seats in the next 5 years.
Day Care Cancer Centres in all District Hospitals
48. Our Government will facilitate setting up of Day Care Cancer
Centres in all district hospitals in the next 3 years. 200 Centres will be
established in 2025-26.
Strengthening urban livelihoods
49. Our Government has been giving priority to assisting urban poor
and vulnerable groups. A scheme for socio-economic upliftment of
urban workers will be implemented to help them improve their incomes,
have sustainable livelihoods and a better quality of life.
PM SVANidhi
50. PM SVANidhi scheme has benefitted more than 68 lakh street
vendors giving them respite from high-interest informal sector loans.
Building on this success, the scheme will 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
51. Gig workers of online platforms provide great dynamism to the
new-age services economy. Recognising their contribution, our
Government will arrange for their identity cards and registration on the
 11

e-Shram portal. They will be provided healthcare under PM Jan Arogya

Yojana. This measure is likely to assist nearly 1 crore gig-workers.
B. Investing in the Economy
Public Private Partnership in Infrastructure
52. Each infrastructure-related ministry will come up with a 3-year
pipeline of projects that can be implemented in PPP mode. States will
also be encouraged to do so and can seek support from the IIPDF (India
Infrastructure Project Development Fund) scheme to prepare PPP
proposals.
Support to States for Infrastructure
53. An outlay of ` 1.5 lakh crore is proposed for the 50-year interest
free loans to states for capital expenditure and incentives for reforms.
Asset Monetization Plan 2025-30
54. Building on the success of the first Asset Monetization Plan
announced in 2021, the second Plan for 2025-30 will be launched to
plough back capital of ` 10 lakh crore in new projects. Regulatory and
fiscal measures will be fine-tuned to support the Plan.
Jal Jeevan Mission
55. Since 2019, 15 crore households representing 80 per cent of
India’s rural population have been provided access to potable tap water
connections. To achieve 100 per cent coverage, I am pleased to
announce the extension of the Mission until 2028 with an enhanced
total outlay.
56. The Mission’s focus will be on the quality of infrastructure and
O&M of rural piped water supply schemes through “Jan Bhagidhari”.
Separate MoUs will be signed with states/UTs, to ensure sustainability
and citizen-centric water service delivery.
Urban Sector Reforms

57. Building on the July Budget proposals, urban sector reforms

related to governance, municipal services, urban land, and planning will
be incentivized.
Urban Challenge Fund
 12

58. The Government will set up an Urban Challenge Fund of ` 1 lakh

crore to implement the proposals for ‘Cities as Growth Hubs’, ‘Creative
Redevelopment of Cities’ and ‘Water and Sanitation’ announced in the
July Budget.
59. This fund will finance up to 25 per cent of the cost of bankable
projects with a stipulation that at least 50 per cent of the cost is funded
from bonds, bank loans, and PPPs. An allocation of ` 10,000 crore is
proposed for 2025-26.

Power Sector Reforms

60. We will incentivize electricity distribution reforms and
augmentation of intra-state transmission capacity by states. This will
improve 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.

Nuclear Energy Mission for Viksit Bharat

61. Development of at least 100 GW of nuclear energy by 2047 is
essential for our energy transition efforts. For an active partnership with
the private sector towards this goal, amendments to the Atomic Energy
Act and the Civil Liability for Nuclear Damage Act will be taken up.

62. A Nuclear Energy Mission for research & development of Small

Modular Reactors (SMR) with an outlay of ` 20,000 crore will be set up.
At least 5 indigenously developed SMRs will be operationalized by 2033.
Shipbuilding
63. The Shipbuilding Financial Assistance Policy will be revamped to
address cost disadvantages. This will also include Credit Notes for
shipbreaking in Indian yards to promote the circular economy.
64. Large ships above a specified size will be included in the
infrastructure harmonized master list (HML).
65. Shipbuilding Clusters will be facilitated to increase the range,
categories and capacity of ships. This will include additional
infrastructure facilities, skilling and technology to develop the entire
 13

ecosystem.
Maritime Development Fund

66. For long-term financing for the maritime industry, a Maritime

Development Fund with a corpus of ` 25,000 crore will be set up. This
will be for distributed support and promoting competition. This will
have up to 49 per cent contribution by the Government, and the balance
will be mobilized from ports and private sector.
UDAN - Regional Connectivity Scheme
67. UDAN has enabled 1.5 crore middle-class people to meet their
aspirations for speedier travel. The scheme has connected 88 airports
and operationalized 619 routes. Inspired by that success, a modified
UDAN scheme will be launched to enhance regional connectivity to 120
new destinations and carry 4 crore passengers in the next 10 years.
The scheme will also support helipads and smaller airports in hilly,
aspirational, and North East region districts.
Greenfield Airport in Bihar
68. Greenfield airports will be facilitated in Bihar to meet the future
needs of the State. These will be in addition to the expansion of the
capacity of Patna airport and a brownfield airport at Bihta.
Western Koshi Canal Project in Mithilanchal
69. Financial support will be provided for the Western Koshi Canal
ERM Project benefitting a large number of farmers cultivating over
50,000 hectares of land in the Mithilanchal region of Bihar.
Mining Sector Reforms
70. Mining sector reforms, including those for minor minerals, will be
encouraged through sharing of best practices and institution of a State
Mining Index.
71. A policy for recovery of critical minerals from tailings will be
brought out.
SWAMIH Fund 2
 14

72. Under the Special Window for Affordable and Mid-Income

Housing (SWAMIH) fifty thousand dwelling units in stressed housing
projects have been completed, and keys handed over to home-buyers.
Another forty thousand units will be completed in 2025, further helping
middle-class families who were paying EMIs on loans taken for
apartments, while also paying rent for their current dwellings.
73. Building on this success, SWAMIH Fund 2 will be established as
a blended finance facility with contribution from the Government, banks
and private investors. This fund of ` 15,000 crore will aim for
expeditious completion of another 1 lakh units.
PM Gati Shakti Data for Private Sector
74. For furthering PPPs and assisting the private sector in project
planning, access to relevant data and maps from the PM Gati Shakti
portal will be provided.
Tourism for employment-led growth
75. Top 50 tourist destination sites in the country will be developed
in partnership with states through a challenge mode. Land for building
key infrastructure will have to be provided by states. Hotels in those
destinations will be included in the infrastructure HML.
76. The following measures will be taken for facilitating employment
-led growth:
1) Organizing intensive skill-development programmes for our
youth including in Institutes of Hospitality Management;
2) Providing MUDRA loans for homestays;
3) Improving ease of travel and connectivity to tourist
destinations;
4) Providing performance-linked incentives to states for
effective destination management including tourist
amenities, cleanliness, and marketing efforts; and
5) Introducing streamlined e-visa facilities along with visa-fee
waivers for certain tourist groups.
77. Continuing with the emphasis on places of spiritual and religious
 15

significance in the July Budget, there will be a special focus on

destinations related to the life and times of Lord Buddha.
Medical Tourism and Heal in India
78. Medical Tourism and Heal in India will be promoted in
partnership with the private sector along with capacity building and
easier visa norms.
C. Investing in Innovation
Research, Development and Innovation
79. To implement private sector driven Research, Development and
Innovation initiative announced in the July Budget, I am now allocating
` 20,000 crore.

Deep Tech Fund of Funds

80. A Deep Tech Fund of Funds will also be explored to catalyze the
next generation startups as a part of this initiative.
PM Research Fellowship
81. In the next five years, under the PM Research Fellowship scheme,
we will provide ten thousand fellowships for technological research in
IITs and IISc with enhanced financial support.
Gene Bank for Crops Germplasm
82. The 2nd Gene Bank with 10 lakh germplasm lines will be set up
for future food and nutritional security. This will provide conservation
support to both public and private sectors for genetic resources.
National Geospatial Mission
83. We will start a National Geospatial Mission to develop
foundational geospatial infrastructure and data. Using PM Gati Shakti,
this Mission will facilitate modernization of land records, urban
planning, and design of infrastructure projects.
Gyan Bharatam Mission
84. A Gyan Bharatam Mission for survey, documentation and
conservation of our manuscript heritage with academic institutions,
museums, libraries and private collectors will be undertaken to cover
more than 1 crore manuscripts. We will set up a National Digital
 16

Repository of Indian knowledge systems for knowledge sharing.

85. Now, I move to Exports as the 4th engine.
Exports as the 4th engine
Export Promotion Mission
86. We will set up an Export Promotion Mission, with sectoral and
ministerial targets, driven jointly by the Ministries of Commerce, MSME,
and Finance. It will facilitate easy access to export credit, cross-border
factoring support, and support to MSMEs to tackle non-tariff measures
in overseas markets.
BharatTradeNet
87. A digital public infrastructure, ‘BharatTradeNet’ (BTN) for
international trade will be set-up as a unified platform for trade
documentation and financing solutions. This will complement the
Unified Logistics Interface Platform. The BTN will be aligned with
international practices.
Support for integration with Global Supply Chains
88. Support will be provided to develop domestic manufacturing
capacities for our economy’s integration with global supply chains.
Sectors will be identified based on objective criteria.
89. Facilitation groups with participation of senior officers and
industry representatives will be formed for select products and supply
chains.
90. Through this, there are huge opportunities related to Industry 4.0,
which needs high skills and talent. Our youth have both. Our
Government will support the domestic electronic equipment industry to
leverage this opportunity for the benefit of the youth.
National Framework for GCC
91. A national framework will be formulated as guidance to states
for promoting Global Capability Centres in emerging tier 2 cities. This
will suggest measures for enhancing availability of talent and
infrastructure, building-byelaw reforms, and mechanisms for
collaboration with industry.
Warehousing facility for air cargo
 17

92. Our Government will facilitate upgradation of infrastructure and

warehousing for air cargo including high value perishable horticulture
produce. Cargo screening and customs protocols will be streamlined
and made user-friendly.
Reforms as the Fuel
93. Now I move to ‘Reforms as the Fuel’, and detail specific reforms.
Tax Reforms
94. Over the past 10 years, our Government has implemented several
reforms for convenience of tax payers, such as (1) faceless assessment,
(2) tax payers charter, (3) faster returns, (4) almost 99 per cent returns
being on self-assessment, and (5) Vivad se Vishwas scheme. Continuing
these efforts,
I reaffirm the commitment of the tax department to “trust first, scrutinize
later”. I also propose to introduce the new income-tax bill next week. I will
detail the indirect tax reforms and changes in direct taxes in Part B.
Financial Sector Reforms and Development
FDI in Insurance Sector
95. The FDI limit for the insurance sector will be raised from 74 to
100 per cent. This enhanced limit will be available for those companies
which invest the entire premium in India. The current guardrails and
conditionalities associated with foreign investment will be reviewed and
simplified.
Expanding Services of India Post Payment Bank
96. The services of India Post Payment Bank will be deepened and
expanded in rural areas.
Credit Enhancement Facility by NaBFID
97. NaBFID will set up a ‘Partial Credit Enhancement Facility’ for
corporate bonds for infrastructure.
Grameen Credit Score
98. Public Sector Banks will develop ‘Grameen Credit Score’
framework to serve the credit needs of SHG members and people in
rural areas.
Pension Sector
 18

99. A forum for regulatory coordination and development of pension

products will be set up.
KYC Simplification
100. To implement the earlier announcement on simplifying the KYC
process, the revamped Central KYC Registry will be rolled out in 2025.
We will also implement a streamlined system for periodic updating.

Merger of Companies
101. Requirements and procedures for speedy approval of company
mergers will be rationalized. The scope for fast-track mergers will also
be widened and the process made simpler.
Bilateral Investment Treaties

102. As proposed in the Interim Budget, we signed Bilateral

Investment Treaties (BIT) with two countries in 2024. To encourage
sustained foreign investment and in the spirit of ‘first develop India’, the
current model BIT will be revamped and made more investor-friendly.

Regulatory Reforms
103. In the last ten years in several aspects, including financial and
non-financial, our Government has demonstrated a steadfast
commitment to ‘Ease of Doing Business’. We are determined to ensure
that our regulations must keep up with technological innovations and
global policy developments. A light-touch regulatory framework based
on principles and trust will unleash productivity and employment.
Through this framework, we will update regulations that were made
under old laws. To develop this modern, flexible, people-friendly, and
trust-based regulatory framework appropriate for the twenty-first
century, I propose four specific measures:

High Level Committee for Regulatory Reforms

104. A High-Level Committee for Regulatory Reforms will be set up
for a review of all non-financial sector regulations, certifications,
licenses, and permissions. The committee will be expected make
recommendations within a year. The objective is to strengthen trust-
 19

based economic governance and take transformational measures to

enhance ‘ease of doing business’, especially in matters of inspections
and compliances. States will be encouraged to join in this endeavour.

Investment Friendliness Index of States

105. An Investment Friendliness Index of States will be launched in

2025 to further the spirit of competitive cooperative federalism.

FSDC Mechanism
106. Under the Financial Stability and Development Council, a
mechanism will be set up to evaluate impact of the current financial
regulations and subsidiary instructions. It will also formulate a
framework to enhance their responsiveness and development of the
financial sector.
Jan Vishwas Bill 2.0

107. In the Jan Vishwas Act 2023, more than 180 legal provisions
were decriminalized. Our Government will now bring up the Jan
Vishwas Bill 2.0 to decriminalize more than 100 provisions in various
laws.
Fiscal Policy

108. Now I move to fiscal policy matters.

Fiscal Consolidation
109. In the July Budget, I had committed to staying the course for
fiscal consolidation. Our endeavour will be to keep the fiscal deficit
each year such that the Central Government debt remains on a
declining path as a percentage of the GDP. The roadmap for the next 6
years has been detailed in the FRBM statement.

Revised Estimates 2024-25

110. The Revised Estimate of the total receipts other than
borrowings is
` 31.47 lakh crore, of which the net tax receipts are ` 25.57 lakh crore.
The Revised Estimate of the total expenditure is ` 47.16 lakh crore, of
 20

which the capital expenditure is about ` 10.18 lakh crore.

111. The Revised Estimate of the fiscal deficit is 4.8 per cent of GDP.
Budget Estimates 2025-26
112. Coming to 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.
113. The fiscal deficit is estimated to be 4.4 per cent of GDP.
114. To finance the fiscal deficit, the net market borrowings from
dated securities are estimated at ` 11.54 lakh crore. The balance
financing is expected to come from small savings and other sources.
The gross market borrowings are estimated at ` 14.82 lakh crore.
I will now move to Part B.
 21

PART B

Indirect Taxes
115. My proposals relating to Customs aim to rationalize tariff
structure and address duty inversion. These will also support domestic
manufacturing and value addition, promote exports, facilitate trade and
provide relief to common people.
Rationalisation of Customs Tariff Structure for Industrial Goods

116. As a part of comprehensive review of Customs rate structure

announced in July 2024 Budget, I propose to:
(i) 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.
(ii) apply appropriate cess to broadly maintain effective duty
incidence except on a few items, where such incidence will
reduce marginally.
(iii) levy not more than one cess or surcharge. Therefore, I
propose to exempt Social Welfare Surcharge on 82 tariff
lines that are subject to a cess.
117. I shall now take up sector specific proposals.

Relief on import of Drugs/Medicines

118. To provide relief to patients, particularly those suffering from
cancer, rare diseases and other severe chronic diseases, I propose to
add 36 lifesaving drugs and medicines to the list of medicines fully
exempted from Basic Customs Duty (BCD). I also propose to add 6
lifesaving medicines to the list attracting concessional customs duty of
5%. Full exemption and concessional duty will also respectively apply
on the bulk drugs for manufacture of the above.

119. Specified drugs and medicines under Patient Assistance

Programmes run by pharmaceutical companies are fully exempt from
 22

BCD, provided the medicines are supplied free of cost to patients. I

propose to add 37 more medicines along with 13 new patient
assistance programmes.
Support to Domestic Manufacturing and Value addition
Critical Minerals
120. In the July 2024 Budget, I had fully exempted BCD on 25 critical
minerals that are not domestically available. I had also reduced BCD of
2 other such minerals to provide a major fillip to their processing
especially by MSMEs. Now, I propose to fully exempt cobalt powder
and waste, the scrap of lithium-ion battery, Lead, Zinc and 12 more
critical minerals. This will help secure their availability for
manufacturing in India and promote more jobs for our youth.
Textiles
121. To promote domestic production of technical textile products
such as agro-textiles, medical textiles and geo textiles at competitive
prices, I propose to add two more types of shuttle-less looms to the list
of fully exempted textile machinery. I also propose to revise the BCD
rate on knitted fabrics covered by nine tariff lines from “10% or 20%” to
“20% or ` 115 per kg, whichever is higher”.
Electronic Goods
122. In line with our ‘Make in India’ policy, and to rectify inverted duty
structure, I propose to increase the BCD on Interactive Flat Panel
Display (IFPD) from 10% to 20% and reduce the BCD to 5% on Open Cell
and other components.
123. In 2023 -24 Budget, for the manufacture of Open Cells of
LCD/LED TVs, I had reduced the BCD on parts of Open Cells from 5% to
2.5% . To further boost the manufacture of such Open Cells, the BCD on
these parts will now stand exempted.
Lithium Ion Battery
124. To the list of exempted capital goods, I propose to add 35
additional capital goods for EV battery manufacturing, and 28
additional capital goods for mobile phone battery manufacturing. This
will boost domestic manufacture of lithium-ion battery, both for mobile
phones and electric vehicles.
 23

Shipping Sector
125. Considering that shipbuilding has a long gestation period, I
propose to continue the exemption of BCD on raw materials,
components, consumables or parts for the manufacture of ships for
another ten years. I also propose the same dispensation for ship
breaking to make it more competitive.
Telecommunication
126. To prevent classification disputes, I propose to reduce the BCD
from 20% to 10% on Carrier Grade ethernet switches to make it at par
with Non-Carrier Grade ethernet switches.
Export Promotion
Handicraft Goods
127. To facilitate exports of handicrafts, I propose to extend the time
period for export from six months to one year, further extendable by
another three months, if required. I also propose to add nine items to
the list of duty-free inputs.
Leather sector
128. I propose to fully exempt BCD on Wet Blue leather to facilitate
imports for domestic value addition and employment. I also propose to
exempt crust leather from 20% export duty to facilitate exports by small
tanners.
Marine products
129. To enhance India's competitiveness in the global seafood
market, I propose to reduce BCD from 30% to 5% on Frozen Fish Paste
(Surimi) for manufacture and export of its analogue products. I also
propose to reduce BCD from 15% to 5% on fish hydrolysate for
manufacture of fish and shrimp feeds.
Domestic MROs for Railway Goods
130. In July 2024 Budget, to promote development of domestic
MROs for aircraft and ships, I had extended the time limit for export of
foreign origin goods that were imported for repairs, from 6 months to
one year and further extendable by one year. I now propose to extend
the same dispensation for railway goods.
 24

Trade facilitation
Time limit for Provisional Assessment
131. Presently, the Customs Act, 1962 does not provide any time
limit to finalize Provisional Assessments leading to uncertainty and
cost to trade. As a measure of promoting ease of doing business, I
propose to fix a time-limit of two years, extendable by a year, for
finalising the provisional assessment.
Voluntary Compliance
132. I propose to introduce a new provision that will enable
importers or exporters, after clearance of goods, to voluntarily declare
material facts and pay duty with interest but without penalty. This will
incentivise voluntary compliance. However, this will not apply in cases
where department has already initiated audit or investigation
proceedings.
Extended Time for End Use
133. For industry to better plan their imports, I propose to extend the
time limit for the end-use of imported inputs in the relevant rules, from
six months to one year. This will provide operational flexibility in view of
cost and uncertainty of supply. Further, such importers will now have to
file only quarterly statements instead of a monthly statement.

Direct Taxes
I now come to my Direct tax proposals.
134. In Part A, I have briefly underlined Taxation Reforms as one of
key reforms to realize our vision of Viksit Bharat. In respect of criminal
law, Our Government had earlier ushered in Bharatiya Nyaya Sanhita
replacing Bharatiya Danda Sanhita. I am happy to inform this August
House and the country that the new income-tax bill will carry forward
the same spirit of “Nyaya”. The new bill will be clear and direct in text
with close to half of the present law, in terms of both chapters and
words. It will be simple to understand for taxpayers and tax
administration, leading to tax certainty and reduced litigation.
135. Reforms, however, are not a destination. They are a means to
achieve good governance for our people and economy. Providing good
 25

governance primarily involves being responsive. The Thirukkural

captures this in Verse 542, which reads:
வாேனா க வா உலெக லா ம னவ
ேகா ேநா க வா .

vaanokki vaalum ulakellaam mannavan

koalnokki vaalung kuti
Meaning:
Just as living beings live expecting rains,
Citizens live expecting good governance.
Our Government is committed to keeping an ear to the ground and a
finger on the pulse, and responding while balancing our nation-building
efforts. The following measures will detail just how our Government
under the guidance of PM Modi has taken steps to understand and
address the needs voiced by our citizens. My tax proposals are guided
by this spirit.
136. The objectives of my proposals are as follows:
(i) Personal Income Tax reforms with special focus on
middle class
(ii) Rationalization of TDS/TCS for easing difficulties
(iii) Encouraging voluntary compliance
(iv) Reducing compliance burden
(v) Ease of doing business
(vi) Employment and investment
I will come to my proposal on personal income tax towards the end.
TDS/TCS rationalization for easing difficulties
137. I propose to rationalize Tax Deduction at Source (TDS) by
reducing the number of rates and thresholds above which TDS is
deducted. Further, threshold amounts for tax deduction will be
increased for better clarity and uniformity. The limit for tax deduction
on interest for senior citizens is being doubled from the present `
50,000 to ` 1 lakh. Similarly, the annual limit of ` 2.40 lakh for TDS on
rent is being increased to ` 6 lakh. This will reduce the number of
 26

transactions liable to TDS, thus benefitting small tax payers receiving

small payments.
138. The threshold to collect tax at source (TCS) on remittances
under RBI’s Liberalized Remittance Scheme (LRS) is proposed to be
increased from ` 7 lakh to ` 10 lakh. I also propose to remove TCS on
remittances for education purposes, where such remittance is out of a
loan taken from a specified financial institution.
139. Both TDS and TCS are being applied on any transaction relating
to sale of goods. To prevent such compliance difficulties, I propose to
omit the TCS. I also propose that the provisions of the higher TDS
deduction will now apply only in non-PAN cases.
140. In July 2024, the delay for payment of TDS up to the due date of
filing statement was decriminalized. I propose to provide the same
relaxation to TCS provisions as well.
Encouraging Voluntary Compliance
141. The Government under the leadership of Prime Minister Modi
believes in “Sabka Saath, Sabka Vikas, Sabka Vishwas and Sabka
Prayas”. In line with this, we brought in updated return facility in 2022
for voluntary compliance by taxpayers who had omitted to report their
correct income. Our trust in taxpayers was proved right. Nearly 90 lakh
taxpayers voluntarily updated their incomes by paying additional tax.
Taking this trust further, I now propose to extend the time-limit to file
updated returns for any assessment year, from the current limit of two
years, to four years.
Reducing Compliance Burden
142. I propose to reduce the compliance burden for small charitable
trusts/institutions by increasing their period of registration from 5
years to 10 years. It is also proposed that disproportionate
consequences do not arise for minor defaults, such as incomplete
applications filed by charitable entities.
143. Presently tax-payers can claim the annual value of self-occupied
properties as nil only on the fulfilment of certain conditions.
Considering the difficulties faced by taxpayers, it is proposed to allow
the benefit of two such self-occupied properties without any condition.
Ease of Doing Business
 27

144. To streamline the process of transfer pricing and to provide an

alternative to yearly examination, I propose to introduce a scheme for
determining arm's length price of international transaction for a block
period of three years. This will be in line with global best practices.
145. With a view to reduce litigation and provide certainty in
international taxation, the scope of safe harbour rules is being
expanded.
146. A number of senior and very senior citizens have very old
National Savings Scheme accounts. As interest is no longer payable on
such accounts, I propose to exempt withdrawals made from NSS by
individuals on or after the 29th of August, 2024. I am also proposing to
allow similar treatment to NPS Vatsalya accounts as is available to
normal NPS accounts, subject to overall limits.
147. In my speech in July 2024, I had promised that all processes
including giving effect to appellate orders shall be digitalized and made
paper-less over the next two years. I am happy to announce that
digitalization is being made operational.
148. In July 2024, we brought in the Vivad Se Vishwas Scheme to
resolve income tax disputes pending in appeal. The scheme has
received a great response, with nearly 33,000 tax payers having availed
of this scheme to settle their disputes.
Employment and Investment
149. I have a few proposals to promote investment and employment.
Tax certainty for electronics manufacturing Schemes
150. It is proposed to provide a presumptive taxation regime for non-
residents who provide services to a resident company that is
establishing or operating an electronics manufacturing facility. I further
propose to introduce 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
151. Presently the tonnage tax scheme is available to only sea going
ships. The benefits of existing tonnage tax scheme are proposed to be
 28

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
152. We continue to support the Indian start-up eco-system. I
propose to extend the period of incorporation by 5 years to allow the
benefit available to start-ups which are incorporated before 1.4.2030.

International Financial Services Centre (IFSC)

153. In order to attract and promote additional activities in the IFSC, I
am inter alia proposing specific benefits to ship-leasing units,
insurance offices and treasury centres of global companies which are
set up in IFSC. Further, to claim benefits, the cut-off date for
commencement in IFSC has also been extended by five years to
31.3.2030.
Alternate Investment Funds (AIFs)
154. Category I and category II AIFs are undertaking investments in
infrastructure and other such sectors. I propose to provide certainty of
taxation to these entities on the gains from securities.
Extension of investment date for Sovereign and Pension Funds
155. To promote funding from Sovereign Wealth Funds and Pension
Funds to the infrastructure sector, I propose to extend the date of
making an investment by five more years, to 31st March, 2030.
Personal Income- tax Reforms with special focus on middle class
156. Democracy, Demography and Demand are the key support
pillars in our journey towards Viksit Bharat. The middle class provides
strength for India’s growth. This Government under the leadership of
Prime Minister Modi has always believed in the admirable energy and
ability of the middle class in nation building. In recognition of their
contribution, we have periodically reduced their tax burden. Right after
2014, the ‘Nil tax’ slab was raised to
` 2.5 lakh, which was further raised to ` 5 lakh in 2019 and to ` 7 lakh in
2023. This is reflective of our Government’s trust on the middle-class
tax payers. I am now happy to announce that there will be no income
tax payable upto income of ` 12 lakh (i.e. average income of ` 1 lakh per
month other than special rate income such as capital gains) under the
 29

new regime. This limit will be ` 12.75 lakh for salaried tax payers, due to
standard deduction of ` 75,000.
157. Slabs and rates are being changed across the board to benefit
all tax-payers. 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.
158. In the new tax regime, I propose to revise tax rate structure as
follows:
0-4 lakh rupees Nil
4-8 lakh rupees 5 per cent
8-12 lakh rupees 10 per cent
12-16 lakh rupees 15 per cent
16-20 lakh rupees 20 per cent
20- 24 lakh rupees 25 per cent
Above 24 lakh rupees 30 per cent
159. To tax payers upto ` 12 lakh of normal income (other than
special rate income such as capital gains) tax rebate is being provided
in addition to the benefit due to slab rate reduction in such a manner
that there is no tax payable by them. The total tax benefit of slab rate
changes and rebate at different income levels can be illustrated with
examples. A tax payer in the new regime with an income of ` 12 lakh
will get a benefit of ` 80,000 in tax (which is 100% of tax payable as per
existing rates). A person having income of ` 18 lakh will get a benefit of
` 70,000 in tax (30% of tax payable as per existing rates).
A person with an income of ` 25 lakh gets a benefit of ` 1,10,000 (25%
of his tax payable as per existing rates).
160. Details of my tax proposals are given in the Annexure.
161. As a result of these proposals, revenue of about ₹ 1 lakh crore in
direct taxes and ₹ 2600 crore in indirect taxes will be forgone.
Mr. Speaker Sir, with this, I commend the budget to this august House.
Jai Hind.
 30

Annexures to Part A
Annexure A

Building Rural Prosperity and Resilience

The programme will focus at:

1) catalyzing enterprise development, employment and financial

independence for rural women;

2) accelerating creation of new employment and businesses for young

farmers and rural youth;

3) nurturing and modernizing agriculture for productivity improvement and

warehousing, especially for marginal and small farmers; and

4) diversifying opportunities for landless families.

Annexure B

Mission for Aatmanirbharta in Pulses

The Mission will place emphasis on:

1) development and commercial availability of climate resilient seeds,

2) enhancing protein content,

3) increasing productivity,

4) improving post-harvest storage and management, and

5) assuring remunerative prices to the farmers.

 31

Annexure C

India Post as a Catalyst for the Rural Economy

The expanded range of services will include:

1) rural community hub colocation;

2) institutional account services;

3) DBT, cash out and EMI pick-up;

4) credit services to micro enterprises;

5) insurance; and

6) assisted digital services.

Annexure D

Annexure E

Manufacturing Mission - Furthering “Make in India

The Mission’s mandate will include 5 focus areas:

1) ease and cost of doing business;

2) future ready workforce for in-demand jobs;

3) a vibrant and dynamic MSME sector;

 32

4) availability of technology; and

5) quality products.

Annexure to Part B
Amendments relating to Indirect Taxes
A. LEGISLATIVE CHANGES IN CUSTOMS LAWS
A.1 Amendments in the Customs Act, 1962
(i) A new sub-section (1B) is being inserted in Section 18 to
provide time limit of two years for finalization of
provisional assessment. It also provides that this time
limit may be extended by the Commissioner of Customs
for a further period of one year if sufficient cause is
shown. It further provides that, for the pending cases,
the time-limit shall be computed from the date of assent
of the Finance Bill, 2025.
(ii) A new sub-section (1C) is being inserted to provide for
certain grounds on which the time-limit of two years for
finalizing provisional assessment shall remain
suspended.
(iii) A new section 18A is being inserted for voluntary
revision of entry after clearance of goods to allow
importers and exporters to revise any entry made in
relation to the goods within a prescribed time and
subject to conditions as may be prescribed. It also
provides for treating such revised entry as self-
assessment and allow payment of duty or treat the
revised entry as a refund claim under section 27. It
further provides for certain cases where this section will
not apply.
(iv) A new Explanation is being inserted in sub-section 1 of
section 27 to clarify that the period of limitation for
claim of refund consequent to the revised entry under
section 18A or amendment under Section 149 of the
Customs Act, 1962, shall be one year from the date of
payment of duty or interest.
(v) A new clause is being inserted in Explanation 1 to
Section 28 to provide that the relevant date in the case
 33

of payment of duty as per the revised entry under

section 18A is the date of payment of duty or interest.
(vi) A new clause is being inserted after clause (d) and (e) of
section 127A to define Interim Board, Member of the
Interim Board and pending applications.
(vii) A new sub-section (6) is being inserted after sub-section
(5) in section 127B to provide end date for receipt of
applications under this section.
(viii) A new sub-section (12) is being inserted after sub-
section (11) in section 127C to make applicable the sub-
sections of Section 127C of the Customs Act, 1962 to
the Interim Board.
(ix) A new sub-section (3) is being inserted after sub-section
(2) in section 127D clarifying that the powers of
Settlement Commission shall be exercised by the
Interim Board and the provisions of this section shall,
mutatis mutandis, apply to the Interim Board as they
apply to the Settlement Commission.
(x) A new sub-section (5) is being inserted after sub-section
(4) of section 127F providing that the powers and
functions of Settlement Commission shall be exercised
or performed by the Interim Board.
(xi) A Proviso to section 127G of the Customs Act, 1962 is
being inserted to provide that the powers and functions
of Settlement Commission under this section shall be
exercised or performed by the Interim Board.
(xii) A new sub-section (4) is being inserted after sub-section
(3) in section 127H of the Customs Act, 1962 to provide
that the powers and functions of Settlement
Commission under this section shall be exercised or
performed by the Interim Board.

These changes shall come into effect from date of

assent to the Finance Bill, 2025
A.2 Amendments in the Customs Tariff Act, 1975
 34

a) The First Schedule to the Customs Tariff Act, 1975 is being

amended to, -
(i) revise tariff rates on certain industrial tariff items
(ii) add 178 new tariff entries in chapter 10, 20, 27, 28,
29, 38 and 71 and substitute/delete 63 tariff entries;
insert supplementary notes in chapter 10, 20, 29 and
38 and amend 2 supplementary notes. This is to
align the tariff lines with WCO classification and
better identification of goods.
These changes shall come into effect from
1.5.2025.
B. LEGISLATIVE CHANGES IN GST LAWS
[Save as otherwise provided, these changes will be brought into effect
from a date to be notified in coordination with States, as per
recommendations of the GST council]
AMENDMENT FOR TRADE FACILITATION
B.1 Amendments in section 2 of the CGST Act, 2017:

a) Clause (61) is being amended to explicitly provide for

distribution of input tax credit by the Input Service Distributor in
respect of inter-state supplies on which tax has to be paid on
reverse charge basis, by inserting reference to sub-section (3)
and sub-section (4) of section 5 of Integrated Goods and
Services Tax Act. This amendment will be effective from 1st
April, 2025.
b) Clause (69) (c) is being amended to insert an Explanation to
provide for definitions of the terms 'Local Fund' and 'Municipal
Fund' used in the definition of "local authority" under the said
clause so as to clarify the scope of the said terms.
c) A new clause (112A) is being inserted to provide definition of
Unique Identification Marking for implementation of Track and
Trace Mechanism
B.2 Amendments in Section 12 and 13 of the CGST Act, 2017
Sub-section (4) of Section 12 and Sub-section (4) of Section 13
relating to time of supply in respect of vouchers are being
 35

omitted.
B.3 Amendments in Section 17 of the CGST Act, 2017
Clause (d) of sub-section (5) is being amended to substitute the
words "plant or machinery" with the words "plant and
machinery" with effect from 1st July, 2017.
B.4 Amendments in Section 20 of the CGST Act, 2017
Section 20(1) and Section 20(2) are being amended to explicitly
provide for distribution of input tax credit by the Input Service
Distributor in respect of inter-state supplies, on which tax has to
be paid on reverse charge basis, by inserting reference to sub-
section (3) and sub-section (4) of section 5 of Integrated Goods
and Services Tax Act in sub-section (1) of section 20. The
amendment will be effective from 1st April, 2025.

B.5 Amendments in Section 34 of the CGST Act, 2017

The Proviso to sub-section (2) is being amended to explicitly
provide for requirement of reversal of corresponding input tax
credit in respect of a credit-note, if availed, by the registered
recipient, for the purpose of reduction of tax liability of the
supplier in respect of the said credit note.
B.6 Amendments in Section 38 of the CGST Act, 2017
a) Section 38(1) is being amended to omit the expression "auto-
generated".
b) Section 38(2) is being amended to omit the expression "auto-
generated" and to insert the expression "including" after the
words "by the recipient" in clause (b) to make the said clause
more inclusive.
c) Section 38(2) is also being amended to insert a new clause (c)
to provide an enabling clause to prescribe other details to be
made available in statement of input tax credit.
B.7 Amendments in Section 39 of the CGST Act, 2017
Section 39(1) is being amended to provide an enabling clause
to prescribe certain conditions and restriction for filing of
return.
B.8. Amendments in Section 107 and 112 of the CGST Act, 2017
a) Section 107(6) is being amended to provide for 10% mandatory
 36

pre-deposit of penalty amount for appeals before Appellate

Authority in cases involving only demand of penalty without
any demand for tax.
b) Section 112(8) is amended to provide for 10% mandatory pre-
deposit of penalty amount for appeals before Appellate
Tribunal in cases involving only demand of penalty without any
demand for tax.
B.9 Insertion of a new section 122B of the CGST Act, 2017
A new Section 122B is being inserted to provide penalties for
contraventions of provisions related to the Track and Trace
Mechanism provided under section 148A.
B.10 Insertion of a new section 148A of the CGST Act, 2017
Section 148A is being inserted to provide for enabling
mechanism for a Track and Trace Mechanism for specified
commodities.

B.11 Amendments in Schedule III of the CGST Act,2017

Schedule III is being amended, w.e.f. 01.7.2017 to,₋
a) insert a new Entry (aa) in paragraph 8 to provide that the
supply of goods warehoused in a Special Economic Zone or in
a Free Trade Warehousing Zone to any person before
clearance for exports or to the Domestic Tariff Area shall be
treated neither as supply of goods nor as supply of services.
b) Amend Explanation 2, w.e.f. 01.07.2017 to clarify that the said
explanation would be applicable in respect of entry (a) of
paragraph 8.
c) Insert Explanation 3 to define the terms 'Special Economic
Zone', 'Free Trade Warehousing Zone' and 'Domestic Tariff
Area', for the purpose of the proposed entry (aa) in paragraph
8.
d) To provide that no refund of tax already paid will be available
for the transactions referred above.
C. OTHER PROVISIONS IN THE FINANCE BILL
 37

C.1 Special Provision for Exemption from Service Tax in Certain

Cases:
Services provided or agreed to be provided by insurance
companies by way of reinsurance services under the Weather
Based Crop Insurance Scheme (WBCIS) and the Modified National
Agricultural Insurance Scheme (MNAIS), are being exempted
st
from service tax for the period commencing from 1 April, 2011
th
and ending with 30 June, 2017.

D. CUSTOMS DUTY RATE CHANGES

D.1. Reduction in customs duty to reduce input costs, deepen value
addition, promote export competitiveness, correct inverted duty
structure, boost domestic manufacturing etc [with effect from
2.2.2025]

S. From To
Commodity
No. (per cent) (per cent)
I. Aquafarming & Marine exports
1. Frozen fish paste (surimi) for
manufacture of surimi analogue 30 5
products for export
2. Fish hydrolysate for manufacture
15 5
of aquatic feed
II. Chemicals
1. Other compounds containing a
pyrimidine ring (whether or not
hydrogenated) or piperazine ring 10 7.5
in the structure classified under
tariff sub heading 2933 59
2. Synthetic flavouring essences
and mixtures of odoriferous
substances of a kind used in 100 20
food or drink industries classified
under tariff sub heading 3302 10
3. Sorbitol classified under tariff
30 20
subheading 3824 60
III. Waste and Scrap of Critical Minerals and others
 38

S. From To
Commodity
No. (per cent) (per cent)
1. Waste and scrap of Antimony, 10/5/2.5 Nil
Beryllium, Bismuth, Cobalt,
Cadmium, Molybdenum,
Rhenium, Tantalum, Tin,
Tungsten, Zirconium, Copper
scrap covered under tariff items
74040012, 74040019 and
74040022
2. Waste and scrap of Lithium-Ion 5 Nil
Battery
3. Cobalt powder 5 Nil
4. Waste and scrap of Lead 5 Nil
5. Waste and scrap Zinc 5 Nil
IV. Drugs and Medicines
1. Addition of 6 more medicines in As 5
List 3 and bulk drugs for their applicable
manufacture
2. Addition of 36 more medicines in As Nil
List 4 and bulk drugs for their applicable
manufacture
3. Addition of 37 more medicines As Nil
and 13 Patient Assistance applicable
Programmes in the list of duty
free imports by pharmaceutical
companies for supply free of cost
to patients
V. Precious Metals
1. Platinum findings 25 6.4
(5 BCD +
1.4 AIDC)
VI. Textile, Handicraft and Leather Sector
1. Wet blue leather 10 Nil
2. Shuttle less loom Rapier Looms 7.5 Nil
 39

S. From To
Commodity
No. (per cent) (per cent)
(below 650 meters per minute)
and Shuttle less loom Air jet
Looms (below 1000 meters per
minute) for use in textile industry
3. Certain additional items for duty As Nil
free import by bonafide exporters applicable
for manufacture of handicrafts
VII. Capital Goods
1. Addition of 35 capital As Nil
goods/machinery for use in the applicable
manufacture of lithium-ion
battery of EVs and 28 capital
goods/machinery for use in the
manufacture of lithium-ion
battery of mobile phones
VIII. IT and Electronics
1. Inputs/ parts and sub-parts of 2.5 Nil
PCBA, camera module,
connectors and inputs or raw
materials for use in manufacture
of wired headset, microphone
and receiver, USB cable,
fingerprint reader/ sensor of
cellular mobile phone
2. Specified inputs/parts (chip on 2.5 Nil
film, PCBA, glass board /
substrate cell) for use in
manufacture of open cells of TV
panels of LED/LCD TV
3. Ethernet Switches Carrier-Grade 20 10
4. Open cell (with or without touch) 15/10 5
for interactive Flat Panel Display
module, Touch Glass sheet and
Touch Sensor PCB for use in
manufacture of Interactive Flat
 40

S. From To
Commodity
No. (per cent) (per cent)
Panel Display module
IX. Space Sector
1. Ground installation for satellites As Nil
including its spares and applicable
consumables
2. Goods used in the building of 5 Nil
launch vehicles and launching of
satellites
X. Motorcycles
1. (i) Engine capacity not 50 40
exceeding 1600 CC
25 20
(CBU)
15 10
(ii) Semi-knocked down
(SKD)
(iii) Completely knocked
down (CKD)
2 (i) Engine capacity 1600 CC 50 30
& above (CBU)
25 20
(ii) Semi-knocked down (SKD)
15 10
(iii) Completely knocked down
(CKD)

D.2. Increase in Customs duty [with effect from 02.02.2025]

S. Commodity Rate of duties
No.
From To
(per cent) (per cent)
I. Textiles
1. Knitted Fabrics covered under tariff 10/20 20 or Rs
items 6004 10 00, 6004 90 00, 6006 115 per
22 00, 6006 31 00, 6006 32 00, kg,
6006 33 00, 6006 34 00, 6006 42 00 whicheve
 41

S. Commodity Rate of duties

and 6006 90 00 r is higher
II Electronics
1 Interactive Flat Panel Display 10 20
classified under tariff item 8528 59
00 (CBU)

D.3. Decrease in Tariff rate with no change in Effective rate [With

effect from 02.02.2025]

S. Commodity Rate of duties

No.
From To
(per cent) (per cent)
1. Glycerol crude, glycerol waters, 30 20
glycerol lye covered by tariff item
1520 00 00
2. Phosphoric Acid 20 7.5
3. Other – Prepared Binders, chemical 17.5 7.5
products and preparations of
chemical or allied industries
covered under tariff item 3824 99
00
4. Marble and travertine, granite, 40 20
crude or roughly trimmed, merely
(+20
cut into blocks, slabs and other
AIDC)
(tariff sub heading 2515 12 and
tariff items, 2525 11 00, 2516 11
00, 2516 12 00)
5. Candles, tapers and the like 25 20
covered by tariff heading 3406
(+2.5 SWS) (+7.5
AIDC)
6. Other reference materials 30 10

7. PVC flex films including PVC flex 25 20

 42

banner and PVC flex sheets (tariff (+2.5 SWS) (+7.5

headings 3920, 3921) AIDC)
8. Footwear covered under tariff 35 20
headings 6401 to 6405
(+3.5 SWS) (+18.5
AIDC)
9. Worked monumental or building 40 20
stone and articles thereof under
heading 6802 except 6802 99 00
10 Marble slabs classified under tariff 40 20
items 6802 10 00 , 6802 21 10 ,
(+20
6802 21 20 , 6802 21 90 , 6802 91
AIDC)
00 and 6802 92 00
11. OTS/MR type-flat rolled products of 27.5 15
thickness less than 0.5 mm
12. Other plates, sheets, strips of 27.5 15
thickness less than 0.5mm
13. Flat -rolled products in coils of 22.5 15
thickness greater than or equal to
4.75 mm but not exceeding 10mm
14. Flat-rolled products in coils of 22.5 15
thickness greater than or equal to 3
mm but less than 4.75 mm
15. Flat-rolled products of stainless 22.5 15
steel of width 600mm or more-
Other nickel chrome austenitic type
16. Flat-rolled products of stainless 22.5 15
steel of width 600mm or more-
Other sheets and plates
17. Flat-rolled products of other alloy 20 15
steel grain oriented
18. Other tubes or pipe fittings of 25 15
stainless steel
19. Other fittings of iron or steel, non- 25 15
galvanised
20. Other structure and parts of 25 15
structures of iron and steel
 43

21. Others-tanks and drums etc. 25 15

22. Other screws and bolts w/n with 25 15
nuts
23. Threaded nuts 25 15
24. Other non-threaded articles 25 15
25. Others springs and leaves of 25 15
iron/steel
26. Other cast articles of iron or steel 25 15
27. Articles of forged or stamped but 25 15
not further worked
28. All other articles of iron/steel 25 15
29. Solar cells covered by tariff 25 20
heading 8541
(+2.5 SWS) (+7.5
AIDC)
30. Motor cars and other motor 125 (tariff 70 (tariff
vehicles principally designed for rate) rate)
the transport of persons, including
station wagons and racing cars,
under tariff heading 8703 >USD 100 BCD + 70+ 40
40000 10 SWS AIDC
(effective (effective
rate) rate)
31. Used Motor cars and other motor 125 (tariff) 70 (tariff)
vehicles principally designed for
the transport of persons, including
station wagons and racing cars, 125 BCD + 70+ 67.5
under tariff heading 8703 12.5 SWS AIDC
(effective (effective
rate) rate)
32. Motorcycles (including mopeds) 100 (tariff) 70(tariff)
and cycles fitted with an auxiliary
(No (No
motor, with or without side-cars
change in change in
under tariff heading 8711
effective effective
rate) rate)
33. Used Motorcycles (including 100 (tariff) 70 (tariff)
mopeds) and cycles fitted with an
 44

auxiliary motor, with or without side

-cars under tariff heading 8711 100 BCD 70+ 40
+10 SWS AIDC
(effective (effective
rate) rate)
34. Bicycles under tariff item 8712 00 35 20
10
(+15
AIDC)
35. Yachts and other vessels for 25 20
pleasure or sports; rowing boats
(+2.5 SWS) (+7.5
and canoes covered under tariff
AIDC)
heading 8903
36 Electricity meters for alternating 25 20
current (Smart Meters) under tariff
(+2.5 SWS) (+7.5
item 9028 30 10
AIDC)
37 Parts of electronic toys, under tariff 25 BCD + 20 BCD+
item 9503 00 91 for manufacture 2.5 SWS 7.5 AIDC
of electronic toys

D.4. Decrease in Tariff rate with reduction in effective rate [With

effect from 02.02.2025]

Rate of duties
Commodity From To
(per cent) (per cent)
1. Synthetic flavouring 100 20
essences and mixtures of
(+2 SWS)
odoriferous substances for
use in food and drink
industry
2. Sorbitol under tariff sub- 30 20
heading 3824 60
(+3 SWS) (+2 SWS)
3. Articles of jewellery and 25 20
parts thereof under tariff
 45

Commodity Rate of duties

heading 7113; articles of
goldsmiths’ or silversmiths’
wares and parts thereof
under tariff heading 7114
4. Solar module under tariff 40 20
heading 8541
(+4 SWS) (+20 AIDC)
5. Motor vehicles (for 40 20
passenger) covered under
(+4 SWS) (+20 AIDC)
tariff heading 8702
6. Motor vehicles (for goods) 40 20
covered under tariff
(+4 SWS) (+20 AIDC)
heading 8704
7. Seats (other than those of 25 20
heading 9402), whether or
(+2.5 SWS) (+5 AIDC)
not convertible into beds,
and parts thereof, covered
under tariff heading 9401
8. Other furniture and parts 25 20
thereof covered under tariff
(+2.5 SWS) (+5 AIDC)
heading 9403
9. Mattress supports, articles 25 20
of bedding and similar
(+2.5 SWS) (+5 AIDC)
furnishing etc covered
under tariff heading 9405
10. Luminaries and light fittings 25 20
including searchlights and
(+2.5 SWS) (+5 AIDC)
spotlights and parts thereof
etc
11. Parts of electronic toys, 70 20
under tariff item 9503 00 91
(+20 AIDC)
12. Laboratory chemicals under 150 70
tariff item 9802 00 00
(+ 15 SWS) (+ 70 AIDC)
(other than those attracting
10% BCD on specified end
use)
 46

Commodity Rate of duties

13. All dutiable articles, 100 (tariff 70 (tariff rate)
imported by a passenger or rate)
a member of a crew in his
baggage, under tariff 35
heading 9803 35+ 3.5 SWS (effective
(effective rate)
rate)
14. Dutiable goods imported 35 20
for personal use classified
(+ 3.5 SWS)
under heading 9804 other
than those at 10% BCD

E. Export duty on Leather [with effect from 2.2.2025]

Rate of duties
S. Commodity
From To
No.
(per cent) (per cent)
1 Crust Leather (hides and skins) 20 0

F. Trade Facilitation Measures

F.1. Increase in duration for export of handicrafts
The duration for export of handicrafts manufactured from duty
free inputs by bonafide exporters is being increased from 6
months to 1 year, further extendable by 3 months.
F.2. Removal of Customs (Import of Goods at Concessional rate
of duty or For Specific End Use) Rules 2022 (IGCR) condition for
import of seeds for use in manufacture of Lab Grown Diamonds
The IGCR condition for custom duty exemption on import of
seeds for use in manufacture of rough Lab Grown Diamond is
being removed.
F.3. Extension of time limit for export
The time limit for export of foreign origin goods imported for
repairs is being extended from 6 months to one year further
extendable by one year for railway goods.
 47

F.4. Amendment of Customs (Import of Goods at Concessional

Rate of Duty or For Specified End Use ) Rules, 2022
Rules 6 and 7 are being amended to increase the time limit for
fulfilling end use from current six months to one year and to file
only a quarterly statement instead of monthly statement.
Note: AIDC – Agriculture Infrastructure and Development Cess; SWS –
Social Welfare Surcharge

G. OTHERS
There are few other changes of minor nature. For details of the budget
proposals, the Explanatory Memorandum and other relevant budget
documents may be referred to.
 48

Annexure to Part B
Amendments relating to Direct Taxes
(i) Personal Income-tax reforms with special focus on middle class

1. Substantial relief is proposed under the new tax regime with new
slabs and tax rates as under: -
Total income Rate of tax
Upto ` 4,00,000 Nil
From ` 4,00,001 to ` 8,00,000 5 per cent
From ` 8,00,001 to ` 12,00,000 10 per cent
From ` 12,00,001 to ` 16,00,000 15 per cent
From ` 16,00,001 to ` 20,00,000 20 per cent
From ` 20,00,001 to ` 24,00,000 25 per cent
Above ` 24,00,000 30 per cent

2. Rebate on income-tax
 Resident individual with total income up to ` 7,00,000 do not
pay any tax due to rebate under the new tax regime. It is
proposed to increase the rebate for the resident individual
under the new regime so that they do not pay tax if their total
income is up to ` 12,00,000. Marginal relief as provided earlier
under the new tax regime is also applicable for income
marginally higher than ` 12,00,000.

 A few examples for calculation of tax benefit are given in the

table below:
 49

Tax after
Tax on Benefit Total
Income Rebate benefit rebate
Slabs and rates of Benefit
Benefit

Rate Full upto Rs 12

Present Proposed
/Slab lacs

8 lac 30,000 20,000 10,000 20,000 30,000 0

9 lac 40,000 30,000 10,000 30,000 40,000 0
10 lac 50,000 40,000 10,000 40,000 50,000 0
11 lac 65,000 50,000 15,000 50,000 65,000 0
12 lac 80,000 60,000 20,000 60,000 80,000 0
16 lac 1,70,000 1,20,000 50,000 0 50,000 1,20,000
20 lac 2,90,000 2,00,000 90,000 0 90,000 2,00,000
24 lac 4,10,000 3,00,000 1,10,000 0 1,10,000 3,00,000

50 lac 11,90,000 10,80,000 1,10,000 0 1,10,000 10,80,000

(ii) Rationalization of TDS/TCS for easing difficulties

1. Rationalization tax deducted at source (TDS) and tax collected at

source (TCS) rates:
 To reduce multiplicity of rates and compliance burden, it is
proposed to bring down certain TDS and TCS rates in certain
sections as below:
. No Section of the Act Present Proposed TDS/TC
TDS/TCS Rate Rate

1. Section 194LBC - 25% if payee is 10%

Income in respect of Individual or HUF
investment in and 30%
securitization trust otherwise

2. Sub-section (1) of 2.5% 2%

section 206C (i) TCS on
timber or any other
forest produce (not
being tendu leaves)
obtained under a forest
 50

lease and

(ii) TCS on timber

obtained by any mode
other than under a forest
lease

3. Sub-section (1G) of 0.5% after ` 7 Nil

section 206C – TCS on lakhs
remittance under LRS
for purpose of
education, financed by
loan from financial
institution

 It is further proposed to increase certain thresholds for

requirement to deduct tax at source or collect tax at source
under certain sections, as below:
S.No Section of the Act Present TDS /TCS Proposed TDS
Threshold (Rs) /TCS Threshold
(Rs)

1. 193 - Interest
Nil 10,000/-
on securities

2. (i) 50,000/- for

senior citizen; (i) 1,00,000/- for
senior citizen
(ii) 40,000/- in
(ii) 50,000/- in
194A - Interest case of others
case of others
other than when payer is when payer is
Interest on bank, cooperative bank, co-operative
securities society and post society and post
office office
(iii) 10,000/- in
(iii) 5,000/- in
other cases other cases

3. 194 – Dividend,
for an
5,000/- 10,000/-
individual
shareholder

4. 194K - Income 5,000/- 10,000/-

in respect of
 51

units of a
mutual fund or
specified
company or
undertaking

5. 194B -
Winnings from
lottery, Aggregate of
crossword amounts 10,000/- in respec
puzzle etc. exceeding of a single
10,000/- during transaction
6. 194BB - the financial year
Winnings from
horse race

7. 194D -
Insurance 15,000/- 20,000/-
commission

8. 194G - Income
by way of
commission, 15,000/- 20,000/-
prize etc. on
lottery tickets

9. 194H -
Commission or 15,000/- 20,000/-
brokerage

10. 2,40,000/- during 50,000/- per

194-I Rent month or part of a
the financial year
month
11. 194J - Fee for
professional or
30,000/- 50,000/-
technical
services

12. 194LA - Income

by way of
2,50,000/- 5,00,000/-
enhanced
compensation

13. 206C(1G) –
Remittance
under LRS and
7,00,000/- 10,00,000/-
overseas tour
program
package
 52

(iii) Encouraging voluntary compliance

1. Extending the time-limit to file the updated return:

 It is proposed to extend the time-limit to file the updated
return from the existing 24 months to 48 months from the end
of the relevant assessment year. The additional tax payable
shall be 60% of the aggregate of tax and interest payable on
additional income for filing updated return during the period of
24 months to 36 months from the end of relevant assessment
year. Additional tax payable shall be 70% of the aggregate of
tax and interest payable for filing updated return during the
period of 36 months to 48 months from the end of relevant
assessment year subject to certain conditions.
2. Obligation to furnish information in respect of crypto-asset:
 It is proposed to bring amendment in the Act to provide for
that a prescribed reporting entity in respect of a crypto-asset
shall furnish information in respect of a transaction in such
crypto asset, in a statement as prescribed. It is also proposed
to align the definition of virtual digital asset accordingly.
3. Annual value of the self-occupied property simplified:

 It is proposed to provide that the annual value of the property

consisting of a house or any part thereof shall be taken as nil,
if the owner occupies it for his own residence or cannot
actually occupy it due to any reason.
(iv) Reducing compliance burden

1. Reduction in compliance burden by omission of TCS on sale of

specified goods:
 To reduce compliance burden of the taxpayers, it is proposed
to no tax will be collected at source on sale of specified goods
of value of more than fifty lakhs.
2. Removal of higher TDS/TCS for non-filers of return of income:
 53

 To reduce compliance burden on the deductor/collector, it is

proposed to omit section 206AB and section 206CCA of the
Act.
3. Definition of “forest produce” rationalized:
 It is proposed to clarify the meaning of “forest produce” u/s
206C(1) of the Act to remove any ambiguity regarding
definition of the same.
 It is also proposed that TCS be collected only on “any other
forest produce which is obtained under a forest lease.”
(v) Ease of doing business

1. Extension of time limit u/s 80-IAC for startups:

 It is proposed to extend the benefit provided under Section 80-

IAC to startups for another period of five years, i.e. the benefit
will be available to eligible start-ups incorporated before
01.04.2030.

2. Parity in rates of long term capital gain on transfer of securities

by non-resident:

 It is proposed to bring parity between the taxation of capital

gains on transfer of capital assets between residents and non-
residents being Foreign Institutional investors, on their income
by way of long-term capital gains on transfer of securities.

3. Simplification of tax provisions for charitable trusts/institutions:

 It is proposed to increase the period of validity of registration

of trust or institution from 5 years to 10 years for smaller
trusts or institutions.
 It is proposed to rationalize the definition of specified violation
for cancellation of registration of trust or institution so as to
not apply the same for minor default such as in-complete
applications.
 It is also proposed to rationalize the definition of persons
making substantial contribution to a trust or institution for
 54

denial of exemption.

4. Rationalization in taxation of business trusts:

 It is proposed to provide that the total income of a business

trust which is charged to tax at the maximum marginal rate,
shall be subject to the provisions of section 112A of the Act
as well, as it is subject to provisions of section 111A and
section 112 of the Act.
5. Harmonization of Significant Economic Presence applicability
with business connection:
 It is proposed to provide that significant economic presence
of a non-resident in India shall not include the transactions or
activities which are confined to the purchase of goods in India
for the purpose of export.
6. Bringing clarity in income on redemption of Unit Linked Insurance
Policy:
 It is proposed to clarify that the profit and gains from the
redemption of unit linked insurance policies to which
exemption under section 10(10D) does not apply, shall be
charged to tax as capital gains.
7. Amendment of definition of ‘capital asset’:
 In order to bring clarity on the chargeability of income arising
out of transfer of capital asset being securities held by an
investment fund as referred to in section 115UB of the Act, the
definition of capital asset is proposed to be amended.
8. Rationalization of transfer pricing provisions for carrying out
multi-year arm’s length price determination
 It is proposed to provide that the transfer pricing provisions
for arm’s length price determination in relation to similar
transactions shall now be applicable for a period of 3 years.
9. Exemption from prosecution for delayed payment of TCS:
 It is proposed to provide for exemption from prosecution to a
person who has failed to pay tax collected at source (TCS) to
 55

the credit of the Central Government, if such payment is made

at any time on or before the time prescribed for filing the
quarterly TCS statement.
10. Amendment of definition of ‘capital asset’:
 In order to bring clarity on the chargeability of income arising
out of transfer of capital asset being securities held by an
investment fund as referred to in section 115UB of the Act, the
definition of capital asset is proposed to be amended.
(vi) Employment and Investment

1. Incentives to IFSC
 It is proposed that the sunset dates related to IFSC units for
exemptions, deductions and relocation in various sections
shall be extended to 31st March, 2030.
 It is proposed to exempt the proceeds received on life
insurance policy issued by IFSC insurance intermediary office
without the condition on maximum premium amount.
 It is proposed to extend the exemption in section 10(4H) to
capital gains for non-resident or a unit of IFSC on transfer of
equity shares of a ship leasing domestic company.
 It is proposed to extend the exemption in section 10(34B) to
dividend paid by a ship leasing company in IFSC to a unit of
IFSC engaged in ship leasing.
 It is proposed that any advance or loan between two group
entities, where one of the group entities is set up in IFSC for
undertaking treasury activities or treasury services, shall be
excluded from dividend.
 It is proposed to provide a simplified safe harbor regime for
investment funds managed by fund manager based in IFSC. It
is further proposed to extend the relaxation of conditions for
IFSC units till 31st March, 2030.
 It is proposed to provide exemption to any income accruing or
arising to or received by a non-resident as a result of transfer
of non-deliverable forward contracts entered into with any
Foreign Portfolio Investor, being a unit in an International
 56

Financial Services Centre, which fulfills prescribed conditions.

 It is proposed that transfer of a share or unit or interest held
by a shareholder in an original fund (being a retail scheme or
exchange traded fund regulated under IFSCA Regulations
2022) in consideration for the share or unit or interest in a
resultant fund in a relocation, shall not be regarded as transfer
for the purpose of calculating capital gains.
2. Extension of date of making investment by Sovereign Wealth
Funds, Pension Funds and others:
 It is proposed that in the case of person specified under
section 10(23FE) the date of making investment shall be
extended from 31st day of March, 2025 to 31st day of March,
2030.
 It is further proposed that in the case of such specified person
exemption shall be available to long-term capital gains under
said section, even if such capital gains are deemed as short-
term capital gains under section 50AA.
3. Scheme of presumptive taxation extended for non-resident
providing services for electronics manufacturing facility:
 It is proposed to provide a presumptive taxation regime for
non-residents, engaged in the business of establishing or
operating electronics manufacturing facility or a connected
facility for manufacturing or production of electronic goods,
article or thing in India.
4. Extension of Tonnage Tax Scheme to Inland vessels:
 It is proposed that the benefits of existing tonnage tax
scheme to be extended to inland vessels registered under the
Indian Vessels Act, 2021 to promote Inland Water
Transportation in the country.

5. Deduction u/s 80CCD for contributions made to the NPS

Vatsalya:
 It is proposed to extend the tax benefits available to the
National Pension Scheme (NPS) under sub-section (1B) of
section 80CCD of the Income-tax Act, 1961 to the
contributions made to the NPS Vatsalya accounts, as
applicable.
 57

(vii) Other miscellaneous amendments

1. Exemption from withdrawals from National Savings Scheme

(NSS):

 It is proposed to provide exemption to the withdrawals made

from National Savings Scheme (NSS) on or after the 29th day
of August, 2024, for any amount deposited under the scheme
and the interest accrued thereon in respect of which a
deduction has been allowed.

2. Increase in the limits on the income of the employees for the

purpose of calculating perquisites:

 The provisions of Section 17 are proposed to be amended so

that the power to prescribe rules may be obtained to increase
these limits.
3. Extension of exemption to Specified Undertaking of Unit Trust of
India (SUUTI)
 It is proposed to extend the exemption of SUUTI created by
the Unit Trust of India (Transfer of Undertaking and Repeal)
Act, 2002, to 31st March, 2027.
4. Non applicability of Section 271AAB of the Act:
 It is proposed that provisions of the aforesaid section shall
not be applicable to a case where search has been initiated
under section 132 on or after the 1st day of September, 2024.
5. Certain penalties to be imposed by the Assessing Officer:
 It is proposed to amend various sections related to penalty to
provide that penalties under these sections shall be levied by
the Assessing Officer, subject to the provisions of the Act
relating to prior approval of Joint Commissioner of Income-
 58

tax.
6. Removing date restrictions on framing the schemes in certain
cases:
 It is proposed that the end date prescribed for notifying
faceless schemes under certain sections may be omitted so
as to provide that Central Government may issue directions
st
beyond the cut-off date of 31 day of March, 2025.

7. Extending the processing period of Application seeking immunity

from penalty and prosecution:

 It is proposed that Assessing Officer shall pass an order

accepting or rejecting the application requesting immunity
from penalty and prosecution, within a period of three months
from the end of the month in which such application is
received.

8. Increasing time limit available to pass order under section 115VP:

 It is proposed to amend section 115VP to provide that the

order, accepting or rejecting, assessee’s option to opt for
tonnage tax scheme shall be passed before the expiry of three
months from the end of the quarter in which such application
was received.

9. Excluding the period such as court stay etc. for calculating time
limit to pass an order:

 It is proposed to exclude certain time period such as period of

stay on proceedings by any court order, etc. from the time
limit to pass an order deeming a person to be an assessee in
default with respect of failure to collect TCS.
 59

10. Time limit to impose penalties rationalized:

 It is proposed that any order imposing a penalty shall not be

passed after the expiry of six months from the end of the
quarter in which the connected proceedings are completed, or
the order of appeal is received.

11. Clarification regarding commencement date and the end date of

the period stayed by the Court:

 It is proposed to amend the relevant sections of the Act to

clarify the commencement date and the end date of the period
stayed by an order or injunction of any court.

12. Time limit for retention of seized books of account or other

documents rationalized:
 It is proposed make amendments to provide that retention of
seized books of account or other documents shall be one
month from the end of the quarter in which the assessment or
reassessment or recomputation order has been made.
13. Rationalisation of provisions related to carry forward of losses
in case of amalgamation
 It is proposed to amend section 72A and section 72AA of the
Act to provide that any loss forming part of the accumulated
loss of the predecessor entity, shall be carried forward for not
more than eight assessment years immediately succeeding
the assessment year for which such loss was first computed
for original predecessor entity.
14. Amendments proposed in provisions of Block assessment for
search and requisition cases under Chapter XIV-B
 It is proposed to add the term “virtual digital asset” to the said
definition of undisclosed income of the block period. The time-
limit for completion of block assessment is proposed to be
made as twelve months from end of the quarter in which the
 60

last of the authorisations for search or requisition has been

executed.