The Union Budget 2025, unveiled by Finance Minister Nirmala Sitharaman on February 1, 2025, brings notable tax reforms, compliance relaxations, and business incentives. Chartered Accountants (CAs) play a crucial role in helping businesses and individuals navigate these changes. Here’s a comprehensive overview of the key updates:
1. Income Tax Reforms
- The new tax regime has been revised, offering more relief to middle-income taxpayers.
- Income up to ₹12 lakh is now tax-free under the revised Section 87A rebate.
New Income Tax Slabs (2025-26):
- Up to ₹4 lakh – Nil
- ₹4 lakh to ₹8 lakh – 5%
- ₹8 lakh to ₹12 lakh – 10%
- ₹12 lakh to ₹16 lakh – 15%
- ₹16 lakh to ₹20 lakh – 20%
- ₹20 lakh to ₹24 lakh – 25%
- Above ₹24 lakh – 30%
These changes aim to boost disposable income, encourage spending, and simplify tax compliance.
2. Changes in TDS and TCS Rules
To simplify compliance and ease tax burdens, the government has introduced several revisions to the Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions:
- TDS on Rent: The threshold for TDS on rent has been increased from ₹2.4 lakh to ₹6 lakh per year.
- TDS on Interest for Senior Citizens: The exemption limit has been raised from ₹50,000 to ₹1 lakh, benefiting retired individuals.
- TDS on Professional Fees (Section 194J): The threshold has been increased to ₹50,000, reducing the compliance burden for professionals.
- TDS on Commission/Brokerage: The limit has been increased from ₹15,000 to ₹20,000, benefiting agents and brokers.
3. Relief for Small Businesses & MSMEs
Micro, Small, and Medium Enterprises (MSMEs) form the backbone of the Indian economy. To support their growth and financial stability, the budget introduces:
- Expansion of the Credit Guarantee Scheme: The scheme limit has been doubled from ₹5 crore to ₹10 crore, providing easier access to finance.
- National Manufacturing Mission: A new initiative to promote domestic production and enhance exports.
- Simplification of GST Compliance: Reduction in compliance requirements for businesses with annual turnover up to ₹10 crore.
4. Indirect Tax & Customs Duty Adjustments
To promote manufacturing and exports, several customs duties have been modified:
- Import duty exemptions on raw materials for lithium-ion batteries to support electric vehicle (EV) production.
- Duty cuts on textiles and electronics components to encourage domestic manufacturing.
- Tax benefits for shipbuilding & railway repair exports to enhance India’s global trade competitiveness.
5. Boost to R&D & Innovation
- A ₹20,000 crore allocation has been made for private-sector-driven Research & Development (R&D) and technology innovation initiatives.
- This is expected to support industries in AI, fintech, healthcare, and sustainable energy.
6. Agriculture and Rural Development Initiatives
Agriculture remains a priority sector, with substantial allocations aimed at increasing productivity and farmer income:
- Prime Minister Dhan-Dhaanya Krishi Yojana: Focuses on 100 districts with low productivity, benefiting 1.7 crore farmers.
- Mission for Aatmanirbharta in Pulses: A six-year initiative targeting key pulses like Tur, Urad, and Masoor, with procurement plans by NAFED and NCCF.
- National Mission on High-Yielding Seeds: Strengthens research in high-yield seed varieties to boost crop production.
Final Thoughts:
The Union Budget 2025 introduces substantial tax benefits, compliance relaxations, and business incentives. Chartered Accountants will play a critical role in:
- Helping clients choose between the new and old tax regimes.
- Advising businesses on updated TDS/TCS provisions to ensure compliance.
- Guiding MSMEs on available credit schemes and financial incentives.
- Ensuring companies benefit from reduced indirect taxes and trade policies.
- Assisting startups and R&D-focused firms in capitalizing on new government initiatives.
Conclusion:
The Union Budget 2025 brings significant tax reforms, compliance relaxations, and financial incentives that impact businesses and individuals alike. For Chartered Accountants, these changes present an opportunity to provide strategic guidance to clients, ensuring they maximize tax benefits, comply with revised regulations, and leverage new government initiatives. By understanding and implementing these changes effectively, CAs can help drive efficiency, growth, and long-term financial stability for their clients.