Union Budget-2025: Highlights of Budged Speech of Hon'ble Minister of Finance in Parliament

Synopsys of Speech of

Nirmala Sitharaman

Minister of Finance

February 1, 2025

(Budget Theme: Stimulating balanced growth of all regions)

Mission for Cotton Productivity

For the benefit of lakhs of cotton growing farmers, The Finance Minister 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

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 Rs. 3 lakh to 5 lakh for loans taken through the KCC. 

India Post as a Catalyst for the Rural Economy

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. 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

Government will provide support to NCDC for its lending operations for the cooperative sector.

Revision in classification criteria for MSMEs

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.

Significant enhancement of credit availability with guarantee cover

To improve access to credit, the credit guarantee cover will be enhanced:

a) For Micro and Small Enterprises, from Rs. 5 crore to 10 crore, leading to additional credit of Rs. 1.5 lakh crore in the next 5 years;

b) For Startups, from Rs. 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 Rs. 20 crore

Credit Cards for Micro Enterprises

The Government will introduce customized Credit Cards with a Rs. 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

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

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 Rs. 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

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

To enhance the productivity, quality and competitiveness of 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 Rs. 4 lakh crore and exports of over Rs. 1.1 lakh crore

Measures for the Toy Sector

Building on the National Action Plan for Toys, Government 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

In line with commitment towards ‘Purvodaya’, The Government 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”

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.

Clean Tech Manufacturing

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

National Centres of Excellence for Skilling

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

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 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

The Government  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 Rs. 500 crore. 

Expansion of medical education

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

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.

PM SVANidhi

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 Rs. 30,000 limit, and capacity building support. 

Social Security Scheme for Welfare of Online Platform Workers

Gig workers of online platforms provide great dynamism to the newage services economy. Recognising their contribution, our Government will arrange for their identity cards and registration on the e-Shram portal. They will be provided healthcare under PM Jan Arogya Yojana. This measure is likely to assist nearly 1 crore gig-workers.

Public Private Partnership in Infrastructure

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

Asset Monetization Plan 2025-30

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 Rs. 10 lakh crore in new projects. Regulatory and fiscal measures will be finetuned to support the Plan.

SWAMIH Fund 2

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. 

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

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

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. The following measures will be taken for facilitating employment-led growth:

Organizing intensive skill-development programmes for our youthincluding in Institutes of Hospitality Management;

Providing MUDRA loans for homestays;

Improving ease of travel and connectivity to tourist destinations;

Providing performance-linked incentives to states for effective destination management including tourist amenities, cleanliness, and marketing efforts; and

Introducing streamlined e-visa facilities along with visa-fee waivers for certain tourist groups.

Continuing with the emphasis on places of spiritual and religious 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 will be promoted in partnership with the private sector along with capacity building and easier visa norms

Research, Development and Innovation

To implement private sector driven Research, Development and Innovation initiative announced in the July Budget, I am now allocating Rs. 20,000 crore. 

A Deep Tech Fund of Funds will also be explored to catalyze the next generation startups as a part of this initiative

In the next five years, under the PM Research Fellowship scheme, The Government will provide ten thousand fellowships for technological research in IITs and IISc with enhanced financial support. 

Gene Bank for Crops Germplasm

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

The Government 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. 

Export Promotion Mission

The Government 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

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

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. Facilitation groups with participation of senior officers and industry representatives will be formed for select products and supply chains. Through this, there are huge opportunities related to Industry 4.0, which needs high skills and talent. Government will support the domestic electronic equipment industry to leverage this opportunity for the benefit of the youth. 

National Framework for GCC

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

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 userfriendly. 

Tax Reforms: The Finance Minister propose to introduce the new income-tax bill next week

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. 

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

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

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

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.

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.

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.

High Level Committee for Regulatory Reforms

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-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.

Revised Estimates 2024-25

The Revised Estimate of the total receipts other than borrowings is Rs. 31.47 lakh crore, of which the net tax receipts are Rs. 25.57 lakh crore. The Revised Estimate of the total expenditure is Rs. 47.16 lakh crore, of which the capital expenditure is about Rs. 10.18 lakh crore. The Revised Estimate of the fiscal deficit is 4.8 per cent of GDP.

Budget Estimates 2025-26

Coming to 2025-26, the total receipts other than borrowings and the total expenditure are estimated at Rs. 34.96 lakh crore and Rs. 50.65 lakh crore respectively. The net tax receipts are estimated at Rs. 28.37 lakh crore. The fiscal deficit is estimated to be 4.4 per cent of GDP. To finance the fiscal deficit, the net market borrowings from dated securities are estimated at Rs. 11.54 lakh crore. The balance financing is expected to come from small savings and other sources. The gross market borrowings are estimated at Rs. 14.82 lakh crore.

Indirect Taxes

As a part of comprehensive review of Customs rate structure announced in July 2024 Budget, I propose to:

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.

apply appropriate cess to broadly maintain effective duty incidence except on a few items, where such incidence will reduce marginally.

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

Relief on import of Drugs/Medicines

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. Specified drugs and medicines under Patient Assistance Programmes run by pharmaceutical companies are fully exempt from 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

In the July 2024 Budget, The Government  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, The Government 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

To promote domestic production of technical textile products such as agro-textiles, medical textiles and geo textiles at competitive prices, It has been proposed to add two more types of shuttle-less looms to the list of fully exempted textile machinery. The Government also propose to revise the BCD rate on knitted fabrics covered by

nine tariff lines from “10% or 20%” to “20% or Rs. 115 per kg, whichever ishigher”.

Electronic Goods

In line with our ‘Make in India’ policy, and to rectify inverted duty structure, It has been proposed 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. 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

To the list of exempted capital goods, It has been proposed 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.

Shipping Sector

Considering that shipbuilding has a long gestation period, It has been proposed to continue the exemption of BCD on raw materials, components, consumables or parts for the manufacture of ships for another ten years. The Government has also propose the same dispensation for ship breaking to make it more competitive.

Telecommunication

To prevent classification disputes, It has been proposed to reduce the BCD from 20% to 10% on Carrier Grade ethernet switches to make it at par with NonCarrier Grade ethernet switches.

Handicraft Goods

To facilitate exports of handicrafts, It has been proposed 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

It has been proposed to fully exempt BCD on Wet Blue leather to facilitate imports for domestic value addition and employment. The Government also propose to exempt crust leather from 20% export duty to facilitate exports by small tanners.

Marine products

To enhance India's competitiveness in the global seafood market, It has been propose to reduce BCD from 30% to 5% on Frozen Fish Paste (Surimi) for manufacture and export of its analogue products. It has 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, Government 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. It is now proposed to extend the same dispensation for railway goods.

Time limit for Provisional Assessment

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, It has been proposed to fix a time-limit of two years, extendable by a year, for finalising the provisional assessment. It has also been proposed 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.

For industry to better plan their imports, It has been proposed 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

TDS/TCS rationalization for easing difficulties

It has been proposed 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 Rs. 50,000 to Rs. 1 lakh. Similarly, the annual limit of Rs. 2.40 lakh for TDS on rent is being increased to Rs. 6 lakh. This will reduce the number of transactions liable to TDS, thus benefitting small tax payers receiving small payments.

The threshold to collect tax at source (TCS) on remittances under RBI’s Liberalized Remittance Scheme (LRS) is proposed to be increased from Rs. 7 lakh to Rs. 10 lakh. It has also proposed to remove TCS on remittances for education purposes, where such remittance is out of a loan taken from a specified financial institution.

Both TDS and TCS are being applied on any transaction relating to sale of goods. To prevent such compliance difficulties, It has been proposed to omit the TCS. It has also been proposed that the provisions of the higher TDS deduction will now apply only in non-PAN cases. In July 2024, the delay for payment of TDS up to the due date of filing statement was decriminalized. It has now propose to provide the same relaxation to TCS provisions as well.

Extension for incorporation of Start-Ups

We continue to support the Indian start-up eco-system. It has been proposed 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)

In order to attract and promote additional activities in the IFSC, The Finance Minister 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.

Personal Income- tax Reforms with special focus on middle class

The Finance Minister announces that there will be no income tax payable upto income of Rs. 12 lakh (i.e. average income of Rs. 1 lakh per month other than special rate income such as capital gains) under the new regime. This limit will be Rs. 12.75 lakh for salaried tax payers, due to standard deduction of Rs. 75,000. Slabs and rates are being changed across the board to benefit all taxpayers. 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.

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

To tax payers upto Rs. 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 Rs. 12 lakh will get a benefit of Rs. 80,000 in tax (which is 100% of tax payable as per existing rates). A person having income of Rs. 18 lakh will get a benefit of Rs. 70,000 in tax (30% of tax payable as per existing rates). A person with an income of Rs. 25 lakh gets a benefit of Rs. 1,10,000 (25% of his tax payable as per existing rates).

As a result of these proposals, revenue of about ₹ 1 lakh crore in direct taxes and ₹ 2600 crore in indirect taxes will be forgone

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Introduction of Form ENR-03 for Enrolment of Unregistered Dealers/Persons in e-Way Bill Portal for generating e-way Bill.

A new feature has been introduced in the E-Way Bill (EWB) system to facilitate the enrolment of unregistered dealers supplying goods, with effect from 11.02.2025. In accordance with Notification No. 12/2024 dated 10th July 2024, Form ENR-03 has been introduced for the enrolment of unregistered dealers.

2.Unregistered dealers engaged in the movement or transportation of goods can now generate e-Way Bills by enrolling themselves on the EWB portal and obtaining a unique Enrolment ID. This ID will serve as an alternative to the Supplier GSTIN or Recipient GSTIN for generating e-Way Bills.

User Guide for ENR-03 Enrolment

1.Accessing ENR-03:

a)As per the notification, an Unregistered Person (URP) can enrol using Form ENR-03.

b)The option is available under the "Registration" tab in the main menu of the EWB portal.

2.Filling Out the ENR-03 Form:

a)Upon selecting the option, the enrolment screen will be displayed.

b)The applicant must select their State and enter their PAN details, which will be verified.

c)The type of enrolment must be selected, and address details must be provided.

d)A mobile number must be entered, which will be verified via OTP.

3.Creating Login Credentials:

a)The user must create a username, check its availability, and set a password before submitting the details.

b)Upon successful submission, a 15-character Enrolment ID will be generated, and an acknowledgment will be displayed.

c)This Enrolment ID can be used for generating e-Way Bills in place of a GSTIN.

4.Generating an e-Way Bill:

a)The enrolled URP can log in to the EWB portal using the registered credentials.

b)By selecting the ‘Generate New’ option, the Enrolment ID will be auto-populated as the Supplier/Recipient.

c)Other relevant details must be entered before proceeding with e-Way Bill generation.

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