Union finance minister Nirmala Sitharaman presented the Union Budget for 2025 in the Lok Sabha at 11am on Saturday, marking her eighth consecutive budget presentation.
This significant national financial blueprint outlines key economic policies, reforms, and allocations that will shape India's growth trajectory. Below is the full text of her address, offering a clearer vision of the government's fiscal outlook for the coming year.
Here’s full text of Nirmala Sitharaman’s Budget 2025 speech
Hon’ble Speaker,
I present the Budget for 2025-26.
Introduction1. This Budget continues our Government’s efforts to:a) accelerate growth,b) secure inclusive development,c) invigorate private sector investments,d) uplift household sentiments, ande) 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
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{{/usCountry}}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 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; andf) 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; and10) Nurturing Innovation.
7. For this journey of development,
a) Our four powerful engines are: Agriculture, MSME, Investment, andExportsb) The fuel: our Reformsc) Our guiding spirit: Inclusivityd) 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 globalcompetitiveness. The domains are:
1) Taxation;2) Power Sector;3) Urban Development;4) Mining;5) Financial Sector; and6) Regulatory Reforms.
Agriculture as the 1st Engine
9. Now I move to specific proposals, beginning with ‘Agriculture as the 1stEngine’.
Prime Minister Dhan-Dhaanya Krishi Yojana – Developing Agri DistrictsProgramme
10. Motivated by the success of the Aspirational Districts Programme, ourGovernment will undertake a ‘Prime Minister Dhan-Dhaanya Krishi Yojana’ in partnership with states. Through the convergence of existing schemes andspecialized measures, the programme will cover 100 districts with lowproductivity, 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 help1.7 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, andinvigorating the rural economy. The goal is to generate ample opportunities in rural areas so that migration is an option, but not 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.
19. A National Mission on High Yielding Seeds will be launched, aimed at (1)strengthening the research ecosystem, (2) targeted development andpropagation 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 untappedpotential of the marine sector, our Government will bring in an enablingframework for sustainable harnessing of fisheries from Indian ExclusiveEconomic 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 toannounce 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 InterestSubvention Scheme will be enhanced from ₹3 lakh to 5 lakh for loans takenthrough the KCC.
Urea Plant in Assam
23. For Atmanirbharta in urea production, our Government had reopenedthree dormant urea plants in the Eastern region. To further augment ureasupply, a plant with annual capacity of 12.7 lakh metric tons will be set up atNamrup, Assam.
India Post as a Catalyst for the Rural Economy
24. India Post with 1.5 lakh rural post offices, complemented by the IndiaPost Payment Bank and a vast network of 2.4 lakh Dak Sevaks, will berepositioned to act as a catalyst for the rural economy. Details are atAnnexure C.
25. India Post will also be transformed as a large public logisticsorganization. This will meet the rising needs of Viswakarmas, newentrepreneurs, women, self-help groups, MSMEs, and large businessorganizations.
Support to NCDC
26. Our Government will provide support to NCDC for its lending operationsfor the cooperative sector.MSMEs as the 2nd engine
27. Now, I move to MSMEs as the 2nd engine, which encompassesmanufacturing 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 toposition India as a global manufacturing hub. With their quality products,these MSMEs are responsible for 45 per cent of our exports. To help themachieve higher efficiencies of scale, technological upgradation and betteraccess to capital, the investment and turnover limits for classification of allMSMEs will be enhanced to 2.5 and 2 times respectively. This will give themthe confidence to grow and generate employment for our youth. The detailsare in Annexure D.
Significant enhancement of credit availability with guarantee cover
29. To improve access to credit, the credit guarantee cover will beenhanced:
a) For Micro and Small Enterprises, from ₹5 crore to 10 crore, leadingto additional credit of ₹1.5 lakh crore in the next 5 years;b) For Startups, from ₹10 crore to 20 crore, with the guarantee feebeing moderated to 1 per cent for loans in 27 focus sectorsimportant 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 microenterprises 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 receivedcommitments of more than ₹91,000 crore. These are supported by the Fundof 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 andScheduled Tribes first-time entrepreneurs. This will provide term loans upto ₹2 crore during the next 5 years. The scheme will incorporate lessons from the successful Stand-Up India scheme. Online capacity building forentrepreneurship and managerial skills will also be organized.
Measures for Labour-Intensive Sectors
33. To promote employment and entrepreneurship opportunities inlabour-intensive sectors, our Government will undertake specific policy andfacilitation measures.
Focus Product Scheme for Footwear & Leather Sectors
34. To enhance the productivity, quality and competitiveness of India’sfootwear and leather sector, a focus product scheme will be implemented. The scheme will support design capacity, component manufacturing, andmachinery 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 ascheme to make India a global hub for toys. The scheme will focus ondevelopment 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 aNational 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 thefarmers 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 coveringsmall, medium and large industries for furthering “Make in India” by providing policy support, execution roadmaps, governance and monitoring frameworkfor central ministries and states. Details are in Annexure E.
Clean Tech Manufacturing
38. Given our commitment to climate-friendly development, the Missionwill also support Clean Tech manufacturing. This will aim to improve domesticvalue 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 encompassesinvesting 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 providesnutritional 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 thenutritional support will be enhanced appropriately.
Atal Tinkering Labs
41. Fifty thousand Atal Tinkering Labs will be set up in Government schoolsin next 5 years to cultivate the spirit of curiosity and innovation, and foster ascientific temper among young minds.Broadband Connectivity to Government Secondary Schools and PHCs
42. Broadband connectivity will be provided to all Government secondaryschools 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 toprovide 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, fiveNational Centres of Excellence for skilling will be set up with global expertiseand 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 from65,000 to 1.35 lakh in the past 10 years. Additional infrastructure will becreated in the 5 IITs started after 2014 to facilitate education for 6,500 morestudents. Hostel and other infrastructure capacity at IIT, Patna will also beexpanded.
Centre of Excellence in AI for Education
46. I had announced three Centres of Excellence in Artificial Intelligence foragriculture, 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 ₹500crore.
Expansion of medical education
47. Our Government has added almost 1.1 lakh UG and PG medicaleducation 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 Centresin all district hospitals in the next 3 years. 200 Centres will be established in2025-26.
Strengthening urban livelihoods
49. Our Government has been giving priority to assisting urban poor andvulnerable groups. A scheme for socio-economic upliftment of urban workerswill be implemented to help them improve their incomes, have sustainablelivelihoods and a better quality of life.PM SVANidhi
50. PM SVANidhi scheme has benefitted more than 68 lakh street vendorsgiving 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 willarrange for their identity cards and registration on the e-Shram portal. Theywill 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 pipelineof projects that can be implemented in PPP mode. States will also beencouraged 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 freeloans 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 announcedin 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’srural population have been provided access to potable tap water connections.
To achieve 100 per cent coverage, I am pleased to announce the extension ofthe Mission until 2028 with an enhanced total outlay.
56. The Mission’s focus will be on the quality of infrastructure and O&M ofrural piped water supply schemes through “Jan Bhagidhari”. Separate MoUswill 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 togovernance, municipal services, urban land, and planning will be incentivized.
Urban Challenge Fund
58. The Government will set up an Urban Challenge Fund of ₹1 lakh croreto implement the proposals for ‘Cities as Growth Hubs’, ‘CreativeRedevelopment of Cities’ and ‘Water and Sanitation’ announced in the JulyBudget.
59. This fund will finance up to 25 per cent of the cost of bankable projectswith 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 ofintra-state transmission capacity by states. This will improve financial healthand capacity of electricity companies. Additional borrowing of 0.5 per cent ofGSDP 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 essentialfor our energy transition efforts. For an active partnership with the privatesector towards this goal, amendments to the Atomic Energy Act and the CivilLiability for Nuclear Damage Act will be taken up.
62. A Nuclear Energy Mission for research & development of Small ModularReactors (SMR) with an outlay of ₹20,000 crore will be set up. At least 5indigenously developed SMRs will be operationalized by 2033.
Shipbuilding
63. The Shipbuilding Financial Assistance Policy will be revamped toaddress cost disadvantages. This will also include Credit Notes for shipbreakingin Indian yards to promote the circular economy.
64. Large ships above a specified size will be included in the infrastructureharmonized master list (HML).
65. Shipbuilding Clusters will be facilitated to increase the range, categoriesand capacity of ships. This will include additional infrastructure facilities, skilling and technology to develop the entire ecosystem.
Maritime Development Fund
66. For long-term financing for the maritime industry, a MaritimeDevelopment 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 percent contribution by the Government, and the balance will be mobilized fromports and private sector.
UDAN – Regional Connectivity Scheme
67. UDAN has enabled 1.5 crore middle-class people to meet theiraspirations for speedier travel. The scheme has connected 88 airports andoperationalized 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 needsof 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 ERMProject benefitting a large number of farmers cultivating over 50,000 hectares of land in the Mithilanchal region of Bihar.
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Mining Sector Reforms
70. Mining sector reforms, including those for minor minerals, will beencouraged through sharing of best practices and institution of a State MiningIndex.
71. A policy for recovery of critical minerals from tailings will be brought out.
SWAMIH Fund 2
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 werepaying EMIs on loans taken for apartments, while also paying rent for theircurrent dwellings.
73. Building on this success, SWAMIH Fund 2 will be established as ablended finance facility with contribution from the Government, banks andprivate investors. This fund of ₹15,000 crore will aim for expeditiouscompletion 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 beprovided.
Tourism for employment-led growth
75. Top 50 tourist destination sites in the country will be developed inpartnership with states through a challenge mode. Land for building keyinfrastructure will have to be provided by states. Hotels in those destinationswill be included in the infrastructure HML.
76. The following measures will be taken for facilitating employment-ledgrowth:
1) Organizing intensive skill-development programmes for our youthincluding 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 effectivedestination management including tourist amenities, cleanliness,and marketing efforts; and5) Introducing streamlined e-visa facilities along with visa-fee waiversfor certain tourist groups.
77. Continuing with the emphasis on places of spiritual and religioussignificance in the July Budget, there will be a special focus on destinationsrelated 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 withthe private sector along with capacity building and easier visa norms.C. Investing in InnovationResearch, Development and Innovation
79. To implement private sector driven Research, Development andInnovation 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 nextgeneration startups as a part of this initiative.PM Research Fellowship
81. In the next five years, under the PM Research Fellowship scheme, wewill 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 futurefood and nutritional security. This will provide conservation support to bothpublic and private sectors for genetic resources.National Geospatial Mission
83. We will start a National Geospatial Mission to develop foundationalgeospatial infrastructure and data. Using PM Gati Shakti, this Mission willfacilitate modernization of land records, urban planning, and design ofinfrastructure projects.
Gyan Bharatam Mission
84. A Gyan Bharatam Mission for survey, documentation and conservationof 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 Repository of Indian knowledge systems forknowledge 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 andministerial targets, driven jointly by the Ministries of Commerce, MSME, andFinance. It will facilitate easy access to export credit, cross-border factoringsupport, and support to MSMEs to tackle non-tariff measures in overseasmarkets.
BharatTradeNet
87. A digital public infrastructure, ‘BharatTradeNet’ (BTN) for internationaltrade will be set-up as a unified platform for trade documentation andfinancing solutions. This will complement the Unified Logistics InterfacePlatform. The BTN will be aligned with international practices.Support for integration with Global Supply Chains
88. Support will be provided to develop domestic manufacturing capacitiesfor our economy’s integration with global supply chains. Sectors will beidentified based on objective criteria.
89. Facilitation groups with participation of senior officers and industryrepresentatives 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 thisopportunity for the benefit of the youth.National Framework for GCC
91. A national framework will be formulated as guidance to states forpromoting 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
92. Our Government will facilitate upgradation of infrastructure andwarehousing 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 severalreforms for convenience of tax payers, such as (1) faceless assessment, (2) taxpayers 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 theindirect 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 percent. This enhanced limit will be available for those companies which invest theentire premium in India. The current guardrails and conditionalities associatedwith 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 andexpanded in rural areas.Credit Enhancement Facility by NaBFID
97. NaBFID will set up a ‘Partial Credit Enhancement Facility’ for corporatebonds for infrastructure.
Grameen Credit Score
98. Public Sector Banks will develop ‘Grameen Credit Score’ framework toserve the credit needs of SHG members and people in rural areas.
Pension Sector
99. A forum for regulatory coordination and development of pensionproducts will be set up.KYC Simplification
100. To implement the earlier announcement on simplifying the KYCprocess, the revamped Central KYC Registry will be rolled out in 2025. We willalso implement a streamlined system for periodic updating.Merger of Companies
101. Requirements and procedures for speedy approval of company mergerswill be rationalized. The scope for fast-track mergers will also be widened andthe process made simpler.
Bilateral Investment Treaties
102. As proposed in the Interim Budget, we signed Bilateral InvestmentTreaties (BIT) with two countries in 2024. To encourage sustained foreigninvestment and in the spirit of ‘first develop India’, the current model BIT willbe 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 ‘Easeof Doing Business’. We are determined to ensure that our regulations mustkeep up with technological innovations and global policy developments. Alight-touch regulatory framework based on principles and trust will unleashproductivity and employment. Through this framework, we will updateregulations that were made under old laws. To develop this modern, flexible,people-friendly, and trust-based regulatory framework appropriate for thetwenty-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 areview of all non-financial sector regulations, certifications, licenses, andpermissions. The committee will be expected make recommendations within a year. The objective is to strengthen trust-based economic governance and taketransformational measures to enhance ‘ease of doing business’, especially inmatters of inspections and compliances. States will be encouraged to join inthis endeavour.
Investment Friendliness Index of States
105. An Investment Friendliness Index of States will be launched in 2025 tofurther the spirit of competitive cooperative federalism.FSDC Mechanism
106. Under the Financial Stability and Development Council, a mechanismwill be set up to evaluate impact of the current financial regulations andsubsidiary instructions. It will also formulate a framework to enhance theirresponsiveness and development of the financial sector.Jan Vishwas Bill 2.0
107. In the Jan Vishwas Act 2023, more than 180 legal provisions weredecriminalized. Our Government will now bring up the Jan Vishwas Bill 2.0 todecriminalize 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 fiscalconsolidation. Our endeavour will be to keep the fiscal deficit each year suchthat 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 FRBMstatement.
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. TheRevised Estimate of the total expenditure is ` 47.16 lakh crore, of which thecapital 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 thetotal expenditure are estimated at ` 34.96 lakh crore and ` 50.65 lakh crorerespectively. 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 datedsecurities are estimated at ` 11.54 lakh crore. The balance financing is expectedto come from small savings and other sources. The gross market borrowingsare estimated at ` 14.82 lakh crore.I will now move to Part B.
PART B
Indirect Taxes
115. My proposals relating to Customs aim to rationalize tariff structure andaddress duty inversion. These will also support domestic manufacturing andvalue addition, promote exports, facilitate trade and provide relief to commonpeople.
Rationalisation of Customs Tariff Structure for Industrial Goods
116. As a part of comprehensive review of Customs rate structureannounced in July 2024 Budget, I propose to:(i) remove seven tariff rates. This is over and above the seven tariffrates removed in 2023-24 budget. After this, there will be only eightremaining tariff rates including ‘zero’ rate.(ii) apply appropriate cess to broadly maintain effective duty incidenceexcept on a few items, where such incidence will reduce marginally.(iii) levy not more than one cess or surcharge. Therefore, I propose toexempt Social Welfare Surcharge on 82 tariff lines that are subjectto acess.
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 lifesavingdrugs and medicines to the list of medicines fully exempted from Basic CustomsDuty (BCD). I also propose to add 6 lifesaving medicines to the list attractingconcessional customs duty of 5%. Full exemption and concessional duty willalso respectively apply on the bulk drugs for manufacture of the above.
119. Specified drugs and medicines under Patient Assistance Programmesrun by pharmaceutical companies are fully exempt from BCD, provided themedicines are supplied free of cost to patients. I propose to add 37 moremedicines 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 mineralsthat are not domestically available. I had also reduced BCD of 2 other suchminerals 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-ionbattery, Lead, Zinc and 12 more critical minerals. This will help secure theiravailability for manufacturing in India and promote more jobs for our youth.Textiles
121. To promote domestic production of technical textile products such asagro-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 textilemachinery. 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 ishigher”.
Electronic Goods
122. In line with our ‘Make in India’ policy, and to rectify inverted dutystructure, 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 othercomponents.
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 boostthe manufacture of such Open Cells, the BCD on these parts will now standexempted.
Lithium Ion Battery
124. To the list of exempted capital goods, I propose to add 35 additionalcapital 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
125. Considering that shipbuilding has a long gestation period, I propose tocontinue the exemption of BCD on raw materials, components, consumablesor parts for the manufacture of ships for another ten years. I also propose thesame dispensation for ship breaking to make it more competitive.
Telecommunication
126. To prevent classification disputes, I propose to reduce the BCD from20% 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 periodfor export from six months to one year, further extendable by another threemonths, if required. I also propose to add nine items to the list of duty-freeinputs.
Leather sector
128. I propose to fully exempt BCD on Wet Blue leather to facilitate importsfor domestic value addition and employment. I also propose to exempt crustleather from 20% export duty to facilitate exports by small tanners.Marine products
129. To enhance India’s competitiveness in the global seafood market, Ipropose to reduce BCD from 30% to 5% on Frozen Fish Paste (Surimi) formanufacture and export of its analogue products. I also propose to reduce BCDfrom 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 foraircraft and ships, I had extended the time limit for export of foreign origingoods that were imported for repairs, from 6 months to one year and furtherextendable by one year. I now propose to extend the same dispensation forrailway goods.
Trade facilitation
Time limit for Provisional Assessment
131. Presently, the Customs Act, 1962 does not provide any time limit tofinalize 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 orexporters, after clearance of goods, to voluntarily declare material facts andpay duty with interest but without penalty. This will incentivise voluntarycompliance. However, this will not apply in cases where department hasalready initiated audit or investigation proceedings.
Extended Time for End Use
133. For industry to better plan their imports, I propose to extend the timelimit for the end-use of imported inputs in the relevant rules, from six monthsto one year. This will provide operational flexibility in view of cost anduncertainty of supply. Further, such importers will now have to file onlyquarterly 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 keyreforms to realize our vision of Viksit Bharat. In respect of criminal law, OurGovernment had earlier ushered in Bharatiya Nyaya Sanhita replacingBharatiya Danda Sanhita. I am happy to inform this August House and thecountry 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 thepresent law, in terms of both chapters and words. It will be simple tounderstand for taxpayers and tax administration, leading to tax certainty andreduced litigation.
135. Reforms, however, are not a destination. They are a means to achievegood governance for our people and economy. Providing good governanceprimarily involves being responsive. The Thirukkural captures this in Verse 542,which reads:வான ாக்கி வாழும் உலககல்லாம் ம ் வ ்னகால்ன ாக்கி வாழுங் குடி.vaanokki vaalum ulakellaam mannavankoalnokki vaalung kutiMeaning: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. Thefollowing 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 investmentI 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 thenumber of rates and thresholds above which TDS is deducted. Further,threshold amounts for tax deduction will be increased for better clarity anduniformity. The limit for tax deduction on interest for senior citizens is beingdoubled 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 thenumber of transactions liable to TDS, thus benefitting small tax payersreceiving small payments.
138. The threshold to collect tax at source (TCS) on remittances under RBI’sLiberalized 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 saleof 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 filingstatement 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 believesin “Sabka Saath, Sabka Vikas, Sabka Vishwas and Sabka Prayas”. In line withthis, we brought in updated return facility in 2022 for voluntary compliance by taxpayers who had omitted to report their correct income. Our trust intaxpayers 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 charitabletrusts/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-occupiedproperties as nil only on the fulfilment of certain conditions. Considering thedifficulties faced by taxpayers, it is proposed to allow the benefit of two suchself-occupied properties without any condition.
Ease of Doing Business
144. To streamline the process of transfer pricing and to provide analternative to yearly examination, I propose to introduce a scheme fordetermining 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 internationaltaxation, the scope of safe harbour rules is being expanded.
146. A number of senior and very senior citizens have very old NationalSavings 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 overalllimits.
147. In my speech in July 2024, I had promised that all processes includinggiving effect to appellate orders shall be digitalized and made paper-less overthe next two years. I am happy to announce that digitalization is being madeoperational.
148. In July 2024, we brought in the Vivad Se Vishwas Scheme to resolveincome tax disputes pending in appeal. The scheme has received a greatresponse, 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 oroperating 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 extended toinland vessels registered under the Indian Vessels Act, 2021 to promote inlandwater transport in the country.
Extension for incorporation of Start-Ups
152. We continue to support the Indian start-up eco-system. I propose toextend the period of incorporation by 5 years to allow the benefit available tostart-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 aminter 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 extendedby five years to 31.3.2030.
Alternate Investment Funds (AIFs)
154. Category I and category II AIFs are undertaking investments ininfrastructure and other such sectors. I propose to provide certainty oftaxation 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 Fundsto the infrastructure sector, I propose to extend the date of making aninvestment 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 ourjourney towards Viksit Bharat. The middle class provides strength for India’sgrowth. This Government under the leadership of Prime Minister Modi hasalways believed in the admirable energy and ability of the middle class innation building. In recognition of their contribution, we have periodicallyreduced 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 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 Nil4-8 lakh rupees 5 per cent8-12 lakh rupees 10 per cent12-16 lakh rupees 15 per cent16-20 lakh rupees 20 per cent20- 24 lakh rupees 25 per centAbove 24 lakh rupees 30 per cent
159. To tax payers upto ₹12 lakh of normal income (other than special rateincome such as capital gains) tax rebate is being provided in addition to thebenefit 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 willget 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 histax 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 directtaxes and ₹ 2600 crore in indirect taxes will be forgone.
Mr. Speaker Sir, with this, I commend the budget to this august House.
Jai Hind