Full speech of finance minister Nirmala Sitharaman as she presents her 8th Union Budget
This significant national financial blueprint outlines key economic policies, reforms, and allocations that will shape India's growth trajectory.
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.
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 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
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 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 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.
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
27. Now, I move to MSMEs as the 2nd 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
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 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 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 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 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
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 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.
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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
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
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 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
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
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-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 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.
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 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 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 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.
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.
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 governance
primarily 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 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 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
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 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 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
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