Union Budget 2025: A Comprehensive Overview and Expert Insights

Boosting M&A Activity

The 2025 budget takes a reformative approach, simplifying M&A procedures to stimulate economic growth. This move, coupled with the establishment of a regulatory reforms committee focused on trust-based measures and ease of doing business, signals the government's intent to invigorate trade and commerce.

Empowering the MSME Sector

India's vast postal network, a national treasure with 149,164 rural post offices, is set to be transformed into logistics hubs. This initiative will empower entrepreneurs, women, and MSME businesses, providing them access to a robust and far-reaching distribution network.

Furthermore, a significant increase in turnover and investment limits for MSME classification will expand access to crucial benefits, including easier access to credit. This, combined with a new Fund of Funds, injects further momentum into the startup ecosystem.

"Significant increase in limits of turnover and investment for classification as MSME would facilitate a lot of companies to get classified as MSMEs and thereby become eligible for MSME benefits, including access to credit. This measure, coupled with setting up of a new Fund of Funds, with additional funding to start-ups is likely to fuel further growth for start-ups/early stage companies” - Nitesh Mehta, Partner, M&A Tax and Regulatory Services, BDO India

Fueling Startup Growth

An additional INR 10,000 crore will be infused into the Fund of Funds, bringing the total allocation to INR 20,000 crore. This substantial investment aims to propel entrepreneurship and accelerate growth within 27 key sectors.

The government's commitment to startups extends to a dedicated DeepTech Fund with INR 20,000 crore in funding, promoting research and development and fostering innovation hubs. 10,000 fellowships will be awarded for research at prestigious institutions like the IITs.

Transforming Taxation

A new Income Tax Bill, designed for clarity and simplicity, promises to revamp the existing 64-year-old Act. This much-anticipated legislation aims to streamline tax compliance and enhance accessibility for all stakeholders.

"The new income tax bill is designed to be clear and direct in its language, ensuring simplicity and ease of understanding for both taxpayers and tax administrators." - Abhishek Sharma, Transaction Tax & Regulatory Services, Dewan P N Chopra & Co

The Jan Vishwas 2.0 Bill will further simplify the legal landscape by decriminalizing over 100 provisions across various laws, fostering a more conducive environment for business.

The principle of "trust first, scrutinize later" underscores a shift towards a more taxpayer-friendly approach, further reinforced by measures like faceless assessment and faster return processing.

Promoting FDI and Global Engagement

FDI in the insurance sector will be raised to 100% for companies reinvesting premiums within India. This move, coupled with the simplification of existing regulations, signifies a major opening for foreign investment.

A national framework for Global Capability Centres (GCCs) will encourage their establishment in Tier 2 cities, boosting employment and fostering growth.

Streamlining Customs and Trade

Several measures aim to simplify customs procedures and promote exports. The Social Welfare Surcharge will be removed from 82 tariff lines, and 36 life-saving drugs will be completely exempt from basic customs duty.

Customs duty exemptions will also be expanded to include 35 capital goods related to Lithium-ion and mobile phone battery manufacturing, bolstering domestic production and the "Make in India" initiative.

"‘Trust first, scrutinize next’, simplified cargo clearance and customs processes proposed in the Union Budget will help increase India’s export competitiveness." - Gyanendra Tripathi, Partner & Leader (West), Indirect Tax, BDO India

Investing in the Future

A National Centre for Skilling, with international collaboration, will address the skills gap in advanced manufacturing, further strengthening the "Make in India" vision.