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Tax Reliefs Could Be Adjusted Year-Round Under New Income Tax Bill

February 7, 2025, 1:49 pm

The Income Tax Bill 2025 is poised for approval by the Union Cabinet on Friday, marking a significant shift in how tax reliefs are handled. One of its key features is the ability for the government to adjust income tax provisions through executive orders without waiting for the annual budget.

Changes Through Executive Orders

A major element of the bill is its provision allowing the government to modify tax deductions and rebates through executive orders. A source explained, “Some provisions have been proposed that will allow the government to modify the limits or amounts of deductions/rebates through executive orders only.” Another source noted that changes to the standard deduction could be part of these adjustments.

Cabinet Approval and Legislative Process

Following the expected Cabinet approval, the bill will be presented in the Lok Sabha, likely on Monday. It may then be sent to the Parliamentary Standing Committee on Finance for further deliberation.

Purpose Behind the New Bill

The Direct Tax Code, as the new legislation is called, aims to overhaul the outdated Income Tax Act of 1961. Its goal is to simplify the income tax structure and provide greater clarity.

Simplification of Tax Laws for Better Understanding

Finance Minister Nirmala Sitharaman highlighted that the bill is designed to make tax laws clearer and more direct. She stated, “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.” This simplification aims to reduce legal complexities, encourage tax certainty, and minimize litigation.

Benefits of the New Tax Bill

The bill is also expected to simplify residency rules for taxpayers, making it easier to determine their tax status. Overall, the new law seeks to streamline tax compliance, benefiting both taxpayers and tax authorities alike.

Budget 2025: Ignoring the Need for Higher Education Investment

February 3, 2025, 1:50 am

Finance Minister Nirmala Sitharaman presented the Union Budget for 2025, emphasizing the need to accelerate growth and ensure inclusive development to realize the aspirations of a “Viksit Bharat.” To lay the foundation for a prosperous nation, the government must make substantial investments in human resources, focusing on education and skill development for the workforce. While the announcement to establish National Centres of Excellence for skilling and a Centre of Excellence in Artificial Intelligence (AI) for education is a positive step, the Union Budget largely overlooks the critical issues facing higher education.

The FM has allocated Rs. 1.28 lakh crore to the education sector for this year, up from Rs. 1.20 lakh crore last year. However, as in previous years, the budget primarily focuses on primary and school education. Of the total allocation to the Ministry of Education, Rs. 78,572 crore has been earmarked for school education, while only Rs. 50,000 crore is allocated for higher education. This represents a reduction from the Rs. 55,000 crore spent on higher education in 2023-24. Last year, funding for the Department of Higher Education was reduced by 17%, with the University Grants Commission (UGC) seeing a significant 61% decrease in funding.

While funding for school education is crucial, it’s important to recognize that significant progress has been made in this area. The National Education Policy (NEP) 2020 aims for 100% enrollment across all levels of school education. According to the Unified District Information System for Education Plus 2021-22 (UDISE+), primary education has already achieved 100% enrollment. However, enrollment drops as we move to higher levels, with only 58% enrollment in higher secondary education. Additionally, NEP 2020 recommends a pupil-teacher ratio (PTR) of 30:1, a target that has been met across all school education levels, as per UDISE+ 2021-22. Despite ongoing challenges such as improving teaching quality, India has made notable strides toward achieving key educational goals in recent years.

The FM has allocated Rs. 1.28 lakh crore to the education sector for this year, up from Rs. 1.20 lakh crore last year. However, as in previous years, the budget primarily focuses on primary and school education. Of the total allocation to the Ministry of Education, Rs. 78,572 crore has been earmarked for school education, while only Rs. 50,000 crore is allocated for higher education.

In contrast, the situation is less favorable in the higher education sector. The National Education Policy (NEP) aims to achieve a Gross Enrollment Ratio (GER) of 50% in higher education by 2035. As of 2021-22, India’s GER stood at just 28.5%. A key factor contributing to this low enrollment rate is the inadequate availability of scholarships to support students pursuing higher education. The allocation for student financial aid has been decreasing in recent years, further hindering access to education. The Standing Committee on Education, Women, Children, Youth, and Sports (2022) recommended that the ministry revise the funding and coverage of scholarship schemes, calling for an increase in the number of scholarships available to students.

The same committee also highlighted the ideal pupil-teacher ratio (PTR) for higher education should be 15:1. Currently, the PTR in regular mode is 23:1, with some states facing much worse ratios—such as Bihar (64:1), Jharkhand (54:1), and Uttar Pradesh (35:1). This discrepancy is largely due to a significant number of vacant faculty positions at both state and central universities, as well as government colleges. Approximately 30% of faculty positions in centrally funded institutions remain unfilled, exacerbating the issue.

Globally, higher education institutions play a crucial role in research and development (R&D). However, R&D has not been a significant focus in India’s Union Budget, with allocations for this sector never reaching even 1% of the GDP. In contrast, many other countries have made substantial investments in R&D. For instance, South Korea allocates 4.8% of its GDP to R&D, the USA 3.5%, Japan 3.3%, Germany 3.1%, and China 2.2%. In India, the spending on health research was just 0.02% of the GDP in 2021-22, far behind the US (0.65%) and the UK (0.44%). The Standing Committee on Health and Family Welfare (2023) recommended that the medical research budget be increased to 0.1% of the GDP.

Moreover, Indian universities contribute only 9% of the total research expenditure, compared to 39% in Canada and 36% in Australia. Unlike universities in other countries, which are central to generating high-quality research, Indian universities are primarily focused on teaching, with limited involvement in advancing research initiatives. This lack of investment in university-led research hampers the potential for innovation and development in the country.

For India to achieve its vision of becoming a “Viksit Bharat” by 2047, it is crucial to prioritize higher education and significantly invest in research and development. Universities should be positioned at the heart of R&D efforts, with a strong emphasis on fostering industry-academia collaborations. To boost enrollment rates, the government must increase scholarship amounts and expand the coverage of these schemes. Additionally, the budget allocation for student financial aid needs to be significantly enhanced.

As India aims to supply a global workforce, substantial investments must be made in providing world-class skills and vocational training to the youth. The government must also address the existing digital divide by improving digital infrastructure, in alignment with the goals of the National Education Policy (NEP) 2020. Filling vacant faculty positions across higher education institutions and implementing comprehensive teacher training programs are essential for effective NEP 2020 implementation.

Furthermore, the government should encourage states to boost their spending on higher education, possibly by offering interest-free loans or incentives to increase investment. Strengthening the higher education ecosystem will help build a highly skilled workforce, which will, in turn, accelerate economic growth and bring India closer to realizing its goal of a developed nation by 2047.

Dr. Abhishek Malhotra is an Assistant Professor in the Department of Economics, Sri Venkateswara College, University of Delhi.

PM Modi Approaches Nirmala Sitharaman After Budget 2025 Speech | Watch

February 1, 2025, 11:26 pm

After presenting her eighth budget on Saturday, Union Finance Minister Nirmala Sitharaman received congratulations from her cabinet colleagues, with Prime Minister Narendra Modi also walking over to extend his greetings.

A video from the Lok Sabha captured Union Minister Jyotiraditya Scindia being the first to shake hands with Sitharaman, followed by Shivraj Singh Chouhan and Manohar Lal Khattar, while others greeted her with folded hands. As she acknowledged the gestures of her party members, Prime Minister Modi was seen rising from his seat and approaching her.

In the footage, Modi was also seen engaging in conversation with Sitharaman and other ministers, including Defence Minister Rajnath Singh and Health Minister JP Nadda.

टैक्स के बोझ को लेकर सारे ताने और मीम वित्तमंत्री @nsitharaman जी के खाते में आते हैं और इसलिए ये देखना सुखद है कि जब बजट में आम आदमी को राहत दी गई तो प्रधानमंत्री @narendramodi से लेकर सारे मंत्रियों ने उन्हें जाकर बधाई भी दी ?
pic.twitter.com/xFzzNM6eFV

— Sushant Sinha (@SushantBSinha) February 1, 2025

Calling the budget a significant milestone in India’s development, Modi stated, “Today is an important milestone in India’s development journey. This budget reflects the aspirations of 140 crore Indians and fulfils the dreams of every citizen. We have opened many sectors for the youth, and the common citizen will drive the mission of Viksit Bharat.”

He also sought to address concerns of the middle class, which has been perceived as moving away from the Bharatiya Janata Party (BJP) due to rising costs and inflation.

“Usually, the focus of the budget is on how the government treasury will be filled. But this budget is exactly the opposite. How will this budget fill the pockets of the citizens, increase their savings and how will they become development partners… this budget lays a very strong foundation for it…” Modi said.

Highlighting employment as a key priority, he added that all job-generating sectors had been given special attention in the budget.

‘Hooked on Makhana’: Nikhil Kamath’s Comment After FM Sitharaman’s Budget Speech Goes Viral

February 1, 2025, 4:39 pm

During her Budget speech on Saturday, Finance Minister Nirmala Sitharaman proposed setting up a Makhana Board in Bihar for supporting the thriving Makhana, or foxnut, industry in the state. The news stirred renewed interest in what billionaire Nikhil Kamath said recently about the superfood. Kamath had written about the possibility of Makhana turning into a ₹6,000 crore industry in the near future.

Kamath’s Post on Makhana

On January 17, the Zerodha co-founder penned, “Perhaps room here to build a very large brand, an Indian brand that sells to the world. Personally, I’m hooked on Makhana.”

Maybe room here to build a really large brand, an Indian brand that sells to the world.

Personally, I’m hooked on Makhana. pic.twitter.com/eu5yK804Ny

— Nikhil Kamath (@nikhilkamathcio) January 17, 2025

In a long post detailing his experience with Makhana, Kamath said, “Makhana isn’t a very high-yield crop. First, you have to trek through thorny leaves & muddy ponds to gather seeds, then dry & manually pop the seeds under high heat.” He further added, “In all of this, much of the crop goes to waste. Of these, only around 2% of popped seeds are export-worthy. Only about 40% of the harvested seeds are eatable.” He added that whereas Makhana was once strictly grown in Bihar, it has also started growing in Assam, Manipur, West Bengal, Tripura, and Odisha.

Sitharaman’s Makhana Board Initiative

Sitharaman said during the Budget speech that there was the opportunity for consumption growth of Makhana. She added, “With rising income levels, the consumption in fruits is also increasing and remuneration for farmers will also increase in collaboration with states.” According to her, “There is a special opportunity in Bihar, the Makhana board will be established in the state. The board will provide training and support to Makhana farmers.” A national mission to promote high-yielding seeds will also be launched.

Budget 2025: Sitharaman Unveils Rs. 10,000 Crore Fund of Funds to Boost Startup

February 1, 2025, 2:03 pm

Fresh funds for start-ups: Finance minister Nirmala Sitharaman promised a new crop of the scheme Fund of Funds for Start-ups (FFS) with a corpus of ₹10,000 crore on Saturday, reiterating the Modi government’s position on the start-up sector and innovation. The count of start-ups recognised by the department for promotion of industry and internal trade (DPIIT) has already crossed 1.5 lakh.

Launched originally in 2016, the FFS scheme has played an important role by making capital available to startups of various types, that is, early-stage, seed as well as growth-stage, without leaning too much on foreign investment. This scheme, which is administered by DPIIT and implemented by SIDBI, was earlier funded under the 14th and 15th Finance Commission cycles based on the performance and availability of funds.

Boosting Domestic Investments

According to her, this fund would also provide aid not just to small beginners but promote investments domestically into the industry.“This has led to several indigenous venture capital funds in the country that has made India a better stakeholder of the world startup hub,” Sitharaman said.

Ten years for Startup India

The renewed funding is in accordance with the action plan for Startup India, which was first announced on January 16, 2016, and has added much to the rising contours of startups in India. Increased domestic investments and innovation-led enterprises have been a result of this initiative, thus fueling entrepreneurial growth in the country.

By providing financial support and easing capital constraints, the government is pushing Indian startups to expand further and solidify its position as a global innovation leader.

Budget 2025: Kisan Credit Card Loan Limit Raised to Rs 5 Lakh, Bihar Receives Major Bonanza

February 1, 2025, 1:55 pm

Finance Minister Nirmala Sitharaman has announced many transformative measures to boost the agricultural and marine sectors while hugely providing relief to the middle class in the Union Budget 2025. The key announcements include increasing loan limits for Kisan Credit Card (KCC) holders, new cotton farming focus areas, and a framework to make fisheries more sustainable.

The finance minister also introduced tax exemptions for the middle class and continued to highlight regional development with a great thrust on Bihar this time.

Kisan Credit Card Loan Limit Raised to Rs 5 Lakh

Sitharaman has announced the raising of the loan limit under the Modified Interest Subvention (MIS) scheme for Kisan Credit Cards (KCC). The loan limit, which was earlier at Rs 3 lakh, has now been increased to Rs 5 lakh. The move is also aimed at enhancing access to finance for 7.7 crore farmers, especially those in the fisheries and dairy sectors.

It would increase the loanable amount available to farmers by allowing them to grow their businesses through necessary tools to scale operations and raise productivity, thereby contributing directly to agricultural growth.

Increase Cotton Sector with a Productivity Mission

The Union Budget 2025 came up with a comprehensive five-year ambitious Mission on Cotton Productivity with scientific support to cotton. That centers more on improvements to extra-long staple cotton strains as a precursor in boosting India’s cotton productions along the visions of the India 5Fs. Indeed, the intent here is to augment increased productivity in Indian cotton production from merely being supplied both in its home market, to being readily made available within this country due to export for increased textile contribution.

Fertiliser Sector development cuts across one critical area through import dependency alleviation. The fertilizer sector was given a much-needed boost by Sitharaman’s announcement of recommissioning three urea plants in eastern India. Furthermore, the government will establish a new 12.7 lakh metric tonne urea plant in Assam, which would decrease India’s reliance on imported fertilizers.

This would ensure better self-sufficiency in fertilizer production and enable farmers to use affordable, quality inputs for the cultivation of crops.

Sustainable Fisheries Framework and Seafood Export Expansion

In the marine sector, the budget provided a structure to sustainable fisheries and utilized the resources of the Exclusive Economic Zone of India and high seas. Specifically, this budget would focus on the enhancement of seafood exports from the Andaman and Nicobar Islands and Lakshadweep.

This new sustainable and responsible fishing structure will be expected to take India’s seafood exports from the current value of Rs 60,000 crore to new heights.

Income Tax Relief for Middle-Class Hailed by Goa CM

The Union Budget 2025 brought much relief to the middle class with the announcement that individuals earning up to Rs 12 lakh would be exempt from income tax. This decision has been termed by Goa Chief Minister Pramod Sawant as “a transformative move for empowering the middle class.”

According to him, it would enhance savings and investments as this middle class has played an important role in building up this nation. “A stronger middle class means a stronger India,” he added, focusing on the long-term economic advantages.

Congress Lashes Out at Budget That Focuses More on Bihar

While the budget has seen appreciation from most quarters, it has also been criticized politically by the Congress party. The Congress party criticized the Modi government for giving more importance to Bihar since several initiatives for the state were announced, including the setting up of a Makhana Board, financial assistance for the Western Kosi canal, and planning to develop greenfield airports.

Congress General Secretary Jairam Ramesh questioned why Andhra Pradesh, another key NDA ally, was “cruelly ignored” in the budget, pointing out the political motivations behind the Bihar-focused announcements.

Bihar appears to have got a bonanza of announcements. It is natural since elections are due there later in the year. But why is the other pillar of the NDA, namely Andhra Pradesh, been so cruelly ignored?

— Jairam Ramesh (@Jairam_Ramesh) February 1, 2025

The Union Budget 2025 therefore as a strategic focus for the government on agriculture, regional development, and middle-class relief. The budget has tremendous initiatives for farmers, the cotton sector, and fisheries, besides tax exemptions for the middle class. Of course, the budget aims at boosting economic growth and improving the lives of millions of Indians.

Budget 2025: Is This Nirmala Sitharaman’s Shortest Speech, Lasts Only 1 Hour 14 Minutes

February 1, 2025, 1:45 pm

Finance Minister Nirmala Sitharaman delivered her eighth successive Union Budget speech on Saturday for fiscal year 2025-26. Her address lasted 1 hour and 14 minutes, which was the shortest budget speech of her eight years in the role.

Budget Speech Records for Sitharaman

Sitharaman is known to be the longest Budget speech in Indian history, delivered in 2020, for two hours and 40 minutes. She had to conclude that speech early, leaving two pages unread.

Her shortest Budget speech was actually made in February 2024 when she presented the interim budget in merely 56 minutes. The shortest budget speech in the history of India, however, was given by Hirubhai Mulljibhai Patel, who delivered an 800-word interim budget address in the year 1977.

At a time when the economy faces concerns of slowdown and increasing demands for tax relief to the middle class, Sitharaman presents the eighth successive Budget. “The tax proposals focus on income tax reforms, rationalization of TDS, and easing compliance,” she said while presenting the 2025-26 Budget. She also announced that the government will introduce a new Income Tax (I-T) Bill in Parliament next week.

Key Tax Reforms

Sitharaman declared that taxpayers earning up to ₹1.28 million ($14,800) per year will not have to pay income tax. The threshold for exemption is raised from ₹700,000.

Income tax rates have also been lowered for individuals earning above that threshold. The government estimates it will lose around ₹1 trillion in tax income due to these proposals, Sitharaman said.

Budget 2025: New Tax Slabs

Following are the revised tax slabs under the new tax regime for FY26:

Up to ₹4 lakh per annum – Nil
Between ₹4 lakh and ₹8 lakh – 5%
Between ₹8 lakh and ₹12 lakh – 10%
Between ₹12 lakh and ₹16 lakh – 15%
Between ₹16 lakh and ₹20 lakh – 20%
Between ₹20 lakh and ₹24 lakh – 25%
Above ₹24 lakh – 30%

There’s a massive difference in the new tax regime – the nil tax slab applies on annual incomes of up to ₹12 lakh, and up to ₹12.75 lakh in the case of salaried individuals if there is a standard deduction of ₹75,000.

Budget 2025: Full List of Price Drop and Hike on These Items

February 1, 2025, 1:13 pm

Finance Minister Nirmala Sitharaman presented the Union Budget for the fiscal year 2025-2026, which is her eighth consecutive budget announcement. This is the second full budget of the Modi 3.0 government, which won another term in the 2024 Lok Sabha elections. The budget is focused on 10 key areas, including agriculture, manufacturing, employment, MSMEs, rural development, and innovation.
“This budget will work on transformative reforms,” Sitharaman said in her budget speech.

Items That Became Cheaper

The government has announced exemptions from Basic Customs Duty (BCD) on 36 cancer and rare disease drugs. Moreover, 37 more medicines will now be exempt from BCD.

To increase domestic production, the Centre announced full BCD exemptions for cobalt products, LED, zinc, lithium-ion battery scrap, and 12 critical minerals. The exemption on raw materials for ship manufacturing has also been extended for a decade. Wet blue leather will also get full exemption from BCD.

The duty on fish pasteurii was reduced from 30% to 5%. The government has also presented a scheme to further the handicraft export sector.

Items That Gained Costlier

The government has also increased BCD on interactive flat panel displays.It has enhanced the BCD of this product from 10% to 20% in order to rectify the inverted duty structure. Provision for provisional assessment has also been allowed within two years.

In the previous year’s budget, Sitharaman has announced cuts on customs duties on mobile phones, gold, silver, and copper. Three medicines meant to treat cancer have also been exempted.

The central government hiked customs duty on non-biodegradable plastics to 25% by 2024. The duty on specified telecom equipment has been raised from 10% to 15%.

Budget 2025: What’s in Store for AI and Smartphone Prices?

February 1, 2025, 11:41 am

Tech enthusiasts and customers eagerly anticipate Smartphone price changes approaching Budget 2025. Many are asking if the new budget would lower mobile phone prices.

First, Let’s examine the prior year’s budget to see what Budget 2025 could produce. Finance Minister Nirmala Sitharaman’s major initiatives in 2024 helped to increase smartphone output in India. Reducing fundamental customs duty on mobile phones, chargers, and printed circuit design assemblies (PCDA) was one of the most significant metrics.

Ultimately consumer-friendly prices for smartphones came from lower manufacturing costs, brought by this cut. Mobile phone prices dropped clearly as a result, which helped both consumers and businesses.

What is to be expected in Budget 2025?

Should Budget 2025 introduce comparable tax cuts, smartphones could become even more affordable. The ultimate decision, though, depends on whether the government will reintroduce different measures to bolster the electronics production industry or keep these tax incentives running.

The affordability and availability of mobile devices in India will be affected by the policy direction irrespective.

High Expectations for the AI Industry

The artificial intelligence (AI) sector depends on Budget 2025 as much as it does on smartphones. Responsible AI development policies and others positioning India as a worldwide AI leader are what experts in the field anticipate.

MD of SAP Labs India, Sindhu Gangadharan, stresses the requirement for disciplined financing of deep tech startups and an emphasis on skill development. She emphasizes that artificial intelligence is vital for economic expansion and worldwide competitiveness as well as a driver of innovation.

A committed deep tech fund and closer cooperation among government, industry, and academia could help to advance artificial intelligence using India.

AI-Driven Infrastructure and Sustainable Solution Orientation

Experts also stress the part played in sustainable urban design and infrastructure creation by AI. Chinmay Hegde, CEO of Astrikos.ai, states, “To guarantee this, the Union Government should keep their attention on sustainable infrastructure and environmentally friendly projects in the next few years.”

Promoting efficient and sustainable urban mobility in urban design calls for more funds for artificial intelligence-enabled smart infrastructure and artificial intelligence-driven infrastructure management.”

By 2025, India’s smartphone and AI industries could be fundamentally transformed. Though customers want lower phone costs, the AI industry is eager for forward policies supporting creativity, infrastructure, and sustainability. These sectors in India will next grow according to the final budget decisions.

Modi Government 2025 Budget May Include Personal Income Tax Cuts for Middle Class

December 26, 2024, 5:23 pm

India’s government is reportedly considering a proposal to reduce personal income tax for individuals earning up to Rs 1.5 million ($17,590) annually in the upcoming budget. This move aims to alleviate the financial burden on the middle class and stimulate consumption in light of a slowing economy, according to a report by Reuters citing two government sources.

The sources indicated that while discussions are ongoing, a final decision on the extent of the tax cuts has not yet been made. The government is expected to finalize its approach closer to the budget announcement scheduled for February 1.

Impact on Taxpayers and Current Tax Regimes

If implemented, the potential tax relief could benefit tens of millions of taxpayers, particularly urban residents grappling with high living costs. Currently, taxpayers in India can choose between two tax systems: the older framework, which allows for exemptions on expenses such as housing rentals and insurance, and the new tax regime introduced in 2020, which offers reduced rates but eliminates many key exemptions.

Under the new tax regime, incomes between Rs 300,000 and Rs 1.5 million are taxed at rates ranging from 5% to 20%, while incomes exceeding Rs 1.5 million are taxed at a rate of 30%. The proposed changes are seen as a way to provide much-needed relief to the middle class and encourage greater consumer spending in the economy.