Union Budget 2025 – Analysis of Tax Proposals

The Budget 2025 was presented on February 1, 2025. The Government announced various schemes which focussed on augmenting growth, providing a fillip to the agricultural as well as niche manufacturing sector and enhancing the spending power in the hands of citizens, etc.

Continuing its trend of prioritising convenience of tax payers, the Government reaffirmed the commitment of the tax department to ‘trust first, scrutinise later’ and also announced introduction of the new income-tax bill shortly. It was also announced (as expected) that the new income-tax bill will be clear and direct in text and will close to half the provisions in comparison to the present law. The Hon’ble Finance Minister has assured that it will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation.

From an income tax standpoint, the Government seemed focussed on clarifying certain ambiguities and aligning provisions to achieve the intended results. The Government seems to have avoided making any substantial changes since the new income-tax bill is expected in a few days. However, there have been some changes with respect to slab rates applicable to individual, rationalising withholding tax rates to reduce complexities, etc. The International Financial Services Centre (“IFSC”) has once again been in focus with additional benefits being announced in order to promote investments in IFSC. A host of changes have also been announced to simplify litigation proceedings, penalties, etc. Some procedural aspects such as applicability of tax collection at source on sale of goods, higher rates of tax deduction and collection for non-filers of tax returns have been removed. The changes proposed in indirect tax laws aim to rationalize tariff structure and address duty inversion while supporting domestic manufacturing and value addition, to promote exports, facilitate trade and provide relief to common people.

One would await the introduction of the income-tax bill to see the impact of the new provisions on the legal positions which have developed through years of judicial precedents.

For a snapshot of the key tax proposals of the Budget 2025,  please click here to download the document.

This prism has been prepared by:

Manish Mishra Partner & Head of Practice – Indirect Tax

Kumarmanglam Vijay Partner and Head of Practice – Direct Tax

Shareen Gupta Partner

Surajkumar Shetty Partner

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