New Delhi: The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, has introduced significant taxation reforms aimed at simplifying the tax structure, easing compliance, and boosting economic growth.
Experts across sectors have shared their insights on the impact of these reforms, highlighting key benefits and concerns.
Income Tax Reforms: Major Relief for Middle-Class Taxpayers
One of the most notable announcements in Budget 2025 is the revision of income tax slabs under the new tax regime.
Shefali Mudra, a tax expert at ClearTax, noted, “The revised tax slabs make the system more progressive, ensuring lower tax burdens for middle-income earners.”
The new tax structure is as follows:
- Income up to Rs 4 lakh: No tax
- Rs 4 lakh to Rs 8 lakh: 5 per cent
- Rs 8 lakh to Rs 12 lakh: 10 per cent
- Rs 12 lakh to Rs 16 lakh: 15 per cent
- Rs 16 lakh to Rs 20 lakh: 20 per cent
- Rs 20 lakh to Rs 24 lakh: 25 per cent
- Above Rs 24 lakh: 30 per cent
A significant benefit of this revision is that individuals earning up to Rs 12 lakh will receive a rebate, ensuring no tax liability—excluding capital gains and other special rate incomes. This change translates to a potential savings of ₹80,000 for taxpayers in this bracket.
Swati Bhargava, Co-founder of CashKaro and EarnKaro, hailed this move, stating, “The increase in the tax exemption limit to Rs 12 lakh is the biggest announcement of the year. By foregoing Rs 1 lakh crore in direct taxes, the government is boosting disposable incomes and overall economic growth.”
Anirudh A. Damani, Managing Partner at Artha Venture Fund, sees this reform as transformative: “The increase in income tax exemption to Rs 12.75 lakh is a bold, economy-igniting move that puts more money in the hands of salaried individuals, fueling consumption and economic momentum.”
Rationalization of TDS and TCS: Boosting Ease of Doing Business
The budget has also introduced changes in TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) rates, reducing compliance burdens on individuals and businesses. Key changes include:
- Senior citizens: The TDS exemption limit on interest income is doubled from Rs 50,000 to Rs 1 lakh.
- Rental income: The annual TDS threshold on rent has increased from Rs 2.4 lakh to Rs 6 lakh.
- Liberalized Remittance Scheme (LRS): The TCS threshold for foreign remittances has been increased from Rs 7 lakh to Rs 10 lakh.
- Education loans: TCS on remittances for education expenses has been removed if funded through a loan.
- Higher TDS rates: Now applicable only in cases where PAN is not provided.
Manmeet Kaur, Partner at Karanjawala & Co., emphasized the business-friendly nature of these changes: “By rationalizing TDS and TCS, the government aims to encourage voluntary compliance, facilitate ease of doing business, and reduce the compliance burden on individuals and enterprises.”
Harpreet Oberoi, Partner at Jotwani Associates, noted, “The simplification of tax compliance through adjusted thresholds for TDS and TCS, along with exemptions on education loan remittances, will significantly ease tax obligations. These reforms create a business-friendly tax structure, reducing unnecessary penalties and litigation risks.”
ITR-U Deadline Extension: Encouraging Voluntary Compliance
To promote tax transparency, the government has extended the deadline for filing updated returns (ITR-U) from two years to four years. Taxpayers filing between 24 to 36 months after the assessment year will face an additional tax of 60 per cent, while those filing between 36 to 48 months will be subject to 70 per cent additional tax.
Manmeet Kaur highlighted this as a significant move: “With 90 lakh taxpayers revising their returns voluntarily, the extension to four years promotes self-assessment and responsible tax filing.”
Stock Market and Economic Implications
Following the budget announcement, Indian stock markets exhibited mixed reactions. Jyoti Bhandari, Founder and CEO of Lovak Capital, explained, “While tax reforms and fiscal consolidation are positive, key indices like Nifty 50 and BSE Sensex experienced slight declines, indicating cautious investor sentiment.” However, she noted that “the emphasis on reducing the fiscal deficit to 4.4 per cent of GDP and net borrowings of Rs 11.54 trillion showcases strong financial discipline.”
Ram Sellaratnam, Group CEO and Managing Director of iBUS Network, underscored the economic benefits: “The reduction in IT tax slabs will strengthen middle-income spending, positively impacting the retail and hospitality sectors. Fiscal consolidation measures enhance India’s attractiveness for FDI and make capital more accessible to high-growth companies.”
A Growth-Oriented Budget with a Long-Term Vision
Beyond taxation, the budget places a strong focus on infrastructure, deep-tech funding, and business-friendly policies. Mohan Ramaswamy, Co-founder and CEO of Rubix Data Sciences, lauded the budget’s impact on business operations: “Simplifying customs procedures, reducing tariff rates, and streamlining the tax filing process will drastically cut the time and costs businesses incur to navigate regulatory hurdles.”
Anirudh A. Damani expressed excitement over the renewed Rs 10,000 crore Fund of Funds and increased deep-tech funding: “This budget isn’t just about the next year—it’s about building a globally competitive India by 2047. The next big moment will be the income tax bill set to be tabled next week, which could further revolutionize India’s tax system.”
Experts agree that Budget 2025 represents a major step forward in tax simplification, economic growth, and ease of doing business. The combination of increased exemptions rationalized TDS and TCS rates, and extended filing deadlines provides relief to taxpayers and businesses alike. The government’s push toward fiscal discipline and investment in infrastructure, deep-tech, and startups further sets the stage for sustained economic progress.
As India moves forward, all eyes will be on the implementation of these reforms and the upcoming income tax bill, which could bring further changes to the tax landscape. One thing is clear—Budget 2025 has laid the foundation for a financially resilient and growth-oriented India.
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