Domestic Manufacturing and Proposals for Trade and Industry Planning:
- Exemption of Critical Minerals: Cobalt powder, lithium iron battery waste and scrap, lead, zinc, and 12 other critical minerals will be fully exempt from customs duty.
- Promotion of Technical Textiles: Two more types of shuttle-less looms will be added to the exemption list for import duty to support domestic production of technical textiles.
- Increase in BCD for Flat LED TV Panels: In line with the Make In India initiative, the Basic Customs Duty (BCD) on flat LED TV panels will be raised from 10% to 20%.
- Exemption for Capital Goods: 35 additional capital goods related to lithium-ion batteries and 28 items related to mobile phones will be added to the exemption list.
- Reduction in BCD on Internet Switches: The BCD on carrier-grade internet switches will be reduced from 20% to 10%.
- Duty-Free Inputs: Nine more items will be added to the list of duty-free inputs.
- Time Limit for Provisional Assessment: A time limit of 2 years, extendable by 1 year, will be set for provisional assessments to reduce uncertainty and cost to trade.
- Extension of Import Use Period: The time limit for the end-use of imports will be increased from 6 months to 1 year, allowing better planning for industry imports.
Exemption of Life-Saving Drugs from Customs Duty:
36 life-saving drugs will be added to the list of drugs fully exempt from customs duty, aimed at providing relief to cancer patients and those suffering from rare diseases.
Concessional Customs Duty for Life-Saving Medicines:
- Six additional life-saving medicines will be included in the list eligible for concessional customs duty.
Patient Assistance Programs:
- Drugs and medicines provided through patient assistance programs by pharmaceutical companies are fully exempt from Basic Customs Duty (BCD).
- The proposal includes adding 37 more drugs and 13 additional patient management programs to this exemption list
Proposals on Indirect Taxes (Customs):
The goal is to streamline the tariff structure and eliminate duty inversions.
Changes for Industrial Goods:
- Removal of Tariff Rates: Seven tariff rates will be eliminated, leaving only 8 tariff rates, including the zero rate.
- Cess Adjustments: Appropriate cess will be applied to maintain effective duty levels, with exceptions for a few items.
- Single Levy of Cess or Surcharge: There will be a proposal to ensure no more than one cess or surcharge is levied.
- Exemption from Social Welfare Surcharge: The social welfare surcharge will be exempted on 82 tariff lines.
Rationalization of TDS and TCS:
The proposal aims to simplify TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) by reducing the number of rates and adjusting the thresholds for deductions.
- Changes for Senior Citizens: The TDS limit on interest for senior citizens will be increased from ₹50,000 to ₹1 lakh.
- Rent TDS Threshold: The TDS threshold for annual rent will be raised from ₹1 lakh to ₹6 lakh.
- TCS Limit on LRS Remittances: The TCS limit on remittances under the Liberalised Remittance Scheme (LRS) will be increased from ₹7 lakh to ₹10 lakh.
- Sale of Goods Compliance: Both TDS and TCS were previously applicable on transactions related to the sale of goods. To ease compliance, the proposal is to remove TCS and apply higher TDS only for non-PAN cases.
Other Tax Provisions Announced by Ms. Sitharaman:
- Reduction in Compliance Burden for Charitable Trusts: Small charitable trusts will now have 10 years to complete their registration, up from 5 years.
- Self-Occupied Property Tax Relief: Taxpayers can claim the annual value of self-occupied homes as nil for two properties, without conditions.
- Expansion of Safe Harbour Rules: To reduce litigation and provide certainty, the scope of safe harbour rules in international taxation is being broadened.
- Tax Exemption for Senior Citizens: Senior citizens with old National Savings Scheme accounts, which no longer earn interest, will be allowed to withdraw their savings tax-free.
- Presumptive Taxation for Non-Residents: A presumptive taxation scheme is proposed for non-residents providing services in the electronics manufacturing sector, aimed at boosting investment and employment.
- Extension of Tonnage Tax Scheme: The tonnage tax scheme, currently available only to sea-going ships, will be extended to inland vessels to promote inland water transport.
- Startups Incentive: The period for incorporation of startups will be extended by 5 years, now available for those incorporated until 2030.
Sources of Revenue for the Budget:
- Borrowings and Other Liabilities: 24% (down from 27% last year).
- Income Tax: 22% (up from 19% last year).
- GST and Other Taxes: 18% (remains the same as the previous year).
- Corporation Tax: 17%.
- Other Sources: Non-tax revenue, union excise duties, customs, and non-debt capital receipts contribute to the remaining budget revenue.
No income tax payable upto incomes of ₹12 lakh
1. Income Tax Relief:
- No income tax will be payable for incomes up to ₹12 lakh.
- Ms. Sitharaman highlights this as a recognition of the middle-class contribution to nation-building, noting periodic reductions in their tax burden.
2. Tax Benefit for Salaried Individuals:
- For salaried taxpayers, the income tax exemption limit increases to ₹12.7 lakh due to the ₹75,000 standard deduction.
Tax Benefit Examples Due to Slab Rate Changes:
- A taxpayer with ₹12 lakh income under the new tax regime will receive a benefit of ₹80,000.
- A person earning ₹18 lakh will benefit by ₹70,000 in tax reduction.
- A person with ₹25 lakh income will see a ₹1,10,000 reduction in taxes.
- The proposed changes will lead to a revenue loss of around ₹1 lakh crore in direct taxes.
- An estimated ₹2,600 crore in indirect taxes will also be foregone.
Income Tax: New Slabs
Upto ₹4 lakhs: Nil
₹4 lakhs – ₹8 lakhs: 5%
₹8 lakhs – ₹12 Lakhs: 10%
₹12 lakhs – ₹16 lakhs: 15%
₹16 lakhs – ₹20 lakhs: 20%
₹20 lakhs – ₹25 lakhs: 25%
Above ₹25 lakhs: 30%
Highlights on urban sector reforms
Urban Challenge Fund:
- An Urban Challenge Fund of ₹1 lakh crore will be launched to spur urban sector reforms.
- The fund will help in the constructive redevelopment of cities, transforming them into growth centers and implementing water and sanitation projects.
Project Financing:
- The fund will cover up to 25% of the project’s cost through bank transfers. 50% of the scheme financing should come from bonds, bank transfers, or public-private partnerships (PPP).
Budget Allocation:
- A disbursement of ₹10,000 crore has been announced from the fund.
Key Highlights on Power Sector Reforms
Incentivizing Reforms:
- States will be encouraged to implement electricity distribution reforms.
Additional Borrowing Facility:
- States undertaking these reforms will be allowed an extra borrowing limit of 0.5% of their Gross State Domestic Product (GSDP).
Key Highlights on Jal Jeevan Mission
Progress Since 2019:
- 15 crore households have gained access to potable tap water connections under the mission.
Target for 100% Coverage:
- The mission aims to provide 100% tap water coverage in rural India by 2028, up from the current 80%.
Increased Funding:
- Enhanced budget outlays will be allocated to achieve this goal.
Key Highlights on Investing in the Economy
Infrastructure Development:
- Each infrastructure ministry will prepare a three-year pipeline of projects to be executed through the Public-Private Partnership (PPP) model.
Support for States:
- ₹1.5 lakh crore allocated for state infrastructure projects, provided as 50-year interest-free loans.
Asset Monetisation:
- A second Asset Monetisation plan (2025-2030) aims to generate ₹10 lakh crore to fund new infrastructure projects.
Major announcements on investment in education and health services
Upgradation centre for AI in education:
- An upgradation centre for AI in education will be set up with a budget of Rs 500 crore.
Expansion of medical education:
- In the last decade, 1.1 lakh new and new medical courses have been added.
- Next year, 10,000 additional medical courses will be started.
Cancer care facilities
- Day care Cancer centres will be set up in all district hospitals within three years. 200 centres will be operational by 2025-26.
Sitharaman: Agriculture as the primary driver of growth
- The PM Dhan Dhanya Krishi Yojana will expand to cover 100 agricultural districts as part of a developing agri-districts program.
- A National Mission for high-yielding seeds will be introduced.
- A comprehensive initiative for vegetables and fruits will be launched in partnership with state governments.
- A Makhana Board will be established in Bihar.
- India, being the second-largest producer of fishery products globally, will create a framework for sustainable fisheries within the country’s economic zone.
- A Mission for Cotton Productivity will be launched to improve cotton farming significantly.
- Kisan Credit Cards will help provide short-term loans to 7.7 crore farmers, fishermen, and dairy farmers. The loan limit will increase from ₹3 lakh to ₹5 lakh.
- A new urea production plant in Assam will have an annual capacity of 12.7 lakh metric tonnes, supporting India’s Atmanirbharta (self-reliance) in urea production.
- India Post, with 1.5 lakh rural post offices and the India Post Payments Bank, will be repositioned to stimulate the rural economy. It will also evolve into a major public sector logistics organization to meet growing demand With 1.5 lakh rural post offices and the India Post Payments Bank, India Posted.
Investment as the Third Engine:
1. Investing in People
- Saksham Anganwadi and Poshan 2.0: Nutritional support for over 8 crore children, 1 crore pregnant women, and 20 lakh adolescent girls. Enhanced cost norms in the scheme.
- Education:50,000 Atal Tinkering Labs to be set up in government schools over the next 5 years. Broadband connectivity to all government secondary schools and rural primary centers.
2. Skilling and Innovation:
- Establishment of five National Centres of Excellence for Skilling with global partnerships.
3. Expanding IITs:
- IITs’ student capacity has doubled in the last decade (from 65,000 to 1.35 lakh).
- Additional infrastructure is planned for five IITs established after 2014 and the expansion of IIT Patna.
