Union Budget 2025: A Comprehensive Overview and Expert Insights

M&A Simplification and Regulatory Reforms

The 2025 budget takes a reformative approach, focusing on key sectors like agriculture, rural development, MSMEs, and financial inclusion. Simplified M&A procedures are a highlight, streamlining the process and encouraging business growth.

Rajesh Narain Gupta, Founder and Chairman of SNG & Partners, notes, "M&A is proposed to be made easy with simplified procedures. Regulatory reforms...reflect intentions of government to boost trade and commerce."

The budget also aims to decriminalize over 100 legal provisions, fostering a trust-based economy.

Empowering MSMEs through Postal Networks

Leveraging India's vast postal network, the budget proposes transforming post offices into logistical hubs for entrepreneurs, women, and MSME businesses. This innovative initiative optimizes existing infrastructure to support small businesses.

Dhruv Chopra, Managing Partner at Dewan PN Chopra, hails this as "an excellent initiative to optimize one of India’s marque asset bases and networks."

Boosting the Startup Ecosystem

The budget commits an additional ₹10,000 crore to the Fund of Funds for startups, bringing the total allocation to ₹20,000 crore. This substantial investment targets 27 focus sectors, driving entrepreneurship and startup growth. A dedicated DeepTech Fund, with ₹20,000 crore in funding, will further promote research and development, complemented by 10,000 fellowships for research in premier institutions.

Tax Reforms and the New Income Tax Bill

A new Income Tax Bill, designed for clarity and ease of understanding, is set to replace the existing 64-year-old Act. This revamp aims to simplify tax compliance and enhance transparency.

Parveen Kumar, Partner - Direct Tax at Dewan P N Chopra & Co, states that the new bill "is proposed to make tax compliance easier for taxpayers and make the Income Tax Act easier to read and understand."

The government emphasizes a "trust first, scrutinize later" approach, further simplifying tax administration.

FDI in Insurance and Customs Duty Rationalization

FDI in the insurance sector has been increased to 100%, subject to certain conditions, opening up the sector to greater foreign investment. Customs duties on numerous items, including life-saving drugs and capital goods related to lithium-ion battery manufacturing, have been reduced or eliminated. This aims to boost domestic manufacturing and improve access to essential goods.

Jan Vishwas 2.0 Bill: Decriminalization and Ease of Doing Business

The Jan Vishwas 2.0 Bill aims to decriminalize over 100 provisions across various laws, reducing the burden on businesses and promoting a more conducive regulatory environment. This complements the simplified Fast Track Merger framework, designed to accelerate merger processes.

Sector-Specific Initiatives and Expert Commentary

The budget includes several sector-specific initiatives, ranging from support for the non-leather footwear sector to promoting clean tech manufacturing in the EV sector. Expert commentary highlights the positive impact of these measures on various industries, including manufacturing, MSME, and tourism.

Nitesh Mehta, Partner at BDO India, observes that the increased limits for MSME classification, "coupled with setting up of a new Fund of Funds...is likely to fuel further growth for start-ups/early stage companies.”

Focus on Skilling and Global Capability Centers

A National Centre for Skilling, with international collaboration, will address the skills gap in advanced manufacturing technologies, supporting the "Make in India" initiative. A national framework for Global Capability Centers (GCCs) aims to promote their growth in Tier 2 cities, fostering employment and regional development.

Transfer Pricing and the New Tax Code

Transfer pricing audits will now cover a three-year block period, easing compliance burdens for businesses. The forthcoming new tax code promises to be simpler and clearer, reducing ambiguity and litigation. Munjal Almoula, Head of Tax at BDO India, notes the intent is "to avoid needless litigation and provide greater certainty to taxpayers."