The Union Budget 2025 was presented with a strong focus on economic growth, tax reforms, and support for MSMEs and startups. This budget aims to provide significant relief to individuals, foster entrepreneurship, and drive investments in emerging technologies. Below are the key highlights that every business owner, startup founder, and tax professional should be aware of.
1. Taxation Updates
Personal Taxation
- New Tax Regime (Default):
- No tax up to ₹4,00,000
- ₹4,00,001 – ₹8,00,000 → 5%
- ₹8,00,001 – ₹12,00,000 → 10%
- ₹12,00,001 – ₹16,00,000 → 15%
- ₹16,00,001 – ₹20,00,000 → 20%
- ₹20,00,001 – ₹24,00,000 → 25%
- Above ₹24,00,000 → 30%
- Rebate under Section 87A increased to ₹60,000 (No tax on income up to ₹12 lakh)
- Standard Deduction increased to ₹75,000
Corporate Taxation
- No change in corporate tax rates.
- Domestic Companies:
- Turnover below ₹400 Cr → 25% Tax
- Turnover above ₹400 Cr → 30% Tax
- Optional Lower Tax Regimes:
- Section 115BAA → 22%
- Section 115BAB → 15% (for new manufacturing companies)
- Surcharge capped at 25% in the new tax regime.
TDS / TCS Changes
- Higher TDS for non-filers removed
- TCS on sale of goods eliminated
- Thresholds increased for:
- Dividend & Mutual Fund Distributions → ₹5,000 → ₹10,000
- Commission & Insurance Commission → ₹15,000 → ₹20,000
- Rent → ₹2.4 lakh/year → ₹50,000/month
- Professional Fees, Royalties → ₹30,000 → ₹50,000
Capital Gains & Crypto Taxation
- Non-exempt ULIP income taxed as capital gains.
- Crypto transactions subject to TDS compliance.
- REITs & InVITs taxed at 12.5% on long-term capital gains.
- Carry forward of losses in case of mergers restricted to 8 years.
2. MSME & Startup Support
MSME Credit & Financing
- Udyam Credit Card: ₹5 lakh credit limit for micro enterprises.
- Credit Guarantee Cover:
- MSMEs: ₹5 Cr → ₹10 Cr
- Startups: ₹10 Cr → ₹20 Cr
- Exporters get higher loan limits under MSME lending schemes.
Startup Incentives
- Tax holiday extended till 2030.
- ₹10,000 Cr Fund of Funds for Startups.
- Loans up to ₹2 Cr for Women & SC/ST Entrepreneurs.
- Simplified Presumptive Taxation for Tech Startups.
Ease of Doing Business
- Simplified compliance for digital and fintech startups.
- Easier access to bank loans for MSMEs via Udyam portal integration.
3. AI, Technology & Digital Economy
- ₹2,000 Cr allocated for AI Development.
- Centre of Excellence in AI for Education with ₹500 Cr funding.
- Government push for Digital Payments & Fintech Ecosystem.
- Expansion of tax exemptions for IFSC businesses till 2030.
4. Fiscal Deficit & Growth Projections
- GDP Growth Projection: 6.7%
- Fiscal Deficit Target: 5.1% of GDP (Lower than last year’s 5.9%)
What This Means for You
✅ More tax savings for individuals due to increased rebates & deductions.
✅ Better funding & credit access for MSMEs & Startups.
✅ Lower compliance burden for businesses (TDS/TCS & GST updates).
✅ Growth opportunities in AI, fintech, and digital businesses with government support.
✅ Crypto & capital gains taxation clarified for investors.
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