Union Budget 2025: From New Tax Slabs to Key Changes in Tariff Structure, Everything on Tax

Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2025 on February 1, announced several changes to customs duties to support key industries and boost economic growth. The new proposals aim to reduce the financial burden on essential sectors like healthcare, manufacturing, and exports, while also rationalising tariff structures. Here’s a detailed look at the items that will become cheaper and those that will see a price hike.

New Income Tax Regime and Slabs Announced

In a significant relief for the middle class, Finance Minister Nirmala Sitharaman announced a revised tax structure under the new income tax regime. Individuals earning up to ₹12 lakh per annum will pay no income tax, with salaried taxpayers earning up to ₹12.75 lakh per annum benefiting from a standard deduction of ₹75,000.

Revised Tax Slabs:

• ₹0 – 4 lakh: NIL
• ₹4 – 8 lakh: 5%
• ₹8 – 12 lakh: 10%
• ₹12 – 16 lakh: 15%
• ₹16 – 20 lakh: 20%
• ₹20 – 24 lakh: 25%
• Above ₹24 lakh: 30%

With these changes, the government aims to boost consumption, savings, and investment by putting more money in the hands of taxpayers. The new tax structure is expected to cost the exchequer approximately ₹1 lakh crore in revenue loss.

Rationalisation of TDS/TCS

To simplify the tax deduction and collection system, the budget proposes multiple rationalisations in Tax Deducted at Source (TDS) and Tax Collected at Source (TCS):

• The TDS threshold on interest earned by senior citizens has been doubled from ₹50,000 to ₹1 lakh.
• TDS on rent has been increased from ₹2.4 lakh to ₹6 lakh per annum to ease compliance for landlords.
• TCS collection threshold increased to ₹10 lakh, reducing the burden on small taxpayers.
• The government has decriminalised delays in TCS payments, aligning it with the earlier decriminalisation of delayed TDS payments.

Boost to Exports Through Tax Reliefs

The government has also introduced tax measures to promote exports:

• Handicraft exports will receive a full Basic Customs Duty exemption.
• Duty on Wet Blue Leather is fully exempted to support value addition in the leather industry.
• Frozen fish paste and fish hydrolysate for shrimp feed will see a reduction in customs duty from 30% to 5%.

Other Key Changes in Tariff Structure

Provisional Assessment Time Limit Introduced

• A new 2-year time limit has been set for provisional assessments. This change aims to make customs clearance more efficient and transparent for businesses involved in imports and exports.

Rationalisation of Tariff Rates

• The government continues its effort to streamline the customs tariff structure by removing seven more tariff rates. This follows a similar measure in the 2023-24 Budget when seven other tariff rates were eliminated.

Social Welfare Surcharge Exemptions

• The Social Welfare Surcharge will now be exempt on 82 tariff lines subject to a cess. This move is expected to reduce the overall tax burden on businesses dealing with these goods.

Lifesaving Drugs and Medicines Exempted

To make critical healthcare more affordable, the government has exempted Basic Customs Duty (BCD) on several lifesaving drugs:

• 36 Cancer and Rare Disease Drugs: These medicines will now be exempt from BCD, reducing costs for patients battling life-threatening diseases.
• 37 More Medicines: An additional set of 37 medicines will be fully exempt from BCD, further strengthening India’s commitment to affordable healthcare.

Support for the Manufacturing Sector

To promote domestic production and reduce input costs, the government has removed BCD on crucial raw materials:

• Critical Minerals Exemption

Cobalt products, LEDs, zinc, lithium-ion battery scrap, and 12 other critical minerals will be fully exempt from BCD. This will lower production costs in the electronics and battery industries.

• Shipbuilding Raw Materials

Essential materials used in shipbuilding will be exempt from BCD for the next 10 years, a move that aligns with the ‘Make in India’ initiative and encourages the growth of the maritime sector.

Promotion of Handicraft Exports

The government has introduced a dedicated scheme to enhance the competitiveness of Indian handicrafts in global markets, further boosting the sector’s exports.

Exemption for Leather Products

• Wet Blue Leather

To support the leather industry, the government has fully exempted wet blue leather from BCD, reducing input costs for manufacturers.

Reduction in Duty on Fish Pasteurii

• The customs duty on fish pasteurii has been slashed from 30% to 5%, making it more affordable for processing and distribution. This measure will benefit the food and agriculture sectors.

Increase in Customs Duty on Interactive Flat-Panel Displays

To correct the inverted duty structure and encourage domestic production, the government has increased the Basic Customs Duty on interactive flat-panel displays from 10% to 20%. This move is likely to impact the pricing of high-end technology products used in education, corporate sectors, and retail industries.

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