On February 1, 2025, Finance Minister Nirmala Sitharaman unveiled her record eighth Union Budget in the Indian Parliament, setting a progressive roadmap for India’s transformation into ‘Viksit Bharat’ by 2047.

This budget, which encompasses a comprehensive strategy with a focus on agriculture, MSME, investment, and exports, will significantly stimulate economic growth while addressing both immediate and long-term challenges.

Boosting Disposable Income

Central to the 2025 budget is the reform in personal income tax—the biggest of which we have seen in many years. By exempting incomes up to ₹12 lakh from taxation—up from the previous ₹7 lakh bracket—the government has put ₹1 lakh crore back into the pockets of the people. This move will boost disposable income across the board, thereby fuelling consumption and creating a ripple effect across the economy that supports GDP growth.

This will supercharge the economy’s primary engine while also reducing bureaucratic hindrances and the long-standing grievances of India’s middle class by effectively championing a socio-economic justice that will resonate strongly with millions.

Fiscal Deficit Goals

Second, India’s commitment to fiscal consolidation is both visionary and necessary. By pegging the fiscal deficit at 4.4% of GDP by FY26, the government is reassuring current and prospective investors that India is on a path of sustainable economic governance. This balance of growth and fiscal discipline is crucial in maintaining macroeconomic stability—a key factor for attracting foreign direct investments.

As economic shocks and instabilities continue to upend parts of the world, India’s prudent fiscal management will signal a steady and fertile market, creating confidence among global investors and positing India as the top destination to grow industry and infrastructure.

Boost To Labour-Intensive Sectors

Third, by reviving key labour-intensive sectors like textiles, leather, toys, and food processing, India is killing two birds with one stone. These sectors are positioned to absorb large portions of the workforce, effectively addressing unemployment while enhancing skill development. In particular, the initiative to develop tourism by enhancing infrastructure and simplifying travel processes, including visa-free travel for specific groups, will have a vast multiplier effect—boosting significant job creation and regional development across the board.

In tourism, the emphasis on developing the top 50 tourist destinations in partnership with various states creates a dual benefit of economic and cultural enrichment. The policy enhancements in this sector can unlock dormant potential, transforming India into a hub of global tourism that celebrates and monetises its diversity.

Revamping PPPs In Infra

Fourth, revamping public-private partnerships (PPPs) in infrastructure will inject new life into long-standing projects that require innovative solutions and fresh capital. The Rs. 10 lakh crore Asset Monetization Plan is a proactive approach to maximising resource efficiency and ushering in a new era of infrastructural development.

A Nuclear Focus

Fifth, the ambitious energy transition plan, with a strong focus on nuclear energy, is a clear marker of India’s commitment to environmental sustainability and energy independence. The goal of developing 100 GW of nuclear energy by 2047, combined with an allocation of ₹20,000 crores for research on small modular reactors, is the government’s concerted effort to modernise India’s energy landscape. Additionally, proposed amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will catalyse private sector participation, encouraging innovation and investment.

The Fund Of Fund Scheme

Sixth, the budget places a strong emphasis on innovation, with a ₹10,000 crore replenishment for the Fund of Fund Scheme (FFS), doubling its total to ₹20,000 crore and boosting domestic venture capital for startups through Alternative Investment Funds (AIFs). Launched in 2016, the FFS has transformed initial scepticism into measurable success, with ₹11,688 crore committed through 151 AIFs that have catalysed a capital pool exceeding ₹91,000 crore. The FFS is a game-changer in providing essential growth capital to early-stage companies.

As a major plus, the establishment of a dedicated Fund of Fund for DeepTech indicates a concerted effort by GoI to employ advanced technologies to drive economic progress. Innovations in AI, quantum computing, and biotechnology are taking centre stage in this new digital world, and strategic investments will sharply enhance India’s global competitiveness.

The National Geospatial Mission, for its part, will also modernise infrastructure through the integration of geospatial data, in turn, improving urban development and land management. By creating a comprehensive geospatial database, India will be able to undertake informed decision-making and resource allocation, increasing efficiency across sectors.

Improving The Ease Of Business

Seventh, the budget’s focus on regulatory reforms is an extension of the Narendra Modi government’s sustained efforts to make India a more business-friendly environment. The newly established High-Level Committee for Regulatory Reform is another step towards eliminating bureaucratic inefficiencies that have long stifled innovation and investment. The committee will audit current financial regulations and their impacts on the sector’s growth, showing India’s willingness to adapt policies in alignment with evolving economic realities.

The Investment Friendliness Index of States is a proven method of incentivising regional governments to cultivate attractive investment conditions. As we witnessed with the Aspirational Districts Programme, goal-driven competition among states leads to a healthier economic environment overall, encouraging both domestic and foreign investments to flow into various regions, instead of being concentrated in a few metropolitan areas.

Among these pro-market initiatives, the Jan Vishwas Bill 2.0 sends a reassuring message to investors by decriminalising over 100 provisions that have long deterred many entrepreneurs. This shift only encourages healthy risk-taking, while also nurturing an atmosphere where innovation can thrive, laying the groundwork for a more resilient and dynamic economy.

A Fillip To MSMEs

Lastly, and equally important, is the budget’s renewed focus on supporting micro, small, and medium enterprises (MSMEs), which are the backbone of India’s economy. Increasing the investment and turnover thresholds for MSMEs by 2.0 to 2.5 times allows a wider array of businesses to benefit from government programmes designed to support smaller firms. Doubling the credit guarantees addresses longstanding challenges around financing, empowering these enterprises to thrive and contribute significantly to job creation. By redefining the regulatory landscape and bolstering support for MSMEs, the government sets a foundation for a vibrant entrepreneurial ecosystem.

These measures not only aim to stimulate economic growth but also reflect a compelling vision for India’s journey towards becoming a developed nation by 2047. As we move forward, the real test will be in the execution and effectiveness of these reforms. Ultimately, it is this commitment to thoughtful regulation and support that can transform India’s economic narrative.

As India navigates global uncertainties, this budget positions the country as a potential leader, signalling to investors that it prioritises stability, sustainability, and inclusive growth. The initiatives outlined in this budget are strategic actions that can galvanise India’s economy, creating a more equitable society and a vibrant marketplace for generations to come. The future looks good, and with efficient implementation, the vision of a prosperous, developed India could be realised by 2047.

(The author is India’s G20 Sherpa and former CEO, NITI Aayog. Views expressed are personal.)

Disclaimer: These are the personal opinions of the author

Almost all finance ministers of India have faced the challenge of widening the country’s tax net. While the debate over how few people pay income tax in India is old, what is less well-known is that many companies also avoid paying income tax. While only 2% of the population pays income taxes, nearly half of the companies that file income tax returns (ITRs) pay nothing at all.

How to widen the tax net remains a key question with no clear answer. Tax evasion, low wage growth, high unemployment, and high exemption limits mean that very few people qualify to pay income taxes. Additionally, accounting loopholes, low audit quality and income tax relief provided in 2019 have resulted in very few corporations actually paying income taxes. It’s true that the number of tax returns filed by individuals has more than doubled, from 3.35 crore in 2013-14 to 7.54 crore in 2023-24. However, many of these are zero-tax returns, filed simply for compliance purposes. The number of individuals filing zero-income tax returns has more than doubled, from 1.69 crore to 4.73 crore during the same period. The result is that the number of individuals actually paying income taxes has grown at a slow pace between 2013-14 and 2023-24—from 1.66 crore to 2.81.

Rising Exemption Limits

The exemption limit has been raised successively since 2013-14. From Rs 2 lakh, it has gone up to effectively Rs 7 lakh by 2023-24. In 2013-14, as many as half of all returns filed were zero-tax. By 2023-24, that share went up to 63%. Among individuals who pay taxes, almost half (47%) report incomes of up to Rs 5 lakh; 37% earn between Rs. 5-10 lakh, 13% between Rs. 10-25 lakh, and only 1% report income above Rs. 50 lakh.

While hiking the exempt income tax slabs over the years may make political sense, it does not make economic sense, especially when 84% of the population earns less than Rs. 10 lakh per annum—India’s per capita income is just around Rs. 2 lakh—and individuals earning up to Rs. 7 lakh are not required to pay income tax under the new tax regime. As many as 90% of eligible taxpayers in India pay anywhere from no tax to Rs. 1.5 lakh.

The top 1% of ITR filers pay 50% of the total personal income tax collection of India, while the top 9% pay 87% of the total tax, highlighting significant inequality and the challenges in widening the tax net. That’s a huge burden on these top 10% of filers. 

Corporate Filings

The situation among corporations is worse. Of the total 10.7 lakh corporate ITR filers, 57% report zero income, and another 33% earn between Rs. 0-50 lakh. In total, 90% of companies report earnings of just up to Rs. 50 lakh (corporations are taxed on profits, not income). Half (48%) of corporate filers pay zero income tax, while another 36% pay between Rs. 0-5 lakh in income tax. In terms of value, 84% of corporate filers contributed almost nothing to the total corporate tax collections of Rs. 7.16 lakh crore in the assessment year 2023-24. Again, the top 1% of corporate ITR filers pay 85% of total corporate income tax. 

All this highlights significant inequality and raises questions about the financial health of companies in India. Another catch is that agricultural income is exempt from taxation—that is half of India’s population. While that makes socio-economic sense, at least wealthier farmers could be brought under the tax ambit to provide a boost to tax collections.

Personal income tax, corporate tax, and GST collections account for one-third each of the total central government receipts. While tightening efforts to combat tax evasion by both individuals and businesses could bring in additional revenue, there is a limit to direct taxation as well. The government will need to focus on raising revenues through indirect taxes, while also considering the reintroduction of a wealth tax.

(Amitabh Tiwari is a political strategist and commentator. In his earlier avatar, he was a corporate and investment banker.)

Disclaimer: These are the personal opinions of the author

US President-elect Donald Trump has reiterated his intention to impose reciprocal tariffs in retaliation for the “high tariff” imposed by New Delhi on import of certain American products.

“Reciprocal. If they tax us, we tax them the same amount. They tax us. We tax them. And they tax us. Almost in all cases, they’re taxing us, and we haven’t been taxing them,” Trump told reporters on Monday.

He made the remarks while responding to a question on a potential trade agreement with China. Trump said India and Brazil were among countries that impose high tariffs on certain US products.

“The word reciprocal is important because if somebody charges us — India, we don’t have to talk about our own — if India charges us 100 per cent, do we charge them nothing for the same? You know, they send in a bicycle and we send them a bicycle. They charge us 100 and 200. India charges a lot. Brazil charges a lot. If they want to charge us, that’s fine, but we’re going to charge them the same thing,” Trump said at a news conference at Mar-a-Lago.

Responding to a question, his Commerce Secretary pick Howard Lutnick said “reciprocity” is something that is going to be a key topic for the Trump administration. “How you treat us is how you should expect to be treated,” he said.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

New Delhi:

 India should do more to tax its super-rich given its high levels of inequality, French economist and author Thomas Piketty said on Friday.

The writer of the best-selling book “Capital in the 21st Century” called on India to follow through on a July pledge by finance ministers from the Group of 20 major economies to cooperate on effectively taxing the world’s largest fortunes.

“India should be active in taxing the rich,” Piketty said at an event organised by Delhi-based think tank Research and Information System for Developing Countries (RIS) and the Delhi School of Economics.

He said India could raise annual revenue worth 2.73% of its gross domestic product by imposing a 2% wealth tax on people with assets of more than 100 million rupees ($1.18 million), and a 33% inheritance tax on property worth at least the same amount.

The proportion of national income held by the top 1% richest Indians now surpassed that of their counterparts in the United States and Brazil, Piketty said, citing a 2024 report he co-authored, published by the World Inequality Lab.

In 2022-23, he added, the richest 1% of India’s population controlled 22.6% of the national income and held 40.1% of the nation’s total wealth.

Speaking at the same event, the Indian government’s chief economic adviser, V. Anantha Nageswaran, opposed Piketty’s call, saying higher taxes could lead to higher overflows.

India’s government abolished a wealth tax in 2015 and has since rejected calls for its return or the introduction of an inheritance tax.

In April, Indian Finance Minister Nirmala Sitharaman said inheritance tax could hit the “middle and aspirational classes”, making it difficult for them to pass on savings or small land holdings to their children. India does not currently levy an inheritance tax.

Over the past year, the cumulative wealth of India’s 100 billionaires increased more than $300 billion to $1.1 trillion, boosted by a stock market boom, according to the Forbes list of the richest Indians published this month.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

India’s Finance Minister Nirmala Sitharaman during the Vibrant Gujarat Global Summit in Gandhinagar, Gujarat, India, on Thursday, Jan. 11, 2024. 
| Photo Credit: Bloomberg

The Finance Minister presented her sixth budget today. Her announcements ranged from railways, tourism, healthcare, technology, aviation, green energy, aquaculture, housing, and more. With regards to taxation, no changes were announced to the tax structure of direct and indirect taxes, and import duties. Meanwhile, startups and investments made by sovereign wealth or pension funds were given an extended tax exemption till March 31, 2025.

Budget 2024 live updates

Besides this, here are the charts that show key numbers from the interim Budget 2024:

Budget at a glance

The Finance Minister said that the Revised Estimate of the total receipts other than borrowings is Rs 27.56 lakh crore. The Revised Estimate of the total expenditure is Rs 44.90 lakh crore. The revenue receipts at Rs 30.03 lakh crore are expected to be higher than the Budget Estimate, reflecting strong growth momentum and formalization in the economy.

Capital Expenditure

Capital expenditure outlay was raised to ₹11.1 lakh crore for FY25 from the ₹9.5 lakh crore in the previous fiscal. The proportion of capital expenditure (excluding grant in aid) to total expenditure stands at 23.31%. This is in line with the trend of increasing capital expenditure in the past few years. Capital expenditure means the government’s spending on durable assets like the construction of infrastructure.

In 2024-25, the total expenditure is estimated at ₹ 47.66 lakh crore, a 6.1% increase over the revised estimates of 2023-24.”

Fiscal Deficit

The budget estimates for the fiscal deficit for FY 25 was pegged at 5.1%, down from the revised estimates of 5.8% last fiscal year. The fiscal deficit is the difference between the government’s revenues and expenditure. It is financed by money from various sources like market borrowings, small savings, dated securities and others. The government has set a target of 4.5% fiscal deficit by 2025-26.

Rupee come from

Borrowings and other liabilities account for the largest avenue from where the Budget money comes, followed by income tax and GST & other taxes.

Rupee goes to

When it comes to expenditure, the highest amount goes towards paying interest and the money given to the states in the form of taxes and duties, accounting for 20 per cent each of the total expenditure.

State-wise allocation of central taxes and duties

Here is the state-wise distribution of net proceeds of Union Taxes and Duties for Budget Estimates 2024-25. 

Allocation to Ministries

The Union Budget allocated a massive ₹6.21 lakh crore for the Defence Ministry, followed by Road Transport & Highways with ₹2.78 lakh crore and Railways with ₹2.55 lakh crore.

Outlay for Major Schemes

The Union Budget 2024-25 listed the allocations for core welfare schemes that drive socio-economic development.

Here is the allocations for major central government sponsored schemes:

Railway Budget in a Glance

Railway projects have been identified under the PM Gati Shakti Yojana for enabling multi-modal connectivity. These will “improve logistics efficiency and reduce costs,” said Ms. Sitharaman.

Touching upon measures that will be taken to expand India’s railway infrastructure, three major railway economic corridors were announced. These include an energy, mineral and cement corridor, a port connectivity corridor and a high traffic density corridor. Ms. Sitharaman emphasised that these corridors, along with dedicated freight corridors, will “accelerate our GDP and reduce logistic costs.”

Health Expenditure

The expenditure for the dept. of health & family welfare for FY25 is Rs. 10,000 crores more than the revised estimates of the current FY. But the allocation to the Union Ministry of Health is estimated to be 1.9% of the total expenditure, continuing the trend of staying below the 2% mark since 2022-23.

Also read |Understanding the formulation of the Budget

Non-residents and foreign companies opening bank accounts in IFSC Gift City will not have to furnish PAN and can instead file a declaration.

The non-resident or the foreign company opening a bank account at the International Financial Services Centres (IFSC) will have to file a declaration in Form 60 and should not have any tax liabilities in India.

The Finance Ministry has amended Income Tax Rules exempting non-residents opening a bank account from the requirement of submitting PAN.

Gujarat International Finance Tec-City (GIFT)-IFSC is being promoted as a tax-neutral enclave for the financial sector.

Nangia Andersen LLP Partner – Financial Services, Sunil Gidwani, said this relaxation would make it easy for foreign companies, NRIs and other non-residents to open a bank account with an IFSC bank.

“It will boost the liability/deposits side as well as the retail business segment of a bank in IFSC,” Mr. Gidwani said.