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2025 Budget: Expert Reactions From Lakshmikumaran & Sridharan Attorneys

2025 Budget: Expert Reactions from Lakshmikumaran & Sridharan Attorneys
The 2025 Budget has introduced significant changes that are set to impact various aspects of taxation and economic policy. Experts from Lakshmikumaran & Sridharan Attorneys have analyzed these announcements, highlighting their implications across different sectors.
V. Lakshmikumaran, Founder & Managing Partner
“Budget 2025 proposes a significant shift in the settlement scheme under the Customs Act, 1962, with the creation of an Interim Board for Settlement. The Board will consist of three senior officers, all of the rank of Chief Commissioner or above, nominated by the Central Board of Indirect Taxes and Customs. Notably, this Board will operate without judicial members, marking a departure from the previous structure of the Settlement Commission. This change signifies a shift of the settlement process from a judicial to an executive function. Effective from 1st April 2025, the Settlement Commission will cease to function, and all pending applications will be taken over by the Interim Board from the stage at which they stood, ensuring continuity and efficiency in the settlement process.”
Charanya Lakshmikumaran, Executive Partner
“GST appeals which involve only penalty amount will uniformly entail a pre-deposit of 10% at first appellate level and additional 10% at the Tribunal level, in light of the proposal in the Budget. The proposed amendment will result in reduction of pre-deposit amount in cases involving detention and seizure of goods in transit, where the pre-deposit was 25%.
The parallel provisions of TDS on purchase of goods under 194Q and TCS on sale of goods under Section 206C(1H) resulted in practical difficulties in implementation. Despite the law stating that TCS will not apply if TDS was deducted by buyer, challenges subsisted as every seller was required to confirm if buyer deducted taxes, and more often than not, both TDS and TCS were applied on the same transaction to err on the side of caution. The present proposal to make Section 206C(1H) inapplicable from April 1, 2025 will go a long way in easing compliance burden without compromising on the information made available to the tax authorities.”
S. Vasudevan, Executive Partner
“The present budget aims to address the concerns of middle-class individuals by radically amending tax rates and rebate provisions so as to effectively make income up to 12 lakhs tax- free. While this will not cover income like capital gains that are taxable at special rates, the rate rationalization is laudable and will certainly benefit a large category of taxpayers by providing them with a higher disposable income and a positive impact on consumer spending.”
Anshul Mathur, Executive Partner
“The 55th GST Council meeting recommended changes to the provisions pertaining to tax liability adjustments in case of issuance of credit notes by suppliers. Accordingly, the Finance Bill has proposed relevant amendments to allow reduction of GST liability by suppliers only where the recipient has reversed the corresponding ITC, thus providing statutory backing in this respect.”
Shivam Mehta, Executive Partner
“The budget changes in the GST domain are majorly focussed on bringing into effect the legislative changes announced in the last GST Council Meeting such as amendments in Schedule III to keep supplies undertaken in respect of goods warehoused in FTWZ or SEZ outside the ambit of GST and amendment in Section 17(5) to nullify the impact of Apex Court decision in case of Safari Retreats.”
Nupur Maheshwari, Executive Partner Rate Rationalization
“The current budget aligns with the theme of rationalization of tariff structures, promoting domestic manufacturing, boosting exports of goods from India, and enhancing the ease of doing business.”
Assessee-Friendly Approach – Ease of Doing Business
“The Government also aims at reducing litigation with a new facility allowing the assessee to disclose facts and discharge additional duty, if any, as a measure to simplify the procedure for making additional duty payments. This, of course, comes with a rider: there are no investigations, and audits are initiated. This amendment will encourage importers to make voluntary disclosures, bring down litigation costs, and help assessees avail of specific schemes like AEO, wherein eligibility is dependent on Show Cause Notices alleging fraud. It is hoped that this facility also enables the assessee to get a refund if the additional disclosure results in such a refund.”
“The time limit for the use of imported inputs is being increased from 6 months to 1 year under the Import of Goods at Concessional Rate of Duty Rules, 2017.”
“A time limit of 2 years, with a further extension of 1 year, has been prescribed for the finalization of provisional assessments. These amendments will provide more certainty to trade. It is hoped that this applies to past cases as well.”
Industry-Specific Quotes
“To benefit the common man grappling with life-threatening diseases, complete exemptions to 36 life-saving drugs and partial exemptions to 6 life-saving drugs have been provided.” “In line with the 'Make in India' policy, specific exemptions have been provided to electronic goods, such as full exemption to parts of open cells, which were subject to 2.5% BCD.
Capital goods exemptions have been provided to boost the domestic manufacture of lithium- ion batteries and ship manufacturing in India (including ship-breaking services).”
L. Badri Narayanan, Executive Partner
“The threshold for MSME classification is proposed to be raised by 2 - 2.5 times, which could impact payments to MSME vendors. Under the MSME Act, there is a requirement to make payments to MSMEs within 45 days. The classification impacts compliance requirements in relation to penalties and income tax deductions. It will be interesting to see how this change is implemented.”
“The Customs duty concessions for Clean Tech and Rare Minerals are welcome. The reduction in customs duty on capital goods and components is likely to make India more attractive for both manufacturing and the recycling industry, making India more self- sufficient in the EV sector.”
S. Sriram, Partner
“The benefit of claiming two house properties as self-occupied is now proposed to be made available without any restrictive conditions attached. The conditions earlier required that either the owner actually occupies the property or that they are prevented from doing so on account of employment or profession being elsewhere. The proposal is likely to provide much-needed relief to taxpayers who have not been able to let out their house properties due to any reason whatsoever and who were earlier liable to pay taxes despite not generating any income thereon.”
Sudin Sabnis, Partner
“The remittances under the LRS were severely impacted by the onset of TCS provisions introduced in October 2020. Despite relief granted for remittances up to Rs. 7 lakhs, the issue was further exacerbated in October 2023 when the rate was increased from 5% to 20% for remittances made for purposes other than education/medical treatment. The present budget intends to increase the threshold for collection of TCS from the existing Rs. 7 lakhs to Rs. 10 lakhs. Further, the budget also proposes to keep remittances for the purposes of education, funded out of a loan obtained from specified financial institutions, outside the ambit of TCS (presently such remittances are subject to a TCS of 1.5% in excess of Rs. 7 lakhs).”
Jivesh Chandrayan, Partner
“With GCCs booming across the nation, as highlighted in the Economic Survey, the push for a Nationwide Framework focusing on their growth in Tier II cities is a game-changer. This strategic move, combined with government incentives for skill development and regulatory reforms in ease of doing business, promises to turbocharge infrastructure development, expand the talent pool, and create new employment and investment opportunities.”
Asish Philip, Partner
“In the past 10 years, FDI in the insurance sector has substantially increased from 26% to 74%. The present Budget proposal to increase the FDI limit from 74% to 100% is a welcome step resulting in significant capital inflow into India and might also trigger a capital rejig in the insurance sector.”
Kunal Arora, Partner, Tourism and Hospitality
“The government is focusing on developing top tourism sites in collaboration with state governments. This will involve offering various performance-linked incentives for effective management and optimizing visa facilities. Coupled with measures to boost mobility and connectivity, this is likely to result in improved infrastructure, especially in smaller tourist destinations.”
Fast-Track Merger
“The Indian government has announced its intent to expand the ambit of fast-track mergers, thereby reducing complexities and timelines. This move will provide a faster and more efficient process for a large number of Indian companies to restructure their businesses.”
Startups
“The government has announced measures for boosting and promoting the startup ecosystem, extending tax benefits for startups incorporated over the next five years. Additionally, a new fund of funds with an expanded scope, along with another dedicated fund for Deep Tech, is being explored, indicating renewed confidence in fostering new-age businesses.”
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