As the Union Budget 2025-26 approaches, the Ministry of Finance has released a comprehensive report card detailing the achievements and progress made on the budget announcements from the previous year.

In a social media post on ‘X’, the Finance Ministry stated, “let’s reflect on the significant #UnionBudget announcements and other #MajorInitiatives, and the progress made under them over time.”

Reduction in Litigation and Appeals

One of the key highlights is the introduction of the Vivad Se Vishwas Scheme, 2024, by the Central Board of Direct Taxes (CBDT), aimed at resolving pending income tax disputes. To expedite the disposal of first appeals, additional officers have been deployed. The monetary limits for filing appeals have been raised to ₹60 lakh for Tax Tribunals, ₹2 crore for High Courts, and ₹5 crore for the Supreme Court, as per CBDT’s guidelines. Furthermore, the scope of safe harbour rules has been expanded, and transfer pricing assessments are being streamlined to reduce international tax disputes.

Simplification of Capital Gains Taxation

Significant changes in capital gains taxation were implemented, including the introduction of only two holding periods: one year for listed assets and two years for unlisted and non-financial assets. Long-term gains now attract a reduced tax rate of 12.5 per cent, while short-term gains are taxed at 20 per cent. To benefit middle- and lower-income groups, the exemption limit for capital gains on certain financial assets was increased to ₹1.25 lakh per year from ₹1 lakh a year. The rationalisation of tax rates and removal of indexation have simplified computations.

Reassessment and Reopening of Cases

The provisions for reassessment have been thoroughly revised. Assessments can now only be reopened beyond three years if the escaped income exceeds ₹50 lakh, with a maximum period of five years. For search cases, the reassessment window has been reduced to six years. This move is expected to enhance tax certainty and reduce disputes.

Comprehensive Review of the Income Tax Act, 1961

The government has initiated a complete overhaul of the Income Tax Act, 1961, to make it concise and easier to understand. Over 6,500 suggestions have been received from stakeholders, and 22 specialised committees are reviewing various aspects of the Act. The goal is to complete this exercise within six months.

These reforms highlight the government’s progress on its budget promises of reducing litigation and fostering a taxpayer-friendly environment.

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During the meeting, Sitharaman and the participants discussed the perspectives and expectations of trade unions for the upcoming budget. The discussions are part of the government’s wider pre-budget tradition, aimed at understanding the needs of various sectors to help in the effective allocation of resources and policy formulation.

The Ministry of Finance shared details of the event through a social media post, stating, “Union Minister for Finance & Corporate Affairs Smt. @nsitharamanchairs the eighth Pre-Budget Consultation with the stakeholders and representatives from the trade unions in connection with the upcoming Union Budget 2025-26, in New Delhi.”

The consultation meeting was attended by the Union Minister of State for Finance, Pankaj Chaudhary, along with senior officials such as the Finance Secretary, Secretaries from the Department of Economic Affairs, and the Department of Investment and Public Asset Management (DIPAM). Representatives from the Labour Ministry and the Chief Economic Adviser to the Government of India also participated in the session.

The Union Budget 2025-26, which is expected to be presented in February, is anticipated to focus on addressing economic challenges while promoting sustainable growth. These consultations are critical for ensuring that the Budget reflects the priorities of various sectors, including the trade unions.

In the days leading up to this meeting, Sitharaman held similar discussions with representatives from other sectors. On Thursday, she met with stakeholders from the financial sector and capital markets as part of her ongoing pre-budget consultations. Additionally, the Finance Ministry has conducted a series of meetings with economists, industry leaders, and officials from state governments to discuss the potential directions for the upcoming Budget.

Prime Minister Narendra Modi also engaged with a group of eminent economists and thought leaders last week at the NITI Aayog to discuss the economic outlook for the upcoming fiscal year and beyond.

The Union Budget for 2025-26 will be presented on February 1, 2025, marking Finance Minister Nirmala Sitharaman’s eighth budget presentation. With the end of the Modi 3.0 tenure in sight, all eyes will be on the budget’s key announcements and its strategic economic guidance for the country’s future development.

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