Budget 2025: Removal Of Tariff Rates To Improve Ease Of Doing Business, Says Sanjay Kumar Agarwal

Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2025, announced that the government would remove seven tariff customs rates and keep only eight tariff rates after the revision. The move is expected to improve the ease of doing business in India, Sanjay Kumar Agarwal, Chairman of the Central Board of Indirect Taxes & Customs told NDTV Profit.

The removal of tariff is aimed at enhancing competitiveness, simplifying the tax structure, focusing on specific sectors, and improving the ease of doing business in India, said Agarwal.

As a result, the average rate has decreased from 11.65% to 10.66%, while finished goods remain at a 10% rate. These changes are designed to streamline the tax system and reduce complexity, making it easier for businesses and individuals alike to navigate.

On the direct tax front, Ravi Agrawal, Chairman of the Central Board of Direct Taxes, highlighted that the finance minister had called for a complete overhaul of the Income Tax Bill in July 2024. This was prompted by the redundancy of certain sections and the need for simplification. As a result, the new bill, which will be introduced next week, will be approximately half the length of the existing one and will be a completely new version, not just an amendment. Some overlap with the current provisions will remain, but the bill will aim to make the tax system more comprehensible and accessible to taxpayers, said Agrawal.

Agrawal further emphasised that taxpayers now have the option to switch to the new tax regime, with no deadline imposed, and stated he saw no reason for taxpayers to remain with the old regime.

For the assessment year 2024-25, about 8.75 crore returns have been filed. Taxpayers earning Rs 24 lakh will receive a benefit of Rs 1.1 lakh, and one crore tax payers will be completely exempted from paying tax.

Additionally, TDS rates have been rationalised, which will provide more disposable income for individuals. With a safe harbour for foreign investments in sectors promoting domestic manufacturing and a significant overhaul of transfer pricing, taxpayers are expected to benefit from more clarity and better financial opportunities.