In a significant move aimed at overhauling India’s taxation system, Finance Minister Nirmala Sitharaman announced that the government will introduce a new Income Tax Bill next week. While presenting the Budget for the financial year 2025-26, Sitharaman emphasized the government’s commitment to a simplified and trust-based taxation framework. The proposed Income Tax Code will follow a “trust first, scrutinise later” approach, a shift that aligns with the government’s past initiatives such as faceless assessments, faster tax returns, and the ‘Vivad Se Vishwas’ dispute resolution schemes.
The Finance Minister also declared a major policy shift in the insurance sector by raising the Foreign Direct Investment (FDI) limit to 100 percent. However, she clarified that this enhanced limit will apply exclusively to those insurance firms that invest the entire premium collected within the country. The decision is expected to attract significant foreign investment, boost the domestic insurance industry, and provide better financial security to policyholders.
Sitharaman further outlined measures to accelerate economic growth and facilitate business operations. The government will ensure swift approvals for corporate mergers and expand the regulatory scope to cover more businesses under the streamlined framework. This move is part of the Centre’s broader agenda to enhance ease of doing business by fostering a modern, people-friendly, and trust-based regulatory environment.
In a bid to strengthen India’s position in global trade, the Finance Minister announced the launch of the ‘Export Promotion Mission.’ This initiative will establish sector-wise and ministerial targets to enhance exports and increase India’s integration into global supply chains. Additionally, a dedicated digital public infrastructure will be set up to support international trade financing, ensuring seamless transactions and reducing procedural bottlenecks.
The government will also introduce the Jan Vishwas Bill 2.0, aimed at decriminalizing over 100 provisions across various laws to create a more investment-friendly ecosystem. Alongside this, an ‘Investment-Friendly Index of States’ will be launched to evaluate and encourage states to adopt policies that attract investors and streamline business processes.
The Budget Session of Parliament, which commenced on January 31, will be conducted in two phases. The first phase will conclude on February 13, while the second phase is scheduled from March 10 to April 4. With these transformative measures, the government aims to position India as a more attractive destination for investment and economic growth, reinforcing its commitment to modernizing tax administration, improving business regulations, and enhancing global trade competitiveness.
