AMCHAM’s Hyderabad Chapter, in association with EY, conducted a session on ‘Intricacies of Union Budget 2025’ at the EY office in Hyderabad on February 3^rd. The session began with a networking breakfast and touched on direct and indirect taxes. Mr. Naveen Agarwal, Partner – Direct Taxes, EY gave a backdrop to Budget 2025 with GDP projections and how the Indian economy’s fundamentals stay robust with a 6.3% – 6.8% real GDP estimated for FY26.

On policy announcements he shared about infrastructure, MSME and clear energy.  The capex target increased to INR 11.21 lakh crores, a slight increase from last year’s budget of INR 11.11 lakh crores. Under the MSMEs, 10 lakhs credit cards to be issued with INR 5 lakh limit for micro enterprises. Sectors in focus included footwear and leather and toys (scheme to make India a global hub). Regarding clear energy – clean-tech, manufacturing support to improve ecosystem and domestic value addition for solar PV cells, EV batteries, motors and controllers, electrolyzers and wind turbines, were mentioned.

More highlights included:

• Artificial intelligence and technology: INR 500 crore total outlay for setting up AI centers of excellence
• Exports: National Framework to be formulated as guidance to states for promoting global capability centers in Tier 2 cities.
• Financial services sector: FDI limits for insurance sector to be raised from 74% to 100% subject to companies investing entire premium in India; current FDI guardrails and conditionalities to be reviewed and simplified. KYC process to be simplified; revamped Central KYC Registry to be rolled out in 2025.
• Threshold for applicability of TCS on foreign remittances increased. Presumptive taxation for non-residents providing services or technology for electronics manufacturing facility in India. 25% of revenue of the non-resident to be deemed as taxable business income.
• Option to elect for transfer pricing assessment for a block of 3 years.

Mr. Kamal Agarwal, EY, spoke on indirect taxes relating to input tax credit and enabling provisions for the Invoice Management System proposed from a date to be notified.  Introduction of ‘Track & Trace Mechanism’ from a date to be notified and other key proposals – time of supply of vouchers (both specific and general purpose) to be the date of redemption of voucher, rationalization of tariff structure (with effect from February 2^nd, 2025) and reduction from 22 to 8 tariff rates including zero rate over the last two budgets.