India’s 2025 economic reforms – Dhanonethree, Blogger | Writer

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Last Updated on July 29, 2026

Table of Contents

Here is the breakdown of India's 2025 economic reforms with direct links to official documentation and analytical sources:

1. Direct Tax Simplification & Income Tax Act 2025

New Legal Framework: The government enacted the Income Tax Act, 2025, replacing the six-decade-old Income-tax Act of 1961. Effective April 1, 2026, it simplifies legal phrasing, removes obsolete provisions, and unifies the concepts of "Previous Year" and "Assessment Year" into a single Tax Year.
Middle-Class Tax Relief: Exemption limits under the New Tax Regime were raised, making annual incomes up to ₹12 lakh tax-free (effectively ₹12.75 lakh for salaried taxpayers utilizing the enhanced standard deduction).
Compliance & TDS Consolidation: Scattered Tax Deducted at Source (TDS) provisions were streamlined into unified schedules, expanding digital-first enforcement and faceless compliance channels to reduce tax litigation.

Two-Slab Core Structure: As detailed by the Press Information Bureau (PIB) and EY Tax Insights, the GST Council abolished the 12% and 28% brackets, consolidating standard goods and services into a primary two-rate structure (5% and 18%).
Demerit / Luxury Slab: A separate 40% GST slab was established for specified luxury items, tobacco, and demerit goods to replace the previous 28% rate plus Compensation Cess.
Relief on Essentials: Individual life and health insurance premiums, as well as 33 life-saving drugs, were moved to a Nil (0%) GST rate, while daily mass-consumption items were brought down to 5%.

Consolidation of 29 Laws: As outlined in the Compendium on New Labour Laws and tracking by Simpliance e-Library, India formally implemented the four integrated Labour Codes—Code on Wages, Industrial Relations Code, Code on Social Security, and OSH Working Conditions Code.
Social Security for Gig Workers: The Code on Social Security formally extended health, life, and accident coverage to gig, platform, and unorganized sector workers.
National Floor Wage & Compliance: Standardized the statutory definition of wages across all states and established portable benefits across state borders.

Restructuring MGNREGA: Enacted the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025, overhauling the two-decade-old MGNREGA framework.
Increased Guarantee: Expanded the annual guaranteed employment entitlement from 100 days to 125 days per rural household.
Asset Quality & Seasonal Alignment: Shifts focus toward climate-resilient water/farm infrastructure while aligning project calendars with local agricultural cycles to prevent labor displacement during harvest periods.

Enhanced Credit Coverage: The Ministry of MSME enhanced the guarantee ceiling under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), doubling collateral-free credit support from ₹5 crore to ₹10 crore per borrower.
Mutual Credit Guarantee Scheme (MCGS-MSME): The government introduced the Mutual Credit Guarantee Scheme for MSMEs, offering 60% credit guarantee cover via NCGTC for loans up to ₹100 crore sanctioned to MSMEs for purchasing plant equipment and machinery.
National Export Promotion Mission: The Cabinet approved the National Export Promotion Mission (NEPM), allocating ₹25,060 crore to streamline single-window trade facilitation (Niryat Protsahan), trade finance access, and global market compliance for MSMEs.---