Decoding India’s Union Budget 2025-26 for the Relocations and Global Mobility Industry

India’s Union Budget for 2025-26 highlights the government’s commitment to fostering
economic growth, enhancing financial resilience, and supporting inclusive development.
With a strong focus on attracting private sector investment, empowering MSMEs, and
improving infrastructure, the budget introduces significant reforms in areas like taxation,
financial regulation, agriculture, exports, and urban development.

As India continues to evolve as a dynamic business hub, foreign companies looking to
relocate or expand operations in the country will find an increasingly favourable
environment. In this blog, the experts at IOS Relocations explore a few key highlights that
impact foreign businesses moving to India and the country’s investor-friendly ecosystem.
For a detailed read of India’s Union Budget for 2025-26, please visit the following link:
https://www.indiabudget.gov.in/doc/Budget_Speech.pdf

1. Taxation and Compliance: What’s New?

Individual tax: Salaried individuals earning up to ₹ 12 lakhs will be exempt from tax due to an increase in the tax rebate from ₹ 25,000 to ₹ 60,000 under the new tax regime.
Tax return filing: The timeframe for filing updated tax returns has been extended to five years from the end of the financial year, effective 1 April 2025.
Non-resident purchases: Purchases made in India by non-residents for export will not constitute a significant economic presence from FY 2025-26.
International tax: A presumptive taxation regime for non-residents providing services or technology for electronics manufacturing will take effect from 1 April 2026, taxing 25% of total receipts at an effective rate of less than 10%.
Significant Economic Presence (SEP): Non-residents purchasing goods in India for export will no longer be subject to SEP regulations under updated business connection rules.

The tax reforms introduced in the Union Budget 2025-26 are set to simplify compliance and
make India a more attractive destination for foreign businesses and expatriates looking to
relocate.

2. Updates for Start-ups and MSME sector

Start-up tax holiday: The deadline for incorporating eligible start-ups to avail of a 3-year tax holiday has been extended from 31 March 2025 to 31 March 2030.
Expanded MSME Classification: The investment and turnover limits for MSME classification have been increased to 2.5 and 2 times, respectively, allowing better access to capital and technology.
Expanded MSME definition: Companies with revenues up to ₹500 crore can now qualify as MSMEs, allowing more businesses to be on-boarded.
Increased credit guarantee: The credit guarantee scope for MSMEs has been expanded to cover up to ₹10 crore, encouraging banks to offer more non-collateralised lending.

MSMEs are a cornerstone of India’s economy, accounting for nearly 45% of the nation’s
exports. By enhancing financial access, market integration, and promoting innovation and
skills, these initiatives are poised to fuel economic growth and generate new employment
opportunities.

Global Trade Capabilities: Investments and Exports

Maritime Development Fund: A fund with a corpus of ₹ 25,000 crore will be established to provide long-term financing for the maritime industry.
FDI in insurance: The Foreign Direct Investment (FDI) limit for insurance companies will increase from 74% to 100%, subject to full premium investment within India.
Global Capability Centers: A national framework will be developed to help states promote Global Capability Centers in tier 2 cities by improving infrastructure, talent availability, and industrial cooperation.
Asset Monetization Plan: A second Asset Monetization Plan for 2025-30 will be launched, unlocking ₹ 10 lakh crore for reinvestment in new projects.
LTCG tax reduction: The long-term capital gains (LTCG) tax on business trusts, including Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), will be reduced to 12.5% plus applicable surcharge and cess.
R&D investment: ₹ 20,000 crore has been allocated for private sector-driven research and development initiatives, including deep-tech innovation.

These reforms aim to boost investment, improve financial access, and drive long-term
economic growth across key sectors. By enabling capital infusion, fostering regional job
creation, and enhancing market penetration, the government is laying a strong foundation
for sustainable and inclusive development.

Final Thoughts

India’s Union Budget 2025-26 paves the way for a more business-friendly landscape, offering
tax benefits, expanded MSME support, and stronger global trade capabilities. With a focus
on infrastructure, investment, and compliance simplification, the reforms create an
encouraging environment for companies relocating to India. As global mobility continues to
evolve, businesses can leverage these opportunities to establish a strong presence in one of
the world’s fastest-growing economies.

Consult with a Relocation Expert

For personalised advice on navigating the implications of the Union Budget 2024-25,
connect with us today. Let us help you make informed decisions and ensure a seamless
relocation experience.