From GST 2.0, Income Tax slab to Labour Codes, govt unveils outcome-driven reforms in 2025
New Delhi, December 30
The year 2025 was marked by a wide-ranging set of economic reforms signalling a decisive shift toward outcome-driven governance aimed at simplifying regulations, boosting growth and strengthening social security for millions of citizens.
Economic reforms in 2025 reflect a maturing phase of India's governance, where the emphasis shifted decisively from "expanding regulatory frameworks" to "delivering measurable outcomes", the government said in a Year-Ender note.
The focus moved towards simplifying systems, reducing compliance burdens, and improving predictability for citizens and businesses. Across taxation, GST, labour regulation, and business compliance, reforms were designed to make every day economic interactions smoother, faster, and more transparent, strengthening trust in institutions and policy certainty, it added.
These reforms span taxation, labour laws, rural employment, MSME support, exports and the Goods and Services Tax (GST), with a clear focus on inclusivity, predictability and ease of doing business.
One of the most significant measures announced in the Union Budget 2025-26 is major income tax relief for individuals. Under the new tax regime, annual incomes up to Rs 12 lakh have been made tax-free, with salaried taxpayers effectively enjoying exemption up to Rs 12.75 lakh due to the standard deduction. The government said the move would raise disposable incomes and stimulate consumption and savings.
In a landmark step toward modernising direct taxation, the Income Tax Act, 1961 has been replaced by the Income Tax Act, 2025. The new law simplifies language, removes obsolete provisions and introduces a unified "tax year", replacing the earlier concepts of assessment and previous years.
Labour reforms form another cornerstone of the 2025 agenda. The government has consolidated 29 labour laws into four Labour Codes covering wages, industrial relations, social security and occupational safety. The new framework extends social security benefits to unorganised, gig and platform workers, while improving workplace safety and simplifying compliance for employers.
Nearly 10 million gig and platform workers are expected to receive annual social security support under the reforms, the statement read.
Rural employment has also received a major overhaul with the enactment of the Viksit Bharat - Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025, which replaces MGNREGA. The new law guarantees 125 days of paid work per rural household each year, ensures timely wage payments and links employment generation with durable asset creation in areas such as water security, infrastructure and climate resilience.
To strengthen small businesses, the government expanded the definition of Micro, Small and Medium Enterprises (MSMEs), raised investment and turnover thresholds and doubled credit guarantee cover for micro and small enterprises to Rs 10 crore. Credit flow has been eased through collateral-free loans, faster interest rate resets and enhanced priority sector lending.
GST reforms, branded as "GST 2.0", aim to simplify indirect taxation through a two-rate structure of 5% and 18%, reduce compliance costs and lower the cost of living through rate cuts on essential goods and services. Improved compliance has expanded the GST taxpayer base to over 1.5 crore, with gross collections reaching Rs 22.08 lakh crore in FY 2024-25, the report noted.
The Cabinet has approved a Rs 25,060-crore Export Promotion Mission for 2025-26 to 2030-31. The initiative seeks to unify export support schemes and help MSMEs and first-time exporters with finance, compliance, branding and market access, while generating employment across manufacturing and logistics.
— ANI
Reader Comments
Extending social security to gig workers is a landmark move. So many delivery partners and drivers work without any safety net. This is true 'Sabka Saath, Sabka Vikas'. Implementation will be key though.
As a small business owner, the doubled credit guarantee and simplified GST are game-changers. The compliance burden was crushing. If these reforms work as promised, it will free up so much time and capital for actual growth.
Replacing the 1961 Income Tax Act is a bold and necessary step. The old law was a maze. A unified tax year and simpler language will reduce so much anxiety during filing season. Hope the new law lives up to its promise of simplicity.
The focus on 'outcomes' over 'regulation' sounds good on paper. But in a country as vast as ours, the devil is in the details. Will the new rural employment act ensure wages are paid on time? That has been a chronic issue. Cautiously optimistic.
GST 2.0 with just two main rates (5% and 18%) is a dream come true! The multiple slabs were so confusing. Lower rates on essentials should help with household budgets. Hope it brings down the prices of daily items. 🤞
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