PIB Summary - 3rd September 2025 | PIB (Press Information Bureau) Summary - UPSC PDF Download

The Income Tax Act, 2025

Background and Evolution

• Earlier framework: The Income-tax Act of 1961 governed direct taxes in India for 64 years.
• Complexity problem: The Act was amended around 65 times, with over 4000 changes. Multiple exemptions and deductions reduced the tax base. The legal language was outdated, making it inaccessible to common taxpayers. The structure was fragmented, and the provisions were litigation-heavy.
• Reform process: Announced in July 2024 by the Finance Minister, the reform was drafted after stakeholder consultations and a review by the Select Committee. The Parliament passed the Income-tax (No. 2) Bill in 2025, which will be effective from 1st April 2026.

Rationale for the Reform

• Simplify the overly complex tax law.
• Reduce litigation and compliance burden.
• Remove obsolete provisions.
• Make the law digital-ready and aligned with global best practices, as seen in the UK and Australia.
• Improve the ease of doing business and encourage voluntary compliance.

Guiding Principles

• Textual & Structural Simplification: Use plain English to replace archaic legal jargon.
• No Major Policy Changes: Keep tax slabs and rates largely unchanged for continuity.
• Predictability: Focus on clarity rather than a complete revenue overhaul.

Key Features of Income Tax Act, 2025

A. Simplified Framework

• Fewer sections with reorganized chapters, structured schedules, and clear formulae.
• For example, TDS provisions have been consolidated into Section 393, which were earlier scattered across different sections.

B. Tax Year Concept

• The confusing terms “Assessment Year” and “Previous Year” have been replaced with “Tax Year.”
• A Tax Year is now defined as April 1 to March 31, aligning with the financial year and enhancing clarity for taxpayers.

C. Power to Frame Schemes (Section 532)

• The government is empowered to design schemes that aim to:
• Minimize human interface through technology.
• Improve efficiency by functional specialization and economies of scale.

D. Digital-First Enforcement

• Definition of Virtual Digital Space expanded to include various digital platforms such as emails, servers, cloud services, social media, trading accounts, and websites.
• Virtual Digital Assets (VDAs) now have a broader scope, encompassing cryptocurrencies, tokenized assets, and other blockchain-based assets.

E. Simplified Compliance

• Compliance processes have been streamlined to reduce redundancies.
• There is a stronger emphasis on faceless assessments and digital compliance, making the process more efficient and transparent.

F. Dispute Resolution

• A robust taxpayer-friendly framework is being established to reduce litigation backlogs and improve the trust-based tax culture.
• The goal is to create a more amicable and efficient dispute resolution process for taxpayers.

Core Objectives

• Simplification: Achieve modern drafting, clarity, and reduced ambiguity in tax laws.
• Digital Integration: Implement faceless assessments, online compliance, and reduce corruption through digital means.
• Taxpayer-Centric Approach: Focus on simplified filing, reduced litigation, and transparency to build taxpayer trust.
• Global Alignment: Recognize Virtual Digital Assets (VDAs) and align taxation practices with global norms.
• Ease of Doing Business: Create a predictable, accessible, and transparent tax framework to enhance the business environment.

Strategic Importance

• Reflects the vision of Atmanirbhar Bharat and Viksit Bharat by 2047.
• Aims to enhance taxpayer trust, fostering voluntary compliance.
• Encourages the adoption of a digital economy.
• Positions India’s tax system in line with global trends in digital asset regulation.

Implications

For Taxpayers:

• The new framework will provide clearer and easier-to-understand rules, reducing confusion and the burden of litigation.

For Businesses:

• Businesses can expect greater predictability, simplified Tax Deducted at Source (TDS) processes, and clearer compliance requirements, all of which contribute to a better investment climate.

For Government:

• The government will benefit from streamlined administration and increased efficiency through technology-driven assessments.
• There is also potential for expanding the tax base by reducing exemptions.

Conclusion

•  The Income Tax Act, 2025 represents a reform focused not on changing tax rates but on improving structural clarity. 
•  It aims to transform the taxation system into one that is predictable, efficient, digital, and taxpayer-friendly. 
•  This marks a significant shift from complexity to clarity, aligning India’s tax laws with global best practices.

Pradhan Mantri Formalisation of Micro Food Processing Enterprises (PMFME)

Basics

• Launch: 29 June 2020, under Atmanirbhar Bharat Abhiyaan.
• Type: Centrally Sponsored Scheme (CSS).
• Duration: FY 2020-21 to FY 2025-26.
• Total Outlay: ₹10,000 crore.
• Cost Sharing: 60:40 → Centre: States. 90:10 → North-Eastern & Himalayan States. 60:40 → UTs with legislatures. 100% Centre → Other UTs.
• Coverage Goal: Support 2 lakh micro food processing units.
• Vision: “Vocal for Local in Food Processing Sector” → competitiveness, formalisation, job creation.

Context and Need

• India has a large number of registered food business operators, ranging from 25 lakh to 64 lakh between 2020 and 2025.
• The food processing sector serves as a crucial link between agriculture and industry in India.
• This sector plays a significant role in contributing to the country's Gross Domestic Product (GDP) through value addition, providing employment, especially in rural areas, and boosting exports. For instance, in FY 2024-25, India exported USD 49.4 billion worth of agricultural and processed food, with approximately 20.4% coming from processed foods.
• However, the sector faces several challenges, including: High informality among micro food processing units. Limited access to finance, branding, infrastructure, and technology. Significant post-harvest losses and wastage.
• The Pradhan Mantri Formalisation of Micro Food Processing Enterprises (PMFME) scheme aims to address these issues by formalising micro units and strengthening value chains.

Key Achievements (as of June 2025)

• Funds released: ₹3,791.1 crore to States/UTs.
• Loans sanctioned: 1,44,517 loans worth ₹11,501.79 crore (Credit Linked Subsidy).
• Training: 1,16,666 beneficiaries trained.
• Seed capital support: Approved for 1,03,201 SHG members, ₹376.98 crore.
• FY 2024-25: 50,875 loans sanctioned under CLS.
• Component-wise approvals (till June 2025): Credit Linked Subsidy → 1,44,517 units (₹11,501.79 crore). Seed Capital → 3,48,907 members (₹1,182.48 crore). Common Infrastructure → 93 projects (₹187.20 crore). Branding & Marketing → 27 projects (₹82.82 crore).

Key Components

• Support for Individual Units
  • Credit-linked capital subsidy of 35% of project cost.
  • Maximum ceiling of ₹10 lakh per unit.
  • Beneficiary contribution of a minimum of 10%, with the balance covered by a bank loan.
• Support for Groups
  • For FPOs and Producer Cooperatives: 35% grant, training, and credit linkage.
  • For Self-Help Groups (SHGs): Seed Capital of ₹40,000 per member for working capital and small tools, with priority given to SHGs linked to ODOP. Disbursed as a repayable loan through the federation.
• Branding & Marketing Support
  • Target groups include FPOs, SHGs, Cooperatives, and SPVs, with a focus on ODOP products.
  • Eligible activities include common branding, packaging, standardisation, tie-ups with retail chains and institutions, and quality certification and control.
  • DPR support of up to ₹5 lakh for marketing and branding proposals.
• Common Infrastructure
  • Funded facilities include assaying, sorting, grading, warehousing, cold storage, common processing units for ODOP produce, and incubation centres for training and shared facilities.
• Capacity Building & Research
  • Lead institutes include NIFTEM in Kundli and IIFPT in Thanjavur, with collaborations involving ICAR, CSIR labs, CFTRI, and DFRL.
  • The focus is on skill development, research and development, product-specific training, and technology transfer, resulting in 225 R&D projects, 20 patents, and 52 technologies commercialised.
• ODOP (One District One Product) Focus
  • States and UTs identify priority products such as fruits, vegetables, spices, fisheries, honey, turmeric, etc.
  • The objective is to promote local produce and traditional foods, reduce wastage and post-harvest losses, and strengthen value chains by linking production, processing, and marketing.
  • This approach complements the Agriculture Export Policy and cluster-based strategies.

Case Study: Ruby Fresh Snacks, Ernakulam (Kerala)

• Ruby Fresh Snacks started in 2011, initially focusing on groundnut laddoos.
• In 2021, they received a PMFME loan of ₹3 lakh, which enabled them to purchase new machines and expand their product range.
• As a result of this support, their profits increased significantly, from ₹12,000 per day to ₹20,000 per day.
• Additionally, their turnover surpassed ₹32 lakh in the fiscal year 2021-22.
• This case study exemplifies the transformative impact of PMFME support on small businesses.

Strategic Significance

• Rural Development: The scheme fosters job creation and empowers women, particularly through Self-Help Groups (SHGs).
• Formalisation: Micro units are integrated into the GST and FSSAI frameworks, enhancing their legitimacy and operational standards.
• Value Addition: By boosting farmer incomes and minimising food wastage, the scheme adds significant value to agricultural produce.
• Exports: The initiative aims to increase India's share of processed food in global markets, thereby enhancing export potential.
• Economic Resilience: Strengthening supply chains aligns with the Atmanirbhar Bharat vision, promoting economic self-reliance.

Challenges & Way Forward

• Awareness Gaps: There is a need to raise awareness among rural entrepreneurs about the opportunities and benefits provided by the PMFME scheme.
• DPR and Credit Disbursal Delays: Timely preparation of Detailed Project Reports (DPRs) and disbursal of credits need to be improved to accelerate project implementation.
• Quality Standards: Scaling up the adoption of quality standards and certification is essential for ensuring product safety and marketability.
• Retail and E-commerce Linkages: Strengthening retail and e-commerce linkages for ODOP (One District One Product) brands will enhance market access and sales potential.
• Incubation Centre Sustainability: Ensuring the sustainability of incubation centres and SHG-based enterprises is crucial for long-term success and impact.

Conclusion

• The PMFME scheme serves as a crucial link between informal micro food processing units and the organised sector.
• By providing support in terms of credit, training, ODOP branding, and infrastructure, the scheme aims to transform local producers into competitive entrepreneurs.
• This initiative not only strengthens farm-to-market linkages but also reduces wastage, boosts exports, and drives inclusive rural growth.
• Ultimately, the PMFME scheme is a key driver of India's ambition to become a global leader in food processing by leveraging local strengths and capabilities.