India’s Union Budget: Recap on Income-Tax Changes, and Changes Under the Jan Vishwas Framework

This article reviews the progress of key reforms promised in India’s Union Budget 2025 as the Union Budget 2026 draws near, focusing especially on income-tax changes, regulatory reforms under the Jan Vishwas framework, and foreign direct investment (FDI) in insurance. 

It tracks how much has been implemented so far, what remains pending or in early rollout, and what this means for taxpayers, businesses, and investors.

Union Budget 2025, presented on 1 February 2025 by Finance Minister Nirmala Sitharaman, was touted as a transformative fiscal blueprint aimed at boosting growth, simplifying taxation, expanding investment, and modernising regulatory frameworks nationwide. 

It promised wide-ranging changes spanning tax law overhaul, insurance FDI, regulatory decriminalisation and ease-of-doing-business measures, many of which are now either completed, in progress, or awaiting full implementation as 2026 approaches. 

Budget 2025: Promises That Set the Stage for 2026

Union Budget 2025 unveiled a bold set of reforms with long-term structural impact. A cornerstone promise was the introduction of a new Income-Tax Act to replace the archaic 1961 law, designed to simplify compliance, reduce litigation, and bring clarity to tax administration. This formed part of a broader direct tax strategy alongside rationalised tax slabs and a roadmap to modernise the tax code.

Fiscal stability and fostering investment formed twin pillars of the budget. It also proposed raising FDI limits in the insurance sector from 74% to 100%, subject to companies investing the full premium in India, to attract global capital and deepen domestic financial markets. The Jan Vishwas Bill 2.0, aimed at decriminalising numerous statutory provisions across Indian law to make compliance easier and reduce needless litigation, was also at the heart of the reforms announced.

As of late-December 2025, most of these reforms have moved beyond announcement stages — with some already implemented and others at various phases of rollout or under legislative scrutiny, setting the tone for Budget 2026’s agenda.

Delivery of Key Tax Reforms: Income-Tax Law & Tax-Change Progress

One of the hallmark promises of Budget 2025 was a comprehensive overhaul of direct tax law, culminating in the Income-Tax Act, 2025, intended to replace the decades-old Income-Tax Act, 1961. This new tax statute seeks to simplify provisions, reduce redundancies, remove obsolete sections, and rationalise tax administration, with around 536 sections and 16 schedules replacing the older framework.

Crucially, the new Income-Tax Act received presidential assent on 21 August 2025 and is scheduled to come into force from 1 April 2026 (i.e., for FY 2026-27). This transition is a tangible implementation of Budget 2025’s tax-reform promise.

In addition to this structural reform, other tax-related proposals from Budget 2025, such as rationalisation of TDS/TCS thresholds and rebates aimed at middle-class taxpayers, though not the focus of this article, have also been progressively rolled out. Wider extensions of filing deadlines and other simplifications have contributed to smoother tax compliance.

FDI in Insurance: From Promise to Law

A standout economic reform item in Budget 2025 was the raise in Foreign Direct Investment (FDI) limits for the insurance sector from 74% to 100%, subject to the condition that the full premium collected by insurers be invested in India. This was intended to unlock foreign capital, spur competition, deepen insurance penetration, and reduce insurance premiums over time.

FDI in Insurance — Promise vs Delivery

Before we look at the implementation status, here is a snapshot of where the FDI reforms stand:
 

The amendment enabling 100% foreign ownership in insurance companies is now fully enacted, representing a tangible delivery on Budget 2025’s investment reform promise. It establishes a foundation to deepen the domestic insurance market and potentially lower costs through increased competition and global capital flows.

Regulatory Reform & Jan Vishwas Bill 2.0: Decriminalisation and Ease of Compliance

Another transformative Budget 2025 promise was the Jan Vishwas Bill 2.0: a regulatory reform initiative designed to decriminalise more than 100 provisions across multiple statutes and reduce punitive barriers that often deter business activity. The aim was to shift towards a trust-based regulatory framework, reducing burden and cost of compliance, especially for MSMEs, startups, and small businesses.

However, as of December 2025, Jan Vishwas Bill 2.0 remains under legislative review. It was introduced in Parliament and referred to a Select Committee, where deliberations and recommendations are underway. The bill is expected to start taking effect in 2026 once approved in its final form.

The lag in implementation reflects the careful legislative scrutiny required for wide-ranging decriminalisation measures, which must balance deregulation with accountability and public interest safeguards.

Additional Reforms: Credit Access, Digital Innovation & Welfare

Beyond tax and regulatory reform, Budget 2025 also promised several other policy initiatives that are now being implemented:

• PM SVANidhi Scheme Revamp: Designed to expand credit access for street vendors with higher RuPay credit card limits and enhanced loan tranches, this revamp has been completed and rolled out. Around 11 lakh vendors are set to benefit from RuPay credit cards with limits of ₹30,000 linked to UPI.
   
• Gyan Bharatam Mission: A mission aimed at documenting and preserving India’s manuscript heritage has been launched and now involves a digital portal to catalogue over 10 million manuscripts.
   
• National Manufacturing Mission: Proposed to increase manufacturing GDP share to 25% by 2030-35, this mission is under active formulation with stakeholder consultations ongoing.
   
• Welfare Measures for Gig Workers: These include unique identity cards, e-Shram linkages, and health coverage under PM-Jan Arogya Yojana for millions of gig workers, implementation is underway.

Status of Fiscal Consolidation & Growth Targets

Budget 2025 reaffirmed India’s commitment to fiscal consolidation, targeting a fiscal deficit of 4.4% of GDP for FY 2025-26, down from a revised 4.8% in FY 2024-25. It also laid out a six-year roadmap under the Fiscal Responsibility and Budget Management (FRBM) framework to ensure government debt remains on a declining trajectory relative to GDP.

With the new tax reforms and investment-friendly policies being progressively delivered, fiscal management remains a central theme that carries into Budget 2026 planning, even as macroeconomic headwinds, from global inflationary pressures to geopolitical uncertainties, continue to shape policy priorities.

Conclusion

As India approaches the Union Budget 2026, a clear picture emerges: several of the major Budget 2025 promises, including the overhaul of income-tax law and higher insurance FDI limits, have indeed moved from paper to practice, either fully implemented or well advanced.

The Income-Tax Act, 2025 is set to take effect in FY 2026-27; the FDI cap in insurance has been legally expanded; and revamped credit access schemes are rolling out to underserved segments. Meanwhile, ambitious regulatory reforms under Jan Vishwas Bill 2.0 await final legislative approval before they come into force in 2026.

Overall, with a mix of completed reforms and others in transitional stages, Budget 2025’s trajectory reflects a calibrated delivery approach, balancing structural change with policy prudence, and sets a nuanced context for what the Union Budget 2026 will prioritise.