EY on Budget 2025: Key amendments proposed in Union Budget 2025 for financial services sector

The Hon’ble Finance Minister presented the Union Budget 2025 on 01 February 2025 in the Lok Sabha. We bring you the key amendments proposed in Finance Bill 2025 with respect to financial services.

On 1 February 2025, the Hon'ble Finance Minister, Nirmala Sitharaman, presented Union Budget 2025 in the Lok Sabha.

We bring you a detailed analysis on tax and regulatory amendments announced by the Hon'ble Finance Minister at her budget speech in respect of banking and financial services:

  • FDI limits for insurance sector to be raised from 74% to 100% subject to companies investing entire premium in India; current FDI guardrails and conditionalities to be reviewed and simplified
  • KYC process to be simplified; revamped Central KYC Registry to be rolled out in 2025
  • Forum for regulatory co-ordination and development of pension products to be instituted
  • ULIP taxation simplified and rationalized. ULIPs not eligible for exemption to be treated as capital asset and gains on the same to be taxed as capital gains
  • Security held by Category I and II AIF will be deemed as capital asset and gains on the same to be taxed as capital gains.
  • Investment deadline for tax exemption by sovereign wealth and pension funds extended to 31st March 2030. Deeming provisions under section 50AA not to apply to gains on unlisted debt securities earned by these funds.
  • Relaxation in applicability of TCS on foreign remittances
  • Rationalisation of withholding tax provisions

The Budget aims to carry forward the spirit of ‘Bharatiya Nyaya Sanhita’ in the new Income-Tax Bill, proposed to be introduced next week in Parliament, to provide tax certainty and reduce litigation.


Download: Union Budget 2025 - Financial Services Highlights