GST 2.0, Income Tax Relief, Labour Code: India’s Economic Reforms of 2025 Set the Stage for Faster Growth in the New Year

New Delhi: The Indian government has set an ambitious goal to make India a developed nation by 2047. In 2025, several key economic reforms were implemented to pave the way for sustainable growth, including GST 2.0, income tax relief, and the Labour Code. Experts suggest that continuing this reform momentum will be critical in the upcoming year.

Income Tax and GST Reforms
The government announced significant income tax relief in the Budget, including exemptions for annual earnings up to ₹12 lakh, aimed at boosting consumption. On 15 August, Prime Minister Narendra Modi unveiled GST 2.0 reforms, followed by the implementation of reduced GST rates in September. Limiting GST to 5% and 18% resulted in record Diwali sales exceeding ₹6 lakh crore and streamlined the GST registration process.

Additionally, a new simplified Income Tax Law, replacing the Income Tax Act of 1961, is scheduled to come into effect from April 2026, along with proposed simplifications in customs regulations.

Labour Code and Social Security Benefits
The consolidation of 29 labour laws into 4 Labour Codes has extended social security benefits—including PF, ESIC, and insurance—to a broad workforce ranging from delivery personnel to cab drivers. Nationally set minimum wages are expected to benefit approximately 18 crore low-income workers. According to a government official, these reforms could reduce manpower and production shutdown-related costs by ₹5,000 crore annually.

Boosting Manufacturing and Investment
The government eased environmental regulations for manufacturing units, replacing the 33% green cover requirement with pollution-based norms, potentially reducing project costs by 20%. On the investment front, the Securities Market Code Bill was introduced in Parliament to reduce compliance burdens, enhance technology adoption, and strengthen investor protection.

Looking Ahead
These reforms in taxation, labour, and industrial policy reflect the government’s commitment to making India an ease-of-doing-business-friendly, investment-attractive, and socially secure economy. Experts note that accelerating reforms in 2026 will be key to maintaining high economic growth and achieving the 2047 vision of a developed India.