In his opening remarks, Mr. Vivekanand, Director (Finance, Taxation and Legal), FIPI, welcomed all the panelists during the budget analysis session organized by FIPI. He said that the Union Budget 2025-26 presented by the honourable Finance Minister is a growth-oriented budget with its key focus areas on increasing the income of the middle class by expanding the nil tax limit to Rs 12 lakh, ease of doing business, building urban infrastructure, and focus on MSMEs, agriculture and exports. He said that with GDP growth rate of 6.4% in FY 2024-25 and projected rate of 6.3% to 6.8% in the FY 2025-26, the economic prospects of India are balanced and strong enough to overcome geopolitical and trade uncertainties which act as a major challenge to growth. Further, reiterating the commitment to stay the course for fiscal consolidation, the Government kept the fiscal deficit within target, at 4.8 % of GDP against budget estimate of 4.9% in FY 2024-25 and at 4.4% of GDP for FY 2026.

He also mentioned about the major highlights of the Union Budget with emphasis on developing a national framework for Global Capability Centers (GCCs) as India’s commitment to building a digital and innovation ecosystem; introduction of a Center of Excellence (CoE) for Artificial Intelligence thereby accelerating AI-driven transformation; additional support of ₹10,000 crore to the ₹10,000 crore fund already set up for startups to energize innovation and entrepreneurship; customs duty adjustments in the EV segment; and emphasis on Nuclear Energy Mission to drive India's transition towards clean energy.

He also said that the growth of the economy is supported by higher capex on infrastructure expansion with an infrastructure budget allocation of Rs. 11.2 lakh crore and an outlay of Rs. 1.5 lakh crore in 50-year interest free loans to States, emphasizing decentralizing responsibility for infrastructure development. He said that as the nation strides towards ‘Make in India’ vision, the government has laid out ‘National Manufacturing Mission,’ that aims to support the production of solar PV cells, EV batteries, electrolysers, wind turbines as part of India's efforts to enhance self-reliance in clean energy and electric mobility. He also touched upon new simplified income tax bill likely to be introduced next week.

Setting the context for the session, Ms. Neetu Vinayek, Partner, EY India, presented the results of the pre-budget survey that was conducted by FIPI prior to the release of Union Budget 2025-26. The survey showed that most of the respondents were of the view that budget would bring in favorable policies towards energy transition and a higher capex allocation towards strategic oil reserves. This proved in sync with the budget announcement including allocation of Rs. 5,000 crores towards the strategic oil reserves.

Thereafter, she highlighted the critical aspects about the Indian Economy presented in the Economic Survey 2025 such as the real GDP growth is estimated to be 6.3% – 6.8 in FY 26, industrial Gross Value Added (GVA) estimated to grow by 6.2% in FY25 and 90% of India's external debt is covered by forex reserves of USD 640 billion (December 2024), which reflect a strong buffer and comfort to the economy. Further she said that the continued step-up of infrastructure investment with increasing private partnership has provided substantial boost to Indian economy.

Ms. Neetu Vinayek then touched upon the key policy announcements for Infrastructure, MSMEs, Clean Energy, Artificial Intelligence and Exports and allocations for Oil and Gas sector in the Union Budget 2025. She highlighted that Rs. 19,326 crore is allocated to MoP&NG, and the key allocations include LPG subsidy of Rs. 12,000 crores for oil marketing companies and allocation of Rs. 250 crores have been done towards development of pipeline infrastructure for injection of CBG into CGD network in the system.

Regarding direct tax proposals announced in the budget, Ms. Neetu Vinayek mentioned that a new income tax bill would be tabled in the following week which would be focused on simplification of the income tax law. She highlighted that there will be no effective tax on income upto Rs. 12 lakhs for Individuals and the slab rates under the concessional tax regime have been modified from 6 slab rates to 7 slab rates, with an additional slab rate of 25%. This will boost consumption by individuals. In addition, simpler rules were proposed in terms of nil computation for up to 2 self-occupied properties. Further, she mentioned that the threshold limit for Tax Collection at Source (TCS) on foreign remittances has been enhanced from Rs 7 lakh to Rs 10 lakh

Mr. Hiten Sutar, Partner EY India, highlighted the corporate tax amendments. He said that there were no changes in tax rates for domestic as well as foreign companies. Further, he said that in providing relief for startups, the Government has extended the date for incorporation of startups who are eligible to claim tax holidays of 3 years out of the block of 10 years under Section 80 IAC from 31 March 2025 to

31 March 2030.. With respect to amendment in the significant economic presence (SEP) provisions, he mentioned that the Budget proposed that activities of a non-resident which are confined to the purchase of goods in India for the purpose of export shall not constitute SEP in India. The Budget proposed fixed standard timelines of 6 months for passing penalty order which shall result in expediting issuance of penalty orders. With respect to amalgamation of companies, presently losses can be carried forward and set-off for a fresh period of 8 years from the year of amalgamation, but now such losses will be available to amalgamated company only for the residuary period. In addition, the Budget proposed that the timeline for of updated tax return is extended to 48 months from 24 months. If any notice under section 148A i.e. procedure prior to initiating reassessment is issued after 36 months then, updated return cannot be filed however, if such notice is issued within 36 months, then the updated tax returns can be filed. He also discussed amendments in relation to Transfer Pricing and rationalization of TDS/TCS provisions. Additionally, he explained key tax incentives proposed in the Budget for stimulating ship leasing activity from IFSC and impact of relaxation of deemed dividend provision for Treasury Centers in IFSC.

Ms. Uma Iyer, Partner, EY highlighted the provisions made under the indirect tax.  She said that there has been rationalization of tariff structure with reduction from 22 to 8 tariff rates including zero rate over last two budgets. Further, basic customs duty has been reduced for certain goods, and to maintain the same effective rate of tax, Agriculture Infrastructure and Development Cess (AIDC) has been levied. The government has also provided customs duty benefits with reduction in custom duty rates to support domestic manufacturing like minerals, textile, electronic goods, capital goods for EV. Further she mentioned about certain procedural changes such as- voluntary revision of import /export documents permitted after clearance; time limit of two years for finalization of provisional assessment further extendable by one year; Settlement Commission to be replaced by Interim Board, wef 1st April, 2025.

The presentation on budget was followed by ‘Panel Discussion on Union Budget 2025-26, focusing on the outcome for oil and gas companies in the Union budget. The panel comprised of Mr. Abhijit Majumder, D(F), OIL, Mr. Hitesh Vaid, CFO, Cairn Oil & Gas, Vedanta Ltd and Mr. Vinod Tahiliani, CFO, RBML. The panel discussion was moderated by Ms. Neetu Vinayek, Partner, EY.

During the discussion, the panelists highlighted the key positive outcomes of the Union budget in terms of increased focus on energy transition, infrastructure investment; and emphasis on MSMEs and startups. The panelist welcomed the incentives provided to new sources of energy such as Nuclear Energy Mission and custom duty exemption on EV manufacturing goods. Further, introduction of ‘National Manufacturing Missions’ to support the production of solar PV cells, EV batteries, electrolysers, wind turbines is considered a positive step towards energy sustainability.

The panelists were of the view that passage of the Oilfields (Regulation and Development) Amendment Bill, 2024 paves new opportunities in oil and gas space; aiming to boost investment in oil and gas exploration and production. Also, with increased capex investment to the tune of Rs. 11.2 lakh crore provides increased demand opportunities for hydrocarbons thus creating a viable market for oil & gas sector in India. Thus, while energy transition continues to soar, they were of the view that the oil and gas segment will continue to exist as well to manage the nations’ energy needs. Thus, the trilogy- energy security, energy access and energy affordability, all go hand in hand.

Further, the panelists highlighted that India is emerging as one of prime spots of Global Capability Centers (GCC) in the world, with rising up in the value chain through detailed engineering design, technological innovation as well as access to technical talent. It has become a center where in it delivers efficient business solutions, leveraging digital automation AI, ensuring significant cost savings, and providing ample job opportunities to the youth. The panel had a consensus on inclusion of all petroleum products including natural gas under GST to avoid losing significantly in terms of input tax credits due to its non-inclusion under GST.  Further, they highlighted that more incentives in the upstream segment in terms of PLI need to be provided for increasing domestic oil and gas production, to reduce on energy imports.

Ms. Uma Iyer and Ms. Neetu Vinayek from EY conducted the Q&A session and provided their views and opinions on various queries posted by participants.

In the concluding remarks, FIPI thanked all the panelists and the subject matter experts for providing their insights on the Union Budget 2025-26 and its implications on the oil & gas industry and the economy.

Presentation