The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, introduces several impactful reforms in taxation, payroll compliance, and MSME support. As India’s leading HR tech and payroll solutions provider, we at greytHR are committed to helping businesses seamlessly adapt to these changes.
This report breaks down the key announcements that affect payroll processing, employee taxation, compliance, and business operations for MSMEs and startups. We also explore how our customers—HR professionals, finance teams, and business owners—can leverage these changes to optimize workforce management and business efficiency.
Budget 2025:Key Highlights for Payroll and HR Compliance
1. Big Tax Relief for Employees: More Take-Home Pay, New Tax Regime Slabs Revised
Revised Income Tax Slabs (New Regime):
No tax on income up to ₹12 lakh (₹12.75 lakh for salaried individuals with standard deduction).
Lower tax rates for middle-income groups, making payroll calculations more efficient.
New Tax Slabs in Union Budget 2025: Relief for Employees
₹0 – ₹4 lakh: 0%
₹4 – ₹8 lakh: 5%
₹8 – ₹12 lakh: 10%
₹12 – ₹16 lakh: 15%
₹16 – ₹20 lakh: 20%
₹20 – ₹24 lakh: 25%
Above ₹24 lakh: 30%
Impact for Employers:
- Increased disposable income may improve employee retention and workplace morale.
- Payroll teams need to update salary structures, CTC breakdowns, and TDS calculations in line with the new slabs.
- greytHR will ensure automatic tax adjustments in payroll software, ensuring hassle-free payroll processing.
2. TDS & TCS Changes: Less Compliance Hassle
Higher TDS thresholds on key components:
- Interest for senior citizens – Increased from ₹50,000 to ₹1,00,000.
- Rent – Increased from ₹2.4 lakh to ₹6 lakh annually.
- Dividend income – TDS threshold raised to ₹10,000.
- TCS on education loans removed – Simplifies payroll tax deduction for employees funding their children’s overseas education.
What This Means for Payroll Teams:
- Adjustments in automated payroll deductions for employees.
- Less tax deductions on smaller incomes, reducing compliance work for HR & finance teams.
- greytHR’s payroll engine will integrate these changes for real-time accuracy.
3. Boost for Gig Workers & Social Security Enhancements
- Gig workers to get health insurance under PM Jan Arogya Yojana.
- Formal identity cards for platform workers, enabling access to financial products like loans and credit.
HR & Payroll Action Steps:
- Companies engaging gig and contract workers should update their HR policies to reflect new social security norms.
- Payroll teams should streamline benefits enrollment and statutory deductions in compliance with new social security initiatives.
Key Announcements for MSMEs & Startups
4. MSMEs Get a Growth Boost
MSME Classification Revised:
- Investment & turnover limits raised by 2.5X and 2X, allowing MSMEs to scale up without losing benefits.
- Micro enterprises: ₹1 crore → ₹2.5 crore (investment), ₹5 crore → ₹10 crore (turnover).
- Small enterprises: ₹10 crore → ₹25 crore (investment), ₹50 crore → ₹100 crore (turnover).
- Medium enterprises: ₹50 crore → ₹125 crore (investment), ₹250 crore → ₹500 crore (turnover).
More Access to Credit:
- Credit guarantee limit increased from ₹5 crore to ₹10 crore, unlocking ₹1.5 lakh crore in funding.
- MSME credit cards introduced with a ₹5 lakh limit – great for cash flow management.
What This Means for MSME Customers Using greytHR:
- Easier access to funding for payroll & HR software adoption.
- Companies can expand operations while retaining MSME tax benefits.
- More businesses will seek HR automation to manage workforce growth.
5. Startups & Entrepreneurs: Funding & Tax Benefits
- Startup Fund of Funds expanded with ₹10,000 crore fresh capital.
- Startup credit guarantee limit raised from ₹10 crore to ₹20 crore.
- Tax exemption for startups extended until March 31, 2030.
What This Means:
- Better funding access for businesses investing in HR technology.
- More job creation opportunities, increasing demand for payroll & HR automation.
6. Ease of Doing Business & Compliance Simplifications
- New Income Tax Bill Coming – Expected to simplify corporate tax filing and compliance.
- Jan Vishwas Bill 2.0 – Expected to decriminalize 100+ business-related minor offenses.
- KYC Compliance Simplified – Central KYC Registry revamp to improve compliance processes.
- Digital-First Tax Administration – More automation in tax processing, reducing HR workload.
How greytHR Supports Businesses:
- Seamless payroll tax updates integrated into our platform.
- Automated compliance monitoring for changing MSME norms.
- Simplified TDS calculations aligned with the new tax structure.
7. Business & Infrastructure Growth Initiatives
- Public-Private Partnerships for MSME Infrastructure – ₹1.5 lakh crore allocated for state-led growth projects.
- UDAN Expansion – 120 new regional flight routes to boost business connectivity for MSMEs.
- PM Gati Shakti Data Access for Private Sector – Businesses can leverage logistics data for efficiency .
Final Thoughts: What This Means for HR, Payroll & MSMEs
Union Budget 2025 provides major financial relief for salaried individuals, eases compliance for businesses, and empowers MSMEs with easier access to credit. As India’s leading payroll and HR tech platform, we at greytHR are committed to ensuring seamless adoption of these changes for all our customers.
greytHR Action Plan:
✔ Automatic Payroll Tax Updates – No manual effort needed!
✔ TDS & Compliance Automation – Aligning new thresholds in real-time.
✔ MSME Support – Helping businesses leverage tax breaks & credit access.
✔ Enhanced Employee Benefits Processing – Integrating new social security provisions.
Need Help Implementing the Changes in Budget 2025?
💡 greytHR customers don’t need to worry! Our platform will automatically integrate the latest tax rules and compliance updates of Budget 2025. Stay tuned for live webinars, detailed guides, and personalized consultations on how to implement these changes smoothly.
👉 Ready to stay compliant with the new budget updates?
Visit www.greythr.com for expert support and HR automation solutions.
📢 Questions? Need clarification on how this impacts your payroll? Our team is here to help!
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