Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman presented the Union Budget 2025-26 in Parliament on 1st February 2025. Here is a detailed article on key takeaways of the budget 2025-26.
The Finance Minister presented the Union Budget 2025-26 with the theme โSabka Vikasโ stimulating balanced growth of all regions.
In line with this theme, the finance minister outlined the broad Principles of Viksit Bharat to encompass the following:
- Zero-poverty;
- Hundred per cent good quality school education;
- Access to high-quality, affordable, and comprehensive healthcare;
- Hundred per cent skilled labour with meaningful employment;
- Seventy per cent of women in economic activities; and
- Farmers are making our country the โfood basket of the world
Summary of Union Budget 2025-26
The Union Budget 2025-2026 promises to continue the Governmentโs efforts to accelerate growth, secure inclusive development, invigorate private sector investments, uplift household sentiments, and enhance the spending power of Indiaโs rising middle class.
- The Budget proposes development measures focusing on the poor (Garib), Youth, farmers (Annadata) and women (Nari).
- The Budget aims to initiate transformative reforms in Taxation, Power Sector, Urban Development, Mining, Financial Sector, and Regulatory Reforms to augment Indiaโs growth potential and global competitiveness.
- Union Budget highlights thatย Agriculture, MSME, Investment, andย exportsย areย engines in the journey to Viksit Bharat using reforms as fuel, guided by the spirit of inclusivity.
Taxation and Middle-Class Relief
- Income Tax Exemption: No income tax for individuals with an average monthly income of up to โน1 lakh.
- New Tax Regime: Salaried individuals earning up to โน12.75 lakh per annum to pay nil income tax.
- Updated Income Tax Returns: The time limit increased from two to four years.
- TDS Adjustments:
- The rent threshold increased from โน2.4 lakh to โน6 lakh.
- Delay in TCS payment decriminalized.
The Budget proposes a revised tax rate structure under the new tax regime as follows:
Total Income per annum |
Rate of Tax |
โน 0 โ 4 Lakh |
NIL |
ย โน 4 โ 8 Lakh |
5% |
โน 8 โ 12 Lakh |
10% |
โน 12 โ 16 Lakh |
15% |
โน 16 โ 20 Lakh |
20% |
โน 20 โ 24 Lakh |
25% |
Above โน 24 Lakh |
30% |
Agriculture and Rural Development
- Prime Minister Dhan-Dhaanya Krishi Yojana: Covering 100 low agricultural productivity districts, benefiting 1.7 crore farmers.
- Rural Prosperity and Resilience programme: In partnership with states to address underemployment in agriculture through skilling, investment, technology, and invigorating the rural economy.
- Aatmanirbharta in Pulses Mission: Special focus on tur, urad, and masoor pulses.
- Other measures: Comprehensive Programme for Vegetables & Fruits, National Mission on High Yielding Seeds, and a five year Mission for Cotton Productivity amongst other measures to promote agriculture and allied activities in a major way.
- Modified Interest Subvention Scheme: Loans up to โน5 lakh through Kisan Credit Card (KCC).
Fiscal Management
- Fiscal Deficit: Estimated at 4.8% for FY 2025; target to reduce to 4.4% in FY 2026.
Industry, MSMEs, and Investment
- MSME Credit Enhancement: Guarantee cover increased from โน5 crore to โน10 crore.
- National Manufacturing Mission: Furthering the “Make in India” initiative for industries of all sizes.
- Private Sector R&D Initiative: Allocation of โน20,000 crore for private-sector-driven research and innovation.
- New scheme: For 5 lakh women, Scheduled Castes and Scheduled Tribes first-time entrepreneurs. This will provide term loans up to Rs. 2 crore during the next 5 years.
- Investment Friendliness Index of States: An Investment Friendliness Index of States will be launched in 2025 to further the spirit of competitive cooperative federalism.
- Asset Monetization Plan 2025-30: To plough back capital of Rs 10 lakh crore in new projects.
Education and Innovation
- Atal Tinkering Labs: 50,000 new labs in government schools over the next five years.
- Centre of Excellence in Artificial Intelligence: Allocated โน500 crore.
- Gyan Bharatam Mission: Survey and conservation of over one crore manuscripts.
Urban Development and Infrastructure
- Urban Challenge Fund: Allocation of โน1 lakh crore for transforming cities into growth hubs.
- Modified UDAN Scheme: Enhancing regional connectivity to 120 new destinations.
- SWAMIH Fund: โน15,000 crore for the completion of 1 lakh stressed housing units.
Energy and Environment
- Nuclear Energy Mission: โน20,000 crore allocated for R&D of small modular reactors.
- Battery Production Boost: Exemptions for capital goods used in EV and Lithium-ion battery manufacturing.
- Shipbuilding: 10-year customs duty exemption on raw materials and components.
Social Welfare and Employment
- PM SVANIDHI Scheme: Enhanced loans from banks and UPI-linked credit cards with a โน30,000 limit.
- Gig Worker Welfare: Identity cards, registration on e-Shram portal, and healthcare under PM Jan Arogya Yojana.
Exports
- Export Promotion Mission will help MSMEs tap into the export market.
- BharatTradeNet (BTN): For international trade was proposed as a unified platform for trade documentation and financing solutions.
- Industry 4.0: Government will support the domestic electronic equipment industry for leveraging the opportunities related to Industry 4.0.
- National Framework has also been proposed for promoting Global Capability Centres in emerging tier 2 cities.
Trade and Customs
- Basic Customs Duty (BCD) Adjustments:
- Exempted on 36 life-saving drugs and medicines.
- Increased to 20% on IFPD; reduced to 5% on open cells.
- Parts of open cells exempted to promote domestic manufacturing.
- BCD reduced from 30% to 5% on frozen fish paste and from 15% to 5% on fish hydrolysate.
Legislative Reforms
- FDI Limit Increase: Enhanced from 74% to 100% for the insurance sector.
- Jan Vishwas Bill 2.0: To decriminalize more than 100 provisions across various laws.
- Financial Stability and Development Council (FSDC): Mechanism to evaluate impact of the current financial regulations and subsidiary instructions. Formulate a framework to enhance their responsiveness and development of the financial sector.
Fiscal consolidation
- The Government endeavours to keep the fiscal deficit each year such that the Central Government debt remains on a declining path as a percentage of the GDP. The roadmap for the next 6 years has been detailed in the FRBM statement.
- The Revised Estimate 2024-25 of fiscal deficit is 4.8 per cent of GDP, while the Budget Estimates 2025-26 is estimated to be 4 per cent.
Conclusion
The Union Budget 2025-26 underscores the government’s commitment to fostering economic growth, ensuring social welfare, and advancing technological innovation while maintaining fiscal prudence.
The comprehensive reforms and allocations aim to strengthen India’s position as a resilient and forward-looking economy.
Frequently Asked Questions (FAQs)
Q. What is the tax slab in 2025?
Ans: Income between Rs 4 lakh and Rs 8 lakh will be taxed at 5%, amounting to Rs 20,000. The next slab, from Rs 8 lakh to Rs 12 lakh, will attract a 10% tax, totalling Rs 40,000. Finally, income between Rs 12 lakh and Rs 16 lakh will be taxed at 15%, resulting in Rs 60,000.
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-Article by Swathi Satish
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