Union Budget 2025-26 Summary

Context:

Finance Minister Nirmala Sitharaman on February 1, 2025, made history as she presented a record eighth consecutive budget, which comes in the backdrop of slowdown in economy and demand for tax cuts for middle class.

Theme: “Sabka Vikas” (Inclusive Growth)

• Zero poverty
• 100% good quality education
• Universal healthcare
• Skilled labor & meaningful employment
• 70% women in economic activities
• India as the food basket of the world”

Economic Growth Strategy: 4 Engines of Development

1st Engine: Agriculture

• Prime Minister Dhan-Dhaanya Krishi Yojana (100 districts) to increase productivity, crop diversification, storage, irrigation, and credit.
• Rural Prosperity & Resilience Programme for skill development, investment, and tech adoption.
• 6-year “Mission for Aatmanirbharta in Pulses” (Tur, Urad, Masoor) with procurement by NAFED & NCCF.
• National Mission on High-Yielding Seeds, Cotton Productivity, and Comprehensive Programme for Fruits & Vegetables.
• Kisan Credit Card Loan Limit Increased from ₹3 lakh to ₹5 lakh under modified interest subvention scheme.

2nd Engine: MSMEs (Micro, Small & Medium Enterprises)

• Investment & Turnover Limits Enhanced (2.5x & 2x) for MSME classification.
• Credit Availability Expanded with guarantee cover.
• New Scheme for Women, SC/ST Entrepreneurs: ₹2 crore term loans for 5 lakh first-time entrepreneurs.
• National Manufacturing Mission for “Make in India”.
• Toy Industry Support to establish India as a global toy manufacturing hub.

3rd Engine: Investment

• Investment in People – 50,000 Atal Tinkering Labs in Government schools.
• Broadband connectivity for all Govt schools & rural health centers under Bharatnet.
• Bharatiya Bhasha Pustak Scheme: digital Indian-language books
• National AI Centre for Education: ₹500 crore outlay
• Gig Workers’ Identity Cards & registration under e-Shram portal.
• Investment in Economy
• Infrastructure Ministries to Launch 3-Year PPP Project Pipeline”
• ₹1.5 lakh crore for 50-year Interest-Free Loans to States for capital expenditure.
• Second Asset Monetization Plan (2025-30): ₹10 lakh crore for new projects.
• Urban Challenge Fund (₹1 lakh crore) for smart city & sanitation projects.
• Investment in Innovation
• ₹20,000 crore for Private Sector-led R&D & Innovation.
• National Geospatial Mission for urban planning.
• Gyan Bharatam Mission on manuscript conservation & digitization of Indian knowledge.

4th Engine: Exports

Export Promotion Mission for MSMEs

• BharatTradeNet (BTN) Digital Infrastructure to facilitate hassle-free international trade.
• Domestic Manufacturing Support for Industry 4.0.
• Air Cargo Infrastructure Upgrades to access perishables & high-value exports

Reforms: The Fuel for Growth

Part A: Financial Sector & Regulatory Reforms

FDI in Insurance Raised to 100% provided the whole premium is invested in India.

• Light-Touch Regulatory Framework based on principles & trust.
• High-Level Committee for Regulatory Reforms (1-year deadline).
• Investment Friendliness Index for States (2025).
• Jan Vishwas Bill 2.0 to decriminalize 100+ provisions across laws.

Fiscal Consolidation

• Fiscal Deficit Target:
• Revised Estimate 2024-25: 4.8% of GDP
• Budget Estimate 2025-26: 4.4% of GDP
• Budgetary Provisions:
• Total Receipts (excl. borrowings): ₹34.96 lakh crore
• Total Expenditure: ₹50.65 lakh crore
• Net Tax Receipts: ₹28.37 lakh crore

Part B: Taxation & Customs Reforms

Direct Taxation

New Income Tax Slabs under Revised Regime

Total Income (₹)	Tax Rate
0 – 4 Lakh	NIL
4 – 8 Lakh	5%
8 – 12 Lakh	10%
12 – 16 Lakh	15%
16 – 20 Lakh	20%
20 – 24 Lakh	25%
Above 24 Lakh	30%

• More Tax Exemption for Middle Class:
  • No tax up to ₹12 lakh annual income.
  • Salaried individuals with ₹12.75 lakh income pay NIL tax (₹75,000 standard deduction).
  • Revenue loss: ₹1 lakh crore
• Benefits to Senior Citizens
  • Exemption on TDS of interest increased from ₹50,000 to ₹1 lakh.
  • TDS exemption threshold for rent increased from ₹2.4 lakh to ₹6 lakh.
  • National Savings Scheme & NPS Vatsalya accounts exempted from TDS.

Voluntary Compliance & Ease of Doing Business

• The return filing is extended up to 4 years from 2 years.
• Charitable trust registration is extended from 5 to 10 years.
• Enhanced Safe Harbour Rules for certainty in international taxation.
• Presumptive taxation for foreign service providers in electronics manufacturing.
• Incentives for Startups & Sovereign Wealth Funds till 2030.

Customs & Trade Facilitation

• Customs Tariff Rationalization
  • 7 tariffs withdrawn, single cess/surcharge policy.
  • 36 life-saving drugs & 37 Patient Assistance Programme medicines fully exempted from BCD.
• Domestic Manufacturing Boost
  • 25 critical minerals, lithium-ion battery components, & shipbuilding materials exempted.
  • “Make in India” Incentives for textiles, semiconductors, electronics.
• Export Promotion
  • Handicrafts Export Incentives.
  • Wet Blue Leather Exemption for value addition & employment.
  • Frozen Fish Paste BCD decreased from 30% to 5%
  • Fish Hydrolysate BCD reduced from 15% to 5%

Conclusion

• Union Budget 2025-26 would be the harbinger of economic growth through inclusivity, investment, and innovation.
• Sabka Vikas theme: Prosperity for farmers, MSMEs, women, and youth.
• Tax policies will boost savings, consumption, and investment in the middle class.
• Continued fiscal prudence and reforms for enhanced global competitiveness of India.