Union Budget 2025: Key Highlights and Major Announcements

No Income Tax on Monthly Income up to Rs. 1 Lakh

In a major relief for the middle class, the Union Budget 2025-26 has introduced a tax exemption for individuals earning up to Rs. 1 lakh per month under the new tax regime. Salaried employees earning up to Rs. 12.75 lakh per annum will pay zero income tax, enhancing household savings and boosting consumption.

Four Pillars of Economic Growth

Finance Minister Nirmala Sitharaman identified four key engines of economic development in her budget speech: Agriculture, MSMEs, Investment, and Exports.

1. Agriculture Boost

• ‘Prime Minister Dhan-Dhaanya Krishi Yojana’ will be launched in 100 low-productivity agricultural districts, benefiting 1.7 crore farmers.
• ‘Mission for Aatmanirbharta in Pulses’ will focus on Tur, Urad, and Masoor dal, with guaranteed procurement by NAFED and NCCF for four years.
• Kisan Credit Card (KCC) Loans: Loan limits under KCC increased from Rs. 3 lakh to Rs. 5 lakh under a modified interest subvention scheme.
• Cotton Productivity Mission and Comprehensive Vegetable & Fruit Programme will be introduced to improve agricultural yield and profitability.

2. MSME Support and Make in India

• Credit Guarantee Cover Doubled: MSME credit coverage has been increased from Rs. 5 crore to Rs. 10 crore.
• National Manufacturing Mission: A new scheme covering small, medium, and large industries will strengthen the ‘Make in India’ initiative.
• Women & SC/ST Entrepreneurs: Five lakh new entrepreneurs from these groups will receive loans up to Rs. 2 crore each.

3. Investment in Infrastructure & Innovation

• 50,000 Atal Tinkering Labs to be set up in government schools over five years.
• AI Centre of Excellence for Education: Rs. 500 crore allocated to advance AI-driven learning.
• Urban Challenge Fund: Rs. 1 lakh crore allocated for transforming cities into growth hubs.
• Nuclear Energy Mission: Rs. 20,000 crore allocated for research on Small Modular Reactors.
• Enhanced Regional Connectivity: The UDAN scheme will be expanded to include 120 new destinations.
• Swamih Fund: Rs. 15,000 crore set aside to complete 1 lakh stalled housing projects.

4. Strengthening Exports

• ‘Bharat Trade Net’ (BTN): A digital infrastructure platform for streamlined international trade processes.
• Export Promotion Mission: A new initiative aimed at supporting MSMEs in global trade.
• Duty Reductions to Boost Exports:
  • Basic Customs Duty (BCD) on frozen fish paste reduced from 30% to 5%.
  • Fish hydrolysate duty lowered from 15% to 5%.

Fiscal Roadmap and Budget Estimates

• Fiscal Deficit Target: Estimated at 4.8% for FY25, with a reduction target to 4.4% in FY26.
• Total Receipts (FY25-26): Estimated at Rs. 34.96 lakh crore.
• Total Expenditure: Rs. 50.65 lakh crore, with a major focus on capital expenditure.
• Net Tax Receipts: Rs. 28.37 lakh crore.

Taxation & Compliance Reforms

• Income Tax Reform: Zero tax for individuals earning up to Rs. 12 lakh per annum under the new tax regime.
• TDS/TCS Rationalization:
  • TDS on rent increased from Rs. 2.4 lakh to Rs. 6 lakh.
  • Senior citizen tax-free interest income limit doubled to Rs. 1 lakh.
  • Delayed TCS payment decriminalized.
• Custom Duty Exemptions & Revisions:
  • BCD on 36 life-saving drugs for cancer and rare diseases removed.
  • Duty on Interactive Flat Panel Displays increased to 20%.
  • Exemptions on lithium-ion battery raw materials and shipbuilding components extended for 10 years.

Empowering the Workforce & Digital Economy

• Gig Workers to Receive Benefits:
  • Identity cards and registration on the e-Shram portal.
  • Access to healthcare under PM Jan Arogya Yojana.
• PM Svanidhi Scheme: Enhanced loans and UPI-linked credit cards with a Rs. 30,000 limit for small vendors.
• Insurance Sector FDI Increase: Foreign Direct Investment limit raised from 74% to 100%.
• Gyan Bharatam Mission: A nationwide project to document and conserve over 1 crore manuscripts.

Conclusion

The Union Budget 2025-26 focuses on inclusive growth, economic expansion, and financial stability. With key incentives for the middle class, MSMEs, and infrastructure projects, the government aims to accelerate India’s journey towards becoming a global economic powerhouse. The strategic reforms in taxation, investment, and digital transformation promise to enhance India’s competitiveness on the world stage.