Union Budget 2025 Highlights
India’s Finance Minister Nirmala Sitharaman introduced the Union Budget 2025–26 on February 1, 2025. It is a big step forward for the country’s economy because it focuses on growth for everyone, tax cuts for the middle class, and strengthening key sectors like agriculture, MSMEs, and innovation. Here is a full list of the most important points that Indian taxpayers and businesses as a whole should know about the Union Budget 2025.
Changes to Taxes and Help for Taxpayers
Raised the tax exemption limit and changed the slabs
Under the new tax system, the income tax exemption limit has been raised to ₹12 lakh per year. This means that wages up to ₹12.75 lakh (including the standard deduction of ₹75,000) are not subject to income tax. This move lowers the tax load for salaried people and middle-class taxpayers, which helps them a lot.
The tax slabs have been rationalized to provide relief for incomes above ₹12.75 lahks, with new slabs as follows:
| Tax Rate | Income Slab (₹) After Budget |
| Nil | Up to 4 lakh |
| 5% | 4 lakh to 8 lakh |
| 10% | 8 lakh to 12 lakh |
| 15% | 12 lakh to 16 lakh |
| 20% | 16 lakh to 20 lakh |
| 25% | 20 lakh to 24 lakh |
| 30% | Above 24 lakh |
This restructuring offers substantial tax savings, especially for those earning between ₹12 lakh and ₹24 lakh annually and encourages more and more taxpayers to file their income tax returns.
Better Standard Deduction and TDS Justification
The normal deduction for pensioners and salaried workers has been raised from ₹50,000 to ₹75,000, which is good news. More money can be tax-deducted at source (TDS) on rental income, from ₹2.4 lakh a year to ₹6 lakh a year. The same goes for interest income, from ₹50,000 to ₹1 lakh for senior citizens. That is better because they can follow the rules better and have more money to spend.
More Time to File Your Income Tax Returns
The government has increased the amount of time people have to file updated income tax returns from two years to four years. This gives taxpayers more time to fix mistakes and get refunds.
Making Tax Laws Easier to Follow
A new Income Tax Bill has been introduced to make tax rules easier for people to understand and follow by making the tax system simpler and lowering the costs of compliance.
Focus on Farming
- Several programs in the budget stress that agriculture is a key source of growth:
- The Prime Minister’s Dhan-Dhaanya Krishi Yojana will help build up agricultural areas and make them more productive.
- A six-year plan to help people become self-sufficient in pulses, with a focus on crops like Tur, Urad, and Masoor.
- The Kisan Credit Card (KCC) plan makes it easier for people to get credit. Farmers, fishermen, and dairy farmers can get loans of up to 5 lakh rupees.
- Setting up a Makhana Board in Bihar to promote local food.
- To get more crops grown, the government has set up a National Mission on High-Yielding Seeds and a mission for cotton production.
- The goal of these steps is to make rural areas wealthier, make sure there is enough food for everyone, and improve the agricultural value chain.
Focus on Small Businesses and New Businesses
- Micro, Small, and Medium-Sized Businesses (MSMEs) and new businesses get a lot of help from the budget:
- Revision of the factors for classifying MSME so that they better reflect how businesses work today.
- Credit guarantee cover for MSMEs has been doubled from ₹5 crore to ₹10 crore. This makes it easy for them to get loans.
- Credit cards for small businesses should be made available to help more people get access to money.
- There is now a plan for first-time entrepreneurs and the Fund of Funds for startups has been improved. These changes are meant to encourage innovation and entrepreneurship.
- To boost industry and exports, extra attention should be paid to areas like shoes, leather, and toys.
- As part of the “Make in India” goal, these programs are meant to create jobs, encourage independence, and make the manufacturing ecosystem stronger.
Growth on Investment and Infrastructure
For FY 2025–26, the government has raised capital spending by 10.1%. They are focusing on building up infrastructure to keep the economy growing in the long run. Modernizing highways, trains, and public transportation systems in cities is one of the most important places.
- Smart Cities is an effort to improve the infrastructure of cities that is growing.
- Plans for affordable homes that give developers and buyers some benefits.
- Government secondary schools and primary health centers will get broadband connections to improve internet access and public services.
New ideas, Research, and Development
A large amount of ₹20,000 crore has been set aside to encourage research, development, and innovation in the private industry. This includes the PM study Fellowship, which will pay for 10,000 fellowships for study in technology at top universities like IITs and IISc.
- Setting up a second Gene Bank for crop germplasm will help make sure that there is enough food and nutrients in the future.
- With these efforts, India hopes to become a world leader in science and technology.
- Promoting exports and making trade easier
- The budget includes duty-free imports of materials for electronics, electric vehicles, and textiles to encourage manufacturing and exports. This is meant to boost exports and help local industries.
- A 10-year exemption for things that are used to build or break ships.
To make trade easier, customs procedures linked to exports were given more time and were made easier to follow.
Notes for Indian Taxpayers
- Under the new rules, people who make up to ₹12.75 lakh will not have to pay income tax. This will give them more money to spend.
- Senior citizens get higher TDS limits and don’t have to pay taxes on withdrawals from the National Savings Scheme.
- MSMEs and startups get more credit help and are encouraged to grow and come up with new ideas.
- The agriculture industry gets targeted help to boost productivity and incomes in rural areas.
- Investing in infrastructure and new ideas is meant to make the economy more modern and create jobs.
In the Union Budget 2025–26, the government shows its dedication to balanced growth, tax simplification, and improving India’s economic engines—agriculture, MSMEs, and investment—while also giving real tax relief to taxpayers and creating a strong space for business and innovation. Reach out to TaxDunia to get access to the best opportunities offered to startups and businesses in the Union Budget 2025.
