Union Budget 2025-26 - No Tax on Income of Up to INR 12 Lakh & Other Announcements

Finance Minister Nirmala Sitharaman presented the Union Budget 2025-26 with a view to boosting the economy through a wide range of measures. These measures would likely help India boost India’s GDP, which is estimated to grow between 6.3% and 6.8% in the next fiscal year. For India to achieve the “Developed Nation’ status by 2047, achieving an 8% growth rate consistently over the years is critical. The Budget Speech is expected to outlay India’s plans to achieve such a high growth rate.

Union Budget 2025-26 Speech Begins

Nirmala Sitharaman began the Budget Speech by saying that the Budget continues the government’s efforts to accelerate growth and inclusive development.

The Budget as per the finance minister is aimed at boosting production, exports and innovation.

Agriculture & Rural Economy

• PM Dhan Dhanya Krishi Yojana will work in partnership with states through the convergence of schemes and cover 100 districts.

• It aims to enhance agricultural productivity, augment post-harvest storage is likely to help 1 crore farmers.

• The programme will focus on rural women, youth, rural farmers.

• A 6-year mission titled Atmanirbharta on pulses is launched.

• Appropriate mechanisms for farm-based organisations will be established.

• Bring an enabling framework for fisheries with a special focus on Andaman Nicobar and Lakshdweep Island.

• India Post will be transformed as a large logistics company in line with PM Vishwakarma Yojana.

MSMEs

• Investment classification limits for MSMEs raised to help them employ more and boost production.

• Customised credit card for micro units. In the first year, 10 lakh cards will be issued.

• A new fund of funds with an expanded scope of INR 10,000 crore will be set up

• A new scheme for 5 lakh women, scheduled caste entrepreneurs will be launched.

• A focused scheme for footwear production will be launched to generate employment.

• India to become the global hub for toys.

• A national manufacturing mission will be launched for small and large-scale industries. The mission will also support clean tech manufacturing such as wind turbines, grid cell batteries, solar panels and other green energy alternatives.

Education

• 50,000 Atal tinkering labs will be launched in government schools to foster innovation and creativity among students.

• 5 National Centres of Excellence for Skilling will be launched in collaboration with global partners.

• Additional infrastructure will be created in IITs to facilitate education for 6,500 more students.

• Centre of Excellence in AI for Education will be set up with a total outlay of INR 500 crore.

Health

Cancer Centres in all districts over the next three years, with 200 centres in FY 2025-26 itself.

Social Security Scheme identity cards for 1 crore gig workers of online platforms to promote their health.

Water

• A separate MOU will be signed with states and union territories for water supply across urban areas.

• An urban challenge fund worth INR 1 lakh crore is proposed to promote development of cities across India.

Power Sector

• Nuclear Energy Mission, development of at least 100 GW energy by 2047 is essential for the country’s energy transformation efforts, said FM.

• An outlay of INR 20,000 crore will be set up for nuclear reactors.

Ship Building

• Ship building will be revamped to promote the circular economy.

• Maritime Development Fund with a corpus of INR 25,000 crore will be set up to promote competition. The government will contribute 49% with the rest to be shared among ports and the private sector.

• Green field airports will be facilitated in Bihar to support the state’s future needs. These will be in addition to the expansion of the Patna Airport.

• Western Kosi Kunal Project will be supported to help Mithilanchal-based farmers in Bihar.

Tourism

• Top tourist destinations will be set up in partnership with states to promote tourism.

• Medical Tourism and Heal in India will be promoted in partnership with the private sector.

• A deep tech fund of funds for the next generation of travel startups.

Exports

• Export Promotion Mission with Sectoral targets will facilitate easy credit access.

• International trade will be established to complement the unified logistics platform.

• Domestic electronic equipment will be supported to benefit the country’s youth. 

• The government will facilitate warehousing for cargos, which will be streamlined to make it user-friendly.

Financial Sector

• The FDI limit in insurance is raised from 74% to 100%.

• A forum for regulatory coordination for pension products to be set up.

• The current model BIT is to be revamped to make it more investor-friendly.

• A light-touch regulatory framework to update regulations made under the old laws.

• A high level committee for financial sector reforms will be set up.

• An investment-friendly index of states will be launched in 2025.

Fiscal Update

• Revised estimate of fiscal deficit is pegged at 4.8% of the GDP.

• Net tax receipts stand at INR 27.83 lakh crore.

• Gross market borrowings stand at INR 14.82 lakh crore

Indirect Taxes

• The government has proposed to remove sudden tariff rates.

• 36 life saving drugs added to the list of medicines under fully exempted medicines from custom duty.

• 37 more medicines are added along with other medicine programmes for exemption.

• 2 more subtle types of looms to the list of exempted products from custom duty.

• BCD stands exempted for battery cells.

• Exemption of BCD to continue on ship building products for another 10 years.

• BCD reduced from 20% to 10% on telecommunication products.

• BCD exemption on blue sheet leather.

• BCD to be reduced from 30% to 10% on frozen fish manufacturers.

• Fix a time limit of 2 years, extendable by a year, to resolve indirect tax related issues.

Direct Tax

• The new income tax bill will be launched to enhance transparency and eliminate litigation issues.

• Personal income tax reforms with a special focus on the middle class, encourage voluntary compliance and investment.

• Threshold limits to be raised for TDS deduction in the new income tax bill.

• Annual limit of INR 2.40 lakh for TDS on rent is INR 6 lakh.

• TCS limit on remittance raised from INR 7 lakh to INR 10 lakh.

• Time limit to file updated returns extended from 2 to 4 years.

• A scheme for determining arms length pricing will be launched.

• The period of incorporation for startups to be raised from 5 years.

• Certainty of taxation for Category 1 and Category 2 AIFs will be created.

• No tax on annual income of Up to INR 12 lakh under the new regime.

• Limit for tax deduction for senior citizens raised to INR 1 lakh.

In the new tax regime, the slabs are as follows-

• 0-4 lakh - NIL

• 4-8 lakh - 5%

• 8-12 lakh - 10%

• 12-16 lakh - 15%

• 16-20 - 20%

• 20-24 lakh - 25%

• Above 24 lakh - 30%