India’s Union Budget for 2025-26, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, introduces several key changes aimed at stimulating economic growth and supporting various sectors. Here’s a simplified breakdown of the major announcements and how they compare to the previous year:
- Personal Income Tax Reforms:
- Individuals earning up to ₹12 lakhs annually are now exempt from paying income tax.
- Reduced tax rates for higher income brackets to boost middle-class spending.
- If your income is over ₹12 lakhs, the following slabs are applicable:
Income Tax Slabs: Old vs New Structure
| Income Slab (Old) | Income Tax Rate | Income Slab (New). | Income Tax Rate |
| Up to ₹3,00,000 | Nil | Up to ₹4,00,000 | Nil |
| ₹3,00,001 to ₹7,00,000 | 5% | ₹4,00,001 to ₹8,00,000 | 5% |
| ₹7,00,001 to ₹10,00,000 | 10% | ₹8,00,001 to ₹12,00,000 | 10% |
| ₹10,00,001 to ₹12,00,000 | 15% | ₹12,00,001 to ₹16,00,000 | 15% |
| ₹12,00,001 to ₹15,00,000 | 20% | ₹16,00,001 to ₹20,00,000 | 20% |
| Above ₹15,00,000 | ₹20,00,001 to ₹24,00,000 | 25% | |
| Above ₹24,00,000 | 30% |
- Fiscal Deficit and Borrowing:
- Fiscal deficit target reduced to 4.4% of the GDP. Last year’s target of 5.9% was successfully met.
- Government plans to borrow ₹14.82 trillion (approximately $180 billion), compared to the United States’ borrowing size of approximately $1.5 trillion.
- Support for Agriculture:
- Focus on high-yield crops, especially cotton, to boost agricultural productivity.
- Increase in the limit for subsidized farm credits.
- Foreign Direct Investment (FDI) in Insurance:
- FDI cap raised from 74% to 100% to attract more foreign investment in the insurance sector.
- Inclusive Development Initiatives:
- Various programs announced to support the poor, youth, farmers, and women.
- Rural Employment Scheme:
- ₹860 billion allocated for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) to provide minimum wages for rural citizens for at least 100 days annually.
- Manufacturing and Export Promotion:
- Introduction of the National Manufacturing Mission to incentivize the manufacturing sector.
- Funds allocated to support start-ups and infrastructure development.
- Infrastructure Development:
- Enhanced regional air connectivity with 120 new destinations and improved support for smaller airports.
- Education and Research:
- Establishment of a National Institute of Food Technology in Bihar to boost the food processing sector and generate employment.
- Expansion of infrastructure in five Indian Institutes of Technology (IITs), including IIT Patna.
- Commodity Boards:
- Creation of a Makhana Board in Bihar to improve production, processing, and marketing of Makhana.
- Customs Duty Reforms:
- Reduction of customs duties on marine products and critical minerals.
- Exemption of life-saving drugs from customs duties.
- Critical Minerals Development:
- Introduction of a new policy for the development of critical minerals to support various industries.
- Tourism Development:
- Development of 50 top tourist destinations in partnership with states to boost tourism infrastructure and connectivity.
- States to provide land for building key infrastructure for these tourism sites.
- Medical and Wellness Tourism:
- Promotion of medical tourism by partnering with the private sector to enhance healthcare infrastructure and attract international patients.
- Incentives for wellness centers and integrative healthcare initiatives.
- Green Energy and Sustainability:
- Allocation of ₹2,000 crore for the Green Energy Fund to support renewable energy projects.
- Incentives for industries adopting carbon-neutral technologies and green manufacturing.
- Defense and Security:
- 12% increase in the defense budget to strengthen modernization programs and cybersecurity initiatives.
- Special focus on indigenization of defense manufacturing.
- Startup Ecosystem Boost:
- Tax holiday extended for startups by an additional three years.
- Simplified compliance processes for early-stage startups.
- Women’s Empowerment:
- ₹3,000 crore allocated for women’s self-help groups and skill development initiatives.
- Financial assistance for women entrepreneurs under the Pradhan Mantri Mahila Udyami Yojana.
- Tourism and Cultural Development:
- ₹1,200 crore allocated for developing tourism circuits and promoting heritage sites.
- Strengthening the Incredible India campaign to attract global tourists.
- Bihar-Specific Announcements:
- Establishment of a National Institute of Food Technology to boost the food processing sector and generate employment.
- Expansion of infrastructure in IIT Patna.
- Creation of a Makhana Board to improve the production, processing, and marketing of Makhana.
- Enhanced railway and road connectivity to support the development of remote areas.
- Special allocation for the revival of traditional handloom and handicraft industries.
