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Budget 2025 Highlights: Giving relief to taxpayer, Union Finance Minister Nirmala Sitharaman announced that those with annual income upto Rs 12 lakh will not have to pay tax.
The tax slab is as follows: Rs 0-4 lakh — Nil, Rs 4-8 lakh — 5%, Rs 8-12 lakh — 10%, Rs 16-20 lakh — 20%, Rs 20-24 lakh — 25%, above Rs 24 lakh — 30%.
The annual limit for TDS on rent has been raised from Rs 2.40 lakh to Rs 6 lakh, benefiting small taxpayers receiving smaller payments, Sitharaman said.
“A tax payer in the new regime with an income of Rs 12 lakh will get a benefit of Rs 80,000 in tax (which is 100% of tax payable as per existing rates). A person having income of Rs 18 lakh will get a benefit of Rs 70,000 in tax (30% of tax payable as per existing rates). A person with an income of Rs 25 lakh gets a benefit of Rs 1,10,000 (25% of his tax payable as per existing rates),” Sitharaman said.
While delivering her Budget speech, Sitharaman urged Income Tax department officials to “trust first, scrutinise later”. Sitharaman mentioned that new I-T bill will be introduced in Parliament next week.
A while ago, Sitharaman began her Budget speech in Parliament and underlined that it will be a testament to the middle class of the country. “This budget continues efforts to accelerate growth and provide inclusive development,” Sitharaman said.
In a major reform, Finance Minister Nirmala Sitharaman announced an increase in the Foreign Direct Investment (FDI) limit in the insurance sector from 74% to 100%.
She also unveiled a six-year initiative aimed at promoting self-reliance in pulses, with a special emphasis on tur, urad, and masoor.
Additionally, Sitharaman stated that Nafed and NCCF will be responsible for procuring pulses over the next four years.
To support MSMEs and startups, the government will enhance the credit guarantee cover.
Sitharaman also shared plans to establish a National Institute of Food Technology, Entrepreneurship, and Management in Bihar.
A new fund for startups will be launched, with an additional Rs 10,000 crore contribution, bringing the total government contribution to Rs 20,000 crore. A new scheme will also be introduced for 5 lakh women and first-time entrepreneurs from the Scheduled Castes and Scheduled Tribes.
She announced the establishment of a Centre for Excellence in AI for education with an allocation of Rs 500 crore. Additionally, she highlighted the plan to add 10,000 new seats in medical colleges next year and a further 75,000 seats over the next five years.
Sitharaman also emphasized the goal of providing internet connectivity to all government schools and hospitals. She revealed that the Udan Scheme would be expanded to include 120 more destinations.
In a significant move to enhance logistics, the government aims to transform India into a major logistics hub by utilizing 1.5 lakh rural post offices. Furthermore, a new urea plant with a capacity of 12.7 lakh tonnes will be established in Assam.
The Finance Minister proposed an increase in the investment and turnover limits for MSMEs, noting their critical role in contributing to 45% of the country’s exports. On the rural economy, she assured support for the National Cooperative Development Corporation’s lending operations.
In the field of nuclear energy, Sitharaman announced a Nuclear Energy Mission, which will focus on the research and development of small modular reactors with an outlay of Rs 20,000 crore.
The government also intends to introduce a new Income Tax Bill next week, and Sitharaman revealed plans to raise the FDI limit in the insurance sector from 74% to 100%.
In a boost to the agriculture sector, Sitharaman announced the comprehensive program for raising vegetables, fruit production, and providing remunerative prices.
Giving a push for small businesses, Sitharaman announced that the Centre will introduce customised credit cards with Rs 5 lakh limit for micro-enterprises. Apart, Sitharaman announced PM Dhan Dhyan Krishi Yojana, covering 100 districts with low yields, modern crop intensity and below average credit parameters. Sitharaman promised that the scheme will benefit 100 crore farmers.
Mentioning about the key areas the Budget for the upcoming fiscal year will focus on, Sitharaman said reforms will be initiated in six domains — taxation, urban development, mining, financial sector, power and regulatory reforms. Sitharaman added the Centre will launch rural prosperity, resilience programme focussing on youth, women and farmers.
Exuding confidence in the Indian economy under the leadership of NDA government, Sitharaman said, “Indian economy is fastest growing among all developing economies,” and added, “We see the next five years as unique opportunity to stimulate growth.”
“Nafed and NCCF will procure pulses in next four years,” Sitharaman said.
Ahead of presenting the Budget, Sitharaman met President Droupadi Murmi at Rashtrapati Bhavan. This time also Sitharaman continued her tradition of using a digital tablet enclosed in a traditional ‘bahi-khata’ style pouch.
A day before the Budget announcement, Sitharaman tabled the Economic Survey for 2024-25 in Parliament. The Survey pegged GDP growth in the coming fiscal year to be between 6.3% and 6.8%. The Survey said that food inflation surged from 7.5% in FY24 to 8.4% in the current financial year while key employment related metrics such as unemployment rate, labour force participation rate and the worker-to-population rate have improved.
Authored by Chief Economic Advisor V Anantha Nageswaran and his team of officials , the Survey recommended the Centre to boost consumer demand through deregulation and implementation of enterprise-friendly reforms in aspiring and emerging states. Considering India’s dependence on China for many products as a key risk, the Survey has
recommended that India needs to go all out to “attract, promote and facilitate further domestic and foreign investments”.
Gross non-performing assets (NPAs) in the banking system declined to a 12-year low of 2.6 per cent of gross loans and advances, the Survey said, citing the Reserve Bank of India’s Financial Stability Report (FSR), December 2024. Another key indicator of the robustness of economy, construction has been a standout, gaining momentum since mid-FY21 and soaring approximately 15 per cent above its pre-pandemic trend—an impressive feat. The Survey also pressed for safe and satisfactory workplace and fair treatment of employees.
Commencing the Budget session on Friday, President Murmu emphasised on the Central government’s decisions on Waqf board and One Nation, One Election. Referring to the moves, Murmu said the government’s third term is seeing work being done at thrice the speed of previous administrations with a determination to end “policy paralysis. Murmu referred to the middle class eight times in her address and listed the measures implemented by the Centre for the middle class.
“The bigger the dreams of the middle class are, the higher the nation soars. It is my government that has, for the first time, openly acknowledged and appreciated the contributions of the middle class on every occasion,” Murmu said.
This is also the Narendra Modi government’s first full-year budget in the third term and is being presented against the backdrop of geopolitical uncertainties and slowing of the economic growth rate to a four-year low. Notably, the US has threatened tariffs against countries, including India.
The Narendra Modi government’s major poll plank, Viksit Bharat by 2047, will require 8% annual growth, a 35% investment rate, and expansion in manufacturing, AI, robotics, and biotechnology.
