Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman presented the Union Budget 2025-26 in Parliament on 01.02.2025, with the theme “Sabka Vikas” stimulating balanced growth of all regions.

Finance Minister outlined the broad Principles of Viksit Bharat

1) Zero-poverty;

2) Hundred per cent good quality school education;

3) Access to high-quality, affordable, and comprehensive healthcare;

4) Hundred per cent skilled labour with meaningful employment;

5) Seventy per cent women in economic activities; and

6) Farmers making our country the ‘food basket of the world’.

The Budget aims transformative reforms in Taxation, Power Sector, Urban Development, Mining, Financial Sector, to augment India’s growth potential and global competitiveness. Union Budget highlights that Agriculture, MSME, Investment, and Exports are engines in the journey to Viksit Bharat.

Agriculture: a) ‘Prime Minister Dhan-Dhaanya Krishi Yojana’ in partnership with states covering 100 districts to increase productivity and facilitate availability of long-term and short-term credit.

b) ‘Rural Prosperity and Resilience’ programme will be launched in partnership with states to address underemployment in agriculture through skilling, investment, technology, and invigorating the rural economy.

c) Government will launch a 6-year “Mission for Aatmanirbharta in Pulses” with special focus on Tur, Urad and Masoor. Central agencies (NAFED and NCCF) will be ready to procure these 3 pulses, as much as offered during the next 4 years from farmers.

d) Announced the increase in loan limits from Rs. 3 lakh to Rs. 5 lakh for loans taken through Kisan Credit Cards under modified interest subvention scheme.

MSME: a) the investment and turnover limits for classification of all MSMEs enhanced to 2.5 and 2 times, respectively. Further, steps to enhance credit availability with guarantee cover have also been announced.

b) New scheme for 5 lakh women, Scheduled Castes and Scheduled Tribes first-time entrepreneurs. This will provide term loans up to Rs. 2 crore during the next 5 years.

c) Government will implement a scheme to make India a global hub for toys, representing the ‘Made in India’ brand. Government will set up a National Manufacturing Mission covering small, medium and large industries for furthering “Make in India”.

Investment: a) 50,000 Atal Tinkering Labs will be set up in Government schools in next 5 years.

b) Broadband connectivity will be provided to all Government secondary schools and primary health centres in rural areas under the Bharatnet project.

c) Bharatiya Bhasha Pustak Scheme will be implemented to provide digital-form Indian language books for school and higher education.

d) Five National Centres of Excellence for skilling will be set up with global expertise and partnerships to equip our youth with the skills required for “Make for India, Make for the World” manufacturing.

e) Centre of Excellence in Artificial Intelligence for education will be set up with a total outlay of 500 crore.

f) Government will arrange for Gig workers’ identity cards, their registration on the e-Shram portal and healthcare under PM Jan Arogya Yojana. Infrastructure-related ministries will come up with a 3-year pipeline of projects in PPP mode.

g) Rs 1.5 lakh crore was proposed for the 50-year interest free loans to states for capital expenditure and incentives for reforms. Asset Monetization Plan 2025-30 to plough back capital of Rs 10 lakh crore in new projects.

h) The Jal Jeevan Mission was extended till 2028 with focus on the quality of infrastructure and Operation & Maintenance of rural piped water supply schemes through “Jan Bhagidhari”.

i) Government will set up an Urban Challenge Fund of Rs.1 lakh crore to implement the proposals for ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’ and ‘Water and Sanitation’.

j) ₹20,000 crore is announced to implement private sector driven Research, Development and Innovation initiative.

k) National Geospatial Mission to develop foundational geospatial infrastructure and data which will benefit urban planning.

l) Gyan Bharatam Mission, for survey, documentation and conservation of  more than 1 crore manuscripts with academic institutions, museums, libraries and private collectors. A National Digital Repository of Indian knowledge systems for knowledge sharing is also proposed.

Export: a) government will support the domestic electronic equipment industry for leveraging the opportunities related to Industry 4.0. A National Framework has also been proposed for promoting Global Capability Centres in emerging tier 2 cities.

b) The government will facilitate upgradation of infrastructure and warehousing for air cargo including high value perishable horticulture produce.

Reforms in Financial and Tax system: Government has implemented several reforms for tax payers and focused on ease of doing business. Foreign Direct Investment (FDI) limit for the insurance from 74 to 100 per cent. High Level Committee for Regulatory Reforms. Investment Friendliness Index of States will be launched in 2025. Jan Vishwas Bill 2.0 will be implemented.

Fiscal Consolidation: Revised estimate 2024-25 of fiscal deficit is 4.8% of GDP, While the budget estimates 2025-26 is estimated to be 4.4% of GDP. Revised Estimate of the total receipts other than borrowings is ₹31.47 lakh crore, of which the net tax receipts are ₹25.57 lakh crore. She added that the Revised Estimate of the total expenditure is ₹47.16 lakh crore, of which the capital expenditure is about ₹10.18 lakh crore.

Budget Estimates: Union Finance Minister stated that the total receipts other than borrowings and the total expenditure are estimated at ₹34.96 lakh crore and ₹50.65 lakh crore respectively. The net tax receipts are estimated at ₹28.37 lakh crore.

Income Tax: Union Budget 2025-26 proposes new direct tax slabs and rates under the new income tax regime so that no income tax is needed to be paid for total income upto ₹ 12 Lakh per annum, i.e. average income of Rs 1 Lakh per month, other than special rate income such as Capital Gain. Salaried individuals earning upto ₹ 12.75 Lakh per annum will pay NIL tax, due to standard deduction of ₹ 75,000. Towards the new tax structure and other direct tax proposals, Government is set to lose revenue of about ₹ 1 lakh crore.

TDS/TCS, Budget doubles limit for tax deduction on interest earned by senior citizens from the present ₹ 50,000 to ₹ 1 Lakh. Further, TDS threshold on rent has been increased to ₹ 6 Lakh from ₹ 2.4 Lakh per annum. Other measures include, increasing of threshold to collect TCS to ₹ 10 Lakh and continuing with higher TDS deductions only in non-PAN cases.

Budget extends time-limit to file updated returns for any assessment year, from the current limit of two years. Small charitable trusts/institutions have been given the benefit by increasing their period of registration from 5 to 10 years.

Budget introduces a scheme for determining arm’s length price of international transaction for a block period of three years. To promote start-up ecosystem, period of incorporation has been extended for a period of 5 years. To promote investment in the infrastructure sector, Budget extends the date of making investment in Sovereign Wealth Funds and Pension Funds by five more years, to 31st March, 2030.

As part of rationalization of Customs tariffs of industrial goods, Budget proposes to; (i) Remove seven tariffs, (ii) apply appropriate cess to maintain effective duty incidence, and (iii) levy not more than one cess or surcharge.

As relief on import of Drugs/Medicines, 36 lifesaving drugs and medicines for treating cancer, rare diseases and chronic diseases have been fully exempted from Basic Customs Duty (BCD). Further, 37 medicines along with 13 new drugs and medicines under Patient Assistance Programmes have been exempted from Basic Customs Duty (BCD), if supplied free to patients.

To support Domestic Manufacturing and Value Addition, BCD on 25 critical minerals, that were not domestically available, were exempted in July 2024. The Budget 2025-26 fully exempts cobalt powder and waste, scrap of lithium-ion battery, Lead, Zinc and 12 more critical minerals. To promote domestic textile production, two more types of shuttle-less looms added to fully exempted textile machinery. Further, BCD on knitted fabrics covering nine tariff lines from “10% to 20%” revised to “20% or ₹ 115 kg, whichever is higher”.

To rectify inverted duty structure and promote “Make in India”, BCD on Interactive Flat Panel Display (IFPD) increased to 20% and on Open cells reduced to 5%. Further to promote manufacture of Open cells, BCD on parts of Open Cells stands exempted.

35 additional capital goods for EV battery manufacturing, and 28 additional capital goods for mobile phone battery manufacturing added to the list of exempted capital goods to Lithion-ion battery production in the country. Union Budget 2025-26 also continues exemption on BCD on raw materials, components, consumables or parts for ship building for another ten years. Budget also reduced BCD from 20% to 10% on Carrier Grade ethernet switches to make it at par with Non-Carrier Grade ethernet switches.

Budget 2025-26 facilitates exports of handicrafts, fully exempts BCD on Wet Blue leather for value addition and employment, reduce BCD from 30% to 5% on Frozen Fish Paste and reduce BCD from 15% to 5% on fish hydrolysate for manufacture of fish and shrimp feeds.