Finance Minister Nirmala Sitharaman presented the full Union Budget for fiscal 2025 on Saturday. She made key announcements on various sectors of interest — from MSMEs to artificial intelligence in education — and more, and offered a glimpse of the government's road map for the upcoming fiscal.
In a highly-welcomed turn of events, the Finance Minister announced that no income tax will be applicable on income up to Rs 12 lakh. The New Income Tax Bill is also set to reduce litigation by making tax provisions easier to understand.
Here are the key takeaways from Sitharaman's budget speech:
Revision Of Income Tax Slabs
The Finance Minister has announced that no income tax will be payable on income up to Rs 12 lakh, with salaried taxpayers benefiting from a tax-free threshold up to Rs 12.75 lakh.
In line with this, the revised tax slabs are as follows:
Rs 0-4 lakh: Nil (no tax)
Rs 4-8 lakh: 5%
Rs 8-12 lakh: 10%
Rs 12-16 lakh: 15%
Rs 16-20 lakh: 20%
Rs 20-24 lakh: 25%
Above Rs 24 lakh: 30%
On Fiscal Deficit
The government aims to keep the fiscal deficit under control. For fiscal 2025, total receipts are projected at Rs 31.47 lakh crore, with net tax receipts at Rs 25.5 lakh crore. The fiscal deficit for the current fiscal is targeted at 4.8% of GDP, reflecting a controlled yet strategic approach to public finances.
Moving into the upcoming fiscal, total receipts are expected to be Rs 34.96 lakh crore, with net tax receipts at Rs 28.37 lakh crore. The total expenditure in fiscal 2026 is projected to be Rs 50.65 lakh crore, with the fiscal deficit estimated to improve slightly to 4.4% of GDP.
Net market borrowing for fiscal 2026 is projected at Rs 11.54 lakh crore, with gross market borrowing at Rs 14.82 lakh crore. The government's capital expenditure in fiscal 2025 is estimated at Rs 10.18 lakh crore.
Personal Tax
The New Income Tax Bill is set to reduce litigation by making tax provisions easier to understand. A key change is the doubling of the tax deduction limit for senior citizens, increasing it to Rs 1 lakh. Another revision is the threshold for tax collection at source on remittances under the LRS, which will be raised from Rs 7 lakh to Rs 10 lakh.
The government also plans to rationalise TDS and TCS to streamline and simplify compliance. In addition, the annual TDS limit on rent will be raised from Rs 2.4 lakh to Rs 6 lakh, and delays in TCS payments up to the due date will no longer be criminalised, reducing pressure on taxpayers.
Other reforms include waiving TCS on remittances if the funds are used for educational loans and extending the time limit to file updated returns from 2 years to 4 years. The compliance burden on small charitable trusts and institutions will be reduced by increasing the registration period from 5 years to 10 years.
Withdrawals from National Savings Scheme accounts made on or after August 2024 will be exempt from taxation. Additionally, a proposal has been made to provide similar tax treatment for NPS Vatsalya accounts as is available to normal NPS accounts, subject to overall limits.
MSMEs — Focus On Manufacturing
The government has introduced several significant updates aimed at boosting the MSME sector. Investment limits for MSMEs will be increased by 2.5 times, and turnover limits will be doubled, announced the Finance Minister.
Additionally, customised credit cards with a Rs 5 lakh limit will be made available to registered micro enterprises. A new scheme will also support 5 lakh first-time women, SC and ST entrepreneurs, providing loans of up to Rs 2 crore.
In a broader context, the government is focusing on creating employment and boosting exports, with a scheme aimed at generating 22 lakh jobs.
A key ambition is to make India a global hub for toy manufacturing, as per the Minister's speech. Further, a National Institute of Food Technology and Management will be established in Bihar to strengthen the food processing industry. Additionally, a National Manufacturing Mission will be set up to promote the growth of industries of all sizes — small, medium, and large.
Impetus For Education And AI
The Saksham Anganwadi and Poshan 2.0 programmes provide nutritional support to 8 crore children and women across India. Additionally, broadband connectivity will be extended to all government secondary schools, ensuring digital inclusion in education. To further improve skills development, the government plans to set up five National Centres of Excellence for Skilling, bringing in global expertise and partnerships, said Sitharaman.
In the higher education sector, the number of students in IITs has doubled over the past decade, and the government is investing in additional infrastructure to accommodate 6,500 more students in five IITs that were established after 2014, said the Finance Minister.
In the medical field, the government has added 1.1 lakh undergraduate and postgraduate medical seats over the past 10 years, with a plan to add 10,000 more seats next year and 75,000 seats over the next five years. Additionally, Centres of Excellence in AI for education will be set up with a total outlay of Rs 500 crore.
Infrastructure
The government has proposed a Rs 1.5 lakh crore interest-free loan for states over 50 years, aimed at boosting capital expenditure and infrastructure spending. Each infrastructure ministry has been tasked with identifying three pipelines of projects that can be implemented through Public Private Partnerships. Moreover, the Jal Jeevan Mission will be extended until 2028 with an enhanced outlay.
The government is also setting up a Rs 1 lakh crore Urban Challenge Fund, designed to finance up to 25% of bankable urban projects. A second infrastructure plan for 2025-30 will also focus on reinvesting Rs 10 lakh crore into new infrastructure initiatives.
A Nuclear Energy Mission will be launched with a Rs 20,000 crore outlay to fund R&D for small modular reactors, with plans to operationalise five by 2033. The government will also amend the Atomic Energy Act and the Civil Liability to Nuclear Energy Act to encourage private sector participation. To boost maritime and air travel, a Maritime Development Fund worth Rs 25,000 crore will be established, and greenfield airports will be developed in Bihar. The modified UDAN scheme aims to enhance regional connectivity, adding 120 new destinations and accommodating 4 crore additional passengers over the next decade.
PM Dhan Dhanya Krishi Yojana
The Finance Minister announced the PM Dhan Dhanya Krishi Yojana to enhance agricultural productivity, and adopt crop diversification. The scheme augments post-harvest storage at Panchayat and block levels. It will also improve the availability of short-, and long-term credit and benefit 1.5 crore farmers. FM says the aim is to create ample opportunity for rural areas so migration is an option, not a necessity.
FM said that as consumption of pulses has increased, the government is working towards self-sufficiency in pulses. A pulses programme will be floated, with focus on tur, urad, masoor.
A Makhana (lotus seed) Board will also be set up in Bihar.
"The proposed development measures span 10 broad areas, focussing on the poor, youth, farmers and women," Sitharaman said.
Tourism
The government will develop the top 50 tourist destinations across the country, said Sitharaman. They will further provide PLI-linked incentives to states to aid the development of tourism areas.
Medical tourism and Heal In India will be promoted in PPP mode, and SWAMIH fund 2 will be established as a blended finance facility of Rs 15,000 crore.
Focus On Exports, Trade
The Bharat Trade Net will be set up a unified platform for trade documentation and financing solutions, announced the Finance Minister.
The National Bank for Financing Infrastructure and Development is expected to set up a partial credit enhancement facility for infra bonds, she added. The investment friendliness index of states is also set to be launched in 2025.
Push For EVs
The ministry also proposed to add 25 additional capital goods for EV battery manufacturing, and 28 goods for mobile phone battery manufacturing.
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