union budget 2025

The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, sets total receipts at ₹34.96 lakh crore and expenditures at ₹50.65 lakh crore, targeting a fiscal deficit of 4.4% of GDP. Key highlights include initiatives to boost agriculture (Dhan-Dhaanya Krishi Yojana), support MSMEs, and enhance credit access for micro enterprises. Major investments are planned in education, healthcare, and infrastructure, with new medical colleges and 50,000 Atal Tinkering Labs. ₹20,000 crore is allocated for private sector R&D, and export initiatives are aimed at enhancing global trade. Tax reforms include increased exemptions and revised slabs for personal income tax, while indirect taxes focus on customs duty rationalization and support for domestic manufacturing. The budget also promotes public-private partnerships in infrastructure, ease of business, and incentives for startups and MSMEs.

Part-A

Smt. Nirmala Sitharaman (Union Minister for Finance and Corporate Affairs) introduced the Union Budget 2025-2026. The following are the budget's highlights:

Budget Estimates 2025-26

The total receipts except borrowings and the total expenditure are evaluated at ₹ 34.96 lakh crore and ₹ 50.65 lakh crore accordingly.

The net tax receipts are assessed at ₹ 28.37 lakh crore.

An estimated 4.4% of GDP is the fiscal deficit.

The expected overall market borrowings amount to ₹14.82 lakh crore.

FY2025–2026 is allocated ₹11.21 lakh crore in capital expenditures, or 3.1% of GDP.

AGRICULTURE

Prime Minister Dhan-Dhaanya Krishi Yojana – Developing Agri Districts Programme

1.7 crore farmers would benefit from the scheme, which will be introduced in collaboration with the states and cover 100 districts with poor productivity, moderate crop intensity, and below-average credit conditions.

Developing Resilience and Prosperity in Rural Areas

In collaboration with the states, a comprehensive multi-sectoral program would be initiated to address underemployment in agriculture through investment, technology, skill development, and boosting the rural economy. 100 developing agri-districts will be covered under Phase 1.

Aatmanirbharta in Pulses

With an emphasis on Tur, Urad, and Masoor, the government will begin a six-year "Mission for Aatmanirbharta in Pulses." Over the following four years, NAFED and NCCF will purchase these pulses from farmers.

Complete Programme for Vegetables & Fruits

In collaboration with states, a comprehensive program will be introduced to support production, efficient supply, processing, and fair prices for farmers.

Makhana Board in Bihar

To enhance makhana production, processing, value addition, and marketing, a Makhana Board will be formed.

National Mission on High Yielding Seeds

To boost the research environment, produce and propagate high-yielding seeds, and make more than 100 seed types commercially available, a National Mission on High Yielding Seeds will be established.

Improved Credit via KCC

For loans obtained via the KCC, the credit ceiling under the Modified Interest Subvention Scheme would be increased from ₹3 lakh to ₹5 lakh.

Mission for Cotton Productivity

A five-year plan was declared to support extra-long staple varieties of cotton and enable notable increases in cotton farming's sustainability and production.

Fisheries

With an emphasis on the Andaman & Nicobar and Lakshadweep Islands, the government will present a framework for a sustainable utilization of fisheries in the Indian High Seas and Exclusive Economic Zone.

Urea Plant in Assam

In Namrup, Assam, a facility with a yearly capacity of 12.7 lakh metric tons would be established.

MSMEs

Changes to the MSMEs' categorization criteria

All MSMEs will have their investment and turnover thresholds raised to 2.5 and 2 times, respectively.

Credit Cards for Micro Enterprises

For microbusinesses registered on the Udyam platform, customized credit cards with a ₹5 lakh limit will be provided; 10 lakh cards will be issued in the first year.

Fund of Funds for Startups

A new Fund of Funds will be established with a broader reach and an additional commitment of ₹10,000 crore.

Scheme for First-time Entrepreneurs

In the next five years, a new program targeting 5 lakh women and first-time business owners from Scheduled Castes and Scheduled Tribes would offer term loans up to ₹2 crore.

Focus Product Scheme for Footwear & Leather Sectors

In an effort to boost the footwear and leather industry's productivity, quality, and competitiveness, a focus product scheme has been announced that would create jobs for 22 lakh people, earn ₹4 lakh crore in revenue, and increase exports by over ₹1.1 lakh crore.

Manufacturing Mission – Furthering “Make in India”

To promote "Make in India," a National Manufacturing Mission including small, medium, and big companies was established.

Measures for the Toy Sector

An initiative has been announced to establish India as a globally epicenter for toys by producing high-quality, distinctive, inventive, and sustainable toys.

Support for Food Processing

Bihar will see the establishment of a National Institute of Food Technology, Entrepreneurship, and Management.

INVESTMENT

1.Investing in People

Saksham Anganwadi and Poshan 2.O

The standards for how much it costs to improve nutritional assistance.

Atal Tinkering Labs

50,000 Atal Tinkering Labs will be introduced in the government schools in the following time span of 5 years.

Broadband Connectivity to Government Secondary Schools and PHCs

Under the Bharatnet initiative, all government secondary schools and basic health centers in rural regions would have access to broadband connectivity.

Bhartiya Bhasha Pustak Scheme

Indian language textbooks in digital format will be made available for use in schools and higher institutions under the Bharatiya Bhasha Pustak Scheme.

National Centres for Excellence for Skilling

To provide our young people the skills they need for "Make for India, Make for the World" manufacturing, five National Centers of Excellence for skilling with international experience and collaborations would be established.

Social Security Scheme for Welfare of Online Platform Workers

 For gig workers, the government would set up identification cards, e-Shram site registration, and healthcare under PM Jan Arogya Yojna.

PM SVAnidhi

The plan would be redesigned with improved bank loans, ₹30,000 limit credit cards connected to UPI, and assistance for capacity building.

Strengthening urban livelihoods

A scheme for the economic and social progress of urban workers to assist them in enhancing their incomes and enduring livelihood programs is introduced.

Day Care Cancer Centres in all District Hospitals

Government to establish 200 Day Care Cancer Centres in all district hospitals during the next three years, 200 Centres in 2025-26.

Expansion of Capacity in IITs

Starting after 2014, the five IITs planned additional infrastructure to provide education for 6,500 extra students.

Centre of Excellence in AI for Education

With a whole investment of ₹ 500 crore, a Centre of Excellence in Artificial Intelligence for Education would be established.

Expansion of medical education

Medical colleges and hospitals will be adding 10,000 more seats next year, thus augmenting 75000 seats in the following five years.

2.Investing in the Economy

Public Private Partnership in Infrastructure

States also urged infrastructure-related ministries to develop a three-year pipeline of PPP-mode projects.

Support to States for Infrastructure

The proposed 50-year interest-free loans to states for capital expenditures and reform incentives total ₹1.5 lakh crore.

Asset Monetization Plan 2025-30

The second plan for 2025–2030 calls for reinvesting ₹10 lakh crore in newly announced projects.

Jal Jeevan Mission

The mission will be prolonged until 2028 with a higher overall budget.

Urban Challenge Fund

To carry out the ideas for "Cities as Growth Hubs," "Creative Redevelopment of Cities," and "Water and Sanitation," an Urban Challenge Fund of ₹1 lakh crore was established. An additional ₹10,000 crore was allocated for 2025–2026.

Nuclear Energy Mission for Viksit Bharat

The Civil Liability for Nuclear Damage Act and the Atomic Energy Act will be amended. With a ₹20,000 crore investment, the Nuclear Energy Mission for Research & Development of Small Modular Reactors (SMR) would be established, with five domestically produced SMRs expected to be operational by 2033.

Shipbuilding

The Shipbuilding Financial Assistance Policy needs a make-over. Big ships over a certain size should be put into the harmonized master list (HML) for infrastructure.

Maritime Development Fund

With up to 49% Government commitment and a corpus of ₹ 25,000 crore to be established, a Maritime Development Fund would be formed up with balance from ports and private sector.

UDAN – Regional Connectivity Scheme

Announced to improve regional connection to 120 additional locations and handle 4 crore people in the next 10 years, a modified UDAN system is Also to assist minor airports, helipads, and hilly, ambitious, North East area districts.

Greenfield Airport in Bihar

Apart from the capacity increase at Patna airport and a brownfield airport at Bihta, greenfield airports declared in Bihar also signal change.

Western Koshi Canal Project in Mithilanchal

Western Koshi Canal ERM Project funding for Bihar.

Mining Sector Reforms

A recovery policy for important minerals from tailings must be implemented.

SWAMIH Fund 2

Announced with government, bank, and private investor support is a fund of ₹ 15,000 crore targeted at quick construction of another 1 lakh homes.

Tourism for employment-led growth

Top 50 tourist attraction places around the nation will be built in cooperation with states under a challenge mode.

3.Investing in Innovation

Research, Development and Innovation

Announced in the July Budget, the private sector led Research, Development and Innovation project would get ₹20,000 crore for implementation.

Deep Tech Fund of Funds

Investigating Deep Tech Funds of Funds to inspire the future generation of entrepreneurs.

PM Research Fellowship

Ten thousand scholarships with improved financial assistance for technical research in IITs and IISc.

Gene Bank for Crops Germplasm

Ten lakh germplasm lines second gene bank ready for use in future food and nutritional security.

National Geospatial Mission

Declared to build basic geospatial infrastructure and data, a National Geospatial Mission.

Gyan Bharatam Mission

To cover nearly 1 crore manuscripts stated, a Gyan Bharatam Mission for survey, documentation, and preservation of our manuscript legacy with academic institutions, museums, libraries, and private collectors is planned.

EXPORT

Export Promotion Mission

Driven together by the Ministries of Commerce, MSME, and Finance, an Export Promotion Mission with sectoral and ministerial aims is to be established.

BharatTradeNet

For international commerce, "BharatTradeNet" (BTN) will be set-up as a single platform for trade paperwork and financing solutions.

National framework of GCC

A national framework should be developed as direction for states encouraging Global Capability Centres in rising tier 2 cities.

SECTOR REFORMS IN FINANCE AND DEVELOPMENT

FDI in Insurance sector

For companies who pay the whole premium in India, the FDI ceiling for the insurance industry would be enhanced from 74 to 100 percent.

Credit enhancement facility by NaBFID

NaBFID arranges a "Partial Credit Enhancement Facility" for infrastructure-related business bonds.

Grameen Credit Score

Public Sector Banks are working on a "Grameen Credit Score" system to meet SHG members' and residents in rural regions' credit needs.

Pension Sector

To be established up is a forum for regulatory cooperation and pension product development.

High Level Committee for Regulatory Reforms

Established for a review of all non-financial sector rules, certificates, licenses, and permits is a High-Level Committee for Regulatory Reforms.

Investment Friendliness Index of States

Launched in 2025, an Investment Friendliness Index of States will help to advance the declared attitude of competitive cooperative federalism.

Jan Vishwas Bill 2.0

The Jan Vishwas Bill 2.0 aims to decriminalize more than one hundred clauses across many legislations.

PART-B

Direct Tax

There will be no income tax payable up to an income of Rs 12 lakh (i.e., an average income of Rs 1 lakh monthly besides special rate income in the form of capital gains) as per the new regime.

Standard deduction of Rs 75,000 will cause this limit—Rs 12.75 lakh—for salaried tax payers to be less.

The new framework will significantly lower middle-class taxes and leave more money in their hands, hence increasing household expenditure, savings, and investment.

The new Income-Tax Bill must be plain and direct in wording so as to make it simple to grasp for taxpayers and tax administration, therefore generating tax certainty and less litigation.

Direct taxes bring about revenue of around ₹ 1 lakh crore, which would be lost.

Revised tax rate framework

Percentage of Tax

Tax Slab for FY 2024-25

Tax Slab for FY 2025-26

Nil

Upto 3 lakhs

Upto 4 lakhs

5%

3-7 lakhs

4-8 lakhs

10%

7-10 lakhs

8-12 lakhs

15%

10-12 lakhs

12-16 lakhs

20%

12-15 lakhs

16-20 lakhs

25%

More than 15 lakhs

20-24 lakhs

30%

More than 15 lakhs

More than 24 lakhs

TDS/TCS rationalization for easing difficulties

Reduction of number of rates and thresholds at which TDS is deducted helps to rationalize Tax Deduction at Source (TDS).

For elderly individuals, the tax deduction ceiling for interest doubles from the previous Rs 50,000 to Rs 1 lakh.

For TDS on rent, the yearly maximum of Rs 2.40 lakh changed to Rs 6 lakh.

Under RBI's Liberalized Remittance Scheme (LRS), the threshold to collect tax at source (TCS) on remittances raised from Rs 7 lakh to Rs 10 lakh.

Only non-PAN situations will apply the greater TDS deduction's requirements.

Decriminalization for the situations of TCS delay of payment up to the due date of filing statement.

Minimizing compliance strain

Decrease in compliance strain for small charitable trusts and institutions through expanding the time period of registration from 5 years to 10 years.

The advantage of declaring the annual value of self-taken properties as nil will be prolonged in duration for two alike self-taken properties unconditionally.

Business convenience

Implementation of a scheme related to identifying the arm’s length price of cross-border transaction for a restricted period of three years.

Increase in the spectrum of safe harbor provisions to decrease legal proceedings and delivering clarity in cross-border taxation.

Withdrawals from the National Savings Scheme (NSS) by any individual on or after the 29th of August, 2024, are exempted from tax.

Taxpayers who participate in NPS (National Pension System) Vatsalya accounts are entitled to an extra Rs. 50,000 tax deduction as per Section 80CCD(1B), which is similar to the tax advantages provided to the regular NPS participants.

Job creation and Investments

In the Union Budget 2025, the government has introduced key initiatives, including tax clarity for electronic manufacturing schemes and the Tonnage Tax Scheme for Inland Vessels, aimed at boosting job creation and driving investments.

Tax clarity for electronics manufacturing schemes

Probable taxation regimen for non-citizens who are delivering services to the resident company that is setting up or managing an electronics production facility.

Implementation of a safe harbor for tax clarity for non-citizens who manage components for distribution to defined electronics production units.

Tonnage Tax Scheme for Inland Vessels

The advantages of the current tonnage tax scheme are to be prolonged to inland vessels listed as per the Indian Vessels Act, 2021, to encourage inland water transport within the country.

Expansion for establishment of Start-ups

Expansion of the time period of incorporation with 5 years to enable the advantage to new ventures incorporated prior to 1.4.2030.

Alternate Investment Funds (AIFs)

Clarity of taxation on the profits from securities to Category I and Category II AIFs, which are carrying out investments in infrastructure and related industries.

Postponement of the investment date for Sovereign and Pension funds

Postponement of the date placing investments in Sovereign Wealth Funds and Pension Funds for an additional five years, i.e., till 31st March, 2030, to encourage investments from them to the infrastructure industry.

INDIRECT TAX

Consolidation of Customs Tariff Structure for Industrial products

Union Budget 2025-26 intends to

Eliminate seven tariff rates. This is in addition to the seven tariff rates eliminated in the 2023-24 budget. Following this, it will be limited to eight remaining tariff rates containing a ‘zero’ rate.

Implement suitable cess to largely sustain effective duty incidents, excluding several items, where these kinds of incidents will decrease negligibly.

Impose no more than one cess or surcharge. Thus, the social welfare surcharge on 82 tariff lines that are liable to a cess is excluded.

₹ 2600 crore of Revenue in indirect taxes will be waived.

Ease on import of Drugs/Medicines

A total of 36 life-protecting drugs and medicines are completely exempted from Basic Customs Duty (BCD).

Customs duty of 5% is reduced on 6 life-protecting drugs.

Listed drugs and medicines as per the Patient Assistance Programmes managed by pharmaceutical companies were completely exempted from BCD; 37 further medicines combined with 13 new patient support programmes.

Assistance to Domestic Manufacturing and Value addition

Critical Minerals

Lead, zinc and twelve other vital minerals totally free from BCD; cobalt powder and trash; scrap of lithium-ion battery.

Textiles

Two further varieties of shuttle-less looms totally free from textile equipment.

On knitted materials, BCD rate changed from "10% or 20%," to "20% or ` 115 per kilogram, whichever is higher.

Electronic Products

10% to 20% increase of BCD on Interactive Flat Panel Display (IFPD)

Decrease of 5% BCD on Open Cell and other elements.

Complete exemption of BCD on components of Open Cells.

Lithium Ion Battery

Exempted are 28 more capital items for mobile phone battery manufacture and 35 more capital goods for EV battery manufacture.

Shipping Industry

Relief of BCD on raw materials, elements, consumables, or components for the manufacture of ships prolonging for an additional 10 years. The same concession for ship breaking as well.

Telecommunication

BCD on Carrier Grade Ethernet switches are decreased from 20% to 10%.

Export upgrade

Handicraft goods

Export time is six months to one year, further extendable by additional three months, should needed. The list of duty-free inputs now includes nine items.

Leather Industry

BCD totally excluded on Wet Blue leather.

Crust leather free from 20% export taxes.

Marine Goods

For manufacturing and shipment of its analogue goods, BCD cut from 30% to 5% on Frozen Fish Paste (Surimi).

On fish hydrolysate for production of fish and prawn feeds, BCD dropped from 15% to 5%.

Domestic MROs for Railway Goods

For manufacturing and shipment of its analogue goods, BCD cut from 30% to 5% on Frozen Fish Paste (Surimi).

On fish hydrolysate for production of fish and prawn feeds, BCD dropped from 15% to 5%.

Trade Assistance

Time constraint for Provisional Assessment

Time-limit of two years established, extendable by a year, for finishing the provisional evaluation.

Voluntary Compliance

Added to let importers or exporters freely report material facts and pay duty with interest but without penalty following goods clearance.

Longer Duration of End Use

According to the applicable regulations, the six-month time restriction for the final use of imported inputs was extended to one year.

Instead of filing monthly filings, many importers simply file quarterly statements.

Conclusion