Key Highlights of the Union Budget 2025

1 February, 2025

Synopsis

• The new budget highlights no income tax payable for income up to ₹12 Lakh.

• 36 life-saving drugs will be fully exempt from duties and taxes.

• Gig workers will receive healthcare under the PM Jan Arogya Yojana.

• The Nuclear Energy Mission targets 100 GW energy by 2047 with ₹20,000 Crore set up for SMR R&D.

• A Deep Tech Fund of Funds will support next-gen startups.

• The new budget enhances farmer support through initiatives like PM Dhan-Dhaanya Krishi Yojana and increased Kisan Credit Card limits.

The Finance Minister, Nirmala Sitharaman, presented the Union Budget for the eighth consecutive year. The Union Budget 2025 focuses on accelerating growth, inclusive development, private sector investments, and enhancing middle-class spending power. Guided by the vision of Viksit Bharat, it prioritises zero poverty, quality education, healthcare, skilled employment and women’s economic participation.

Key Highlights of the Union Budget 2025

Agriculture

• Kisan Credit Card (KCC): Increases loan limit from ₹3 Lakh to ₹5 Lakh under the Modified Interest Subvention Scheme.

• India Post: Transforms into a logistics organisation supporting MSMEs, entrepreneurs, and rural economies through its vast network.

• PM Dhan-Dhaanya Krishi Yojana: Boosts agricultural productivity in 100 districts by improving irrigation, storage, and credit, benefiting 1.7 Crore farmers.

• Rural Prosperity and Resilience Program: Enhances rural employment through skilling, investment, and technology, focusing on women, youth, and small farmers.

• Mission for Aatmanirbharta in Pulses: Focuses on self-sufficiency in Tur, Urad, and Masoor over six years.

• Comprehensive Programme for Vegetables & Fruits: Boosts production, processing, and supply chains.

• Makhana Board: Set up in Bihar to enhance production, processing, and marketing.
  
  

MSME

• The MSME classification criteria will be revised, increasing investment and turnover limits to 2.5 and 2 times respectively.
  
  

• A ₹10,000 Crore Fund of Funds will support startups, and ₹2 Crore term loans will aid 5 Lakh first-time women, SC, and ST entrepreneurs. New schemes will boost footwear, leather, and toy manufacturing.

Investments

A. Investing in People

• Initiatives like Saksham Anganwadi and Poshan 2.0 focus on providing nutritional support to children, women, and adolescent girls.

• The expansion of Atal Tinkering Labs, broadband connectivity through Bharatnet, and the Bharatiya Bhasha Pustak Scheme aim to enhance innovation and digital literacy in schools.

• Medical education gets a boost with 10,000 new seats, while 200 Day Care Cancer Centres will be established.

• The Union Budget 2025-26 includes measures for urban livelihoods, improved financial support for street vendors under PM SVANidhi.

• The government will provide identity cards and registration for gig workers on the e-Shram portal, offering healthcare under PM Jan Arogya Yojana, benefiting nearly 1 crore workers.
  
  

B. Investing in Economy

• The introduction of a 3-year PPP infrastructure pipeline, ₹1.5 Lakh Crore support to states for capital expenditure, and a ₹10 Lakh Crore Asset Monetization Plan will boost economic activity.

• The Jal Jeevan Mission and urban sector reforms focus on enhancing water, sanitation, and municipal services.

• Additionally, the Union Budget 2025 includes support for the power, maritime, and shipbuilding sectors, as well as the development of airports and transportation networks.

• There are also funds for affordable housing, mining reforms, and tourism to drive employment and growth.
  
  

C. Investing in Innovation

• ₹20,000 Crore is earmarked for private sector-driven R&D, while a Deep Tech Fund of Funds will support next-gen startups.

• The budget highlights also emphasises food security with the establishment of a second Gene Bank for crops and a National Geospatial Mission for modernizing land records.
  
  

Exports

• Initiatives like the Export Promotion Mission, BharatTradeNet, and Industry 4.0 support will enhance MSME exports, talent development, and high-value goods handling.

• The Foreign Direct Investment (FDI) limit for the insurance sector will be increased from 74% to 100%, applicable to companies investing the entire premium in India.
  
  

Indirect Taxes

• Customs Tariff Rationalisation: Remove 7 tariff rates, reduce duties on some items, exempt Social Welfare Surcharge on 82 lines.

• Drug Relief: Add 36 lifesaving drugs to BCD exemption list, 6 with concessional duty.

• Domestic Manufacturing Support: Exempt critical minerals, loom machinery, and capital goods for EV and mobile batteries from BCD; adjust duties on electronics and extend shipbuilding exemptions for 10 years.

• Export Promotion: Extend export time for handicrafts, exempt BCD on Wet Blue leather, reduce BCD on marine products to support exports and extend export time for domestic MROs for railway goods.

• Trade Facilitation: Set a 2-year limit for provisional assessments, introduce voluntary compliance for duty declarations, and extend end-use import time to 1 year with quarterly filings.
  
  

Direct Taxes

• TDS/TCS Rationalisation:

  • Increasing senior citizens' interest tax deduction limit to ₹1 Lakh and rent limit to ₹6 Lakh.

  • Raise TCS threshold for remittances under LRS from ₹7 Lakh to ₹10 Lakh, and remove TCS on educational remittances from loaned funds.

  • Omit TCS on goods sales and apply higher TDS for non-PAN cases only.
    
    

• Investment & Employment Proposals: Provide tax certainty for non-residents in electronics manufacturing, extend benefits to inland vessels and start-up incorporation, and offer incentives for IFSC activities, AIFs in infrastructure, and Sovereign/Pension Funds until March 31, 2030.
  
  

Personal Income -Tax Reforms

As per Union Budget 2025, the "Nil tax" slab will be raised further to ₹12 Lakh under the new regime (₹12.75 Lakh for salaried taxpayers due to a ₹75,000 standard deduction).

Modified slab rates are as follows for FY 2025 -2026 (AY 2026-2027):

​​​​​​​The Union Budget 2025 introduces significant reforms to promote economic growth, ease of doing business, and financial inclusion, while offering targeted support to the middle class. These measures reflect the government's commitment to building a prosperous, developed India.


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