Union Budget 2025: Key highlights and initiatives

Union Budget 2025: FM Nirmala Sitharaman’s gift to middle class, ‘No Income tax for upto Rs.12 lakh…’

On February 1, 2025, Finance Minister Nirmala Sitharaman presented India’s Union Budget, focusing on stimulating economic growth, providing tax relief to the middle class, and enhancing agricultural productivity. The budget outlines significant measures across various sectors to bolster the nation’s economy.

Income Tax reforms

A major highlight of the budget is the substantial relief provided to the middle class through income tax reforms:

• Tax exemption limit increased: Individuals earning up to Rs.12 lakh annually are now exempt from income tax.
• Standard deduction benefit: Salaried taxpayers can avail of a standard deduction of Rs.75,000, effectively making incomes up to Rs.12.75 lakh tax-free.

Revised Income Tax slabs:

• Income up to Rs.4,00,000: No Tax
• Rs.4,00,001 to Rs.8,00,000: 5%
• Rs.8,00,001 to Rs.12,00,000: 10%
• Rs.12,00,001 to Rs.16,00,000: 15%
• Rs.16,00,001 to Rs.20,00,000: 20%
• Rs.20,00,001 to Rs.24,00,000: 25%
• Above Rs.24,00,000: 30%

These measures aim to increase disposable income, thereby boosting household consumption, savings, and investment.

Agricultural initiatives

The budget places a strong emphasis on agriculture, introducing programs to enhance productivity and support farmers:

• Pulse and cotton production programs: A six-year initiative has been launched to boost the production of pulses and cotton, aiming to reduce import dependence. State agencies will procure specific pulses at guaranteed prices to support farmers.
• High-yield crop program: A program targeting 17 million farmers has been introduced to promote high-yield crop varieties, enhancing food security and farmer income.

Fiscal discipline

The government has set a fiscal deficit target of 4.4% of GDP for the fiscal year 2025-26, down from the revised 4.8% in the current year. This move reflects a commitment to fiscal prudence while accommodating tax reforms and increased capital expenditure.

Capital expenditure and infrastructure development

An allocation of Rs.11.2 trillion has been made for capital expenditure, focusing on infrastructure projects across agriculture, manufacturing, and financial sectors. This investment aims to stimulate economic growth and create employment opportunities.

Support for startups and employment

To foster innovation and entrepreneurship, the budget includes provisions to support startups:

• Extended incorporation period: The incorporation period for startups to avail of tax benefits has been extended to five years, encouraging new business ventures.
• Gig economy formalization: Initiatives have been announced to formalize gig economy workers, improving their access to healthcare and welfare programs.

Energy and innovation

The budget outlines significant investments in the energy sector:

• Nuclear Energy Mission: A mission to achieve 100 GW of nuclear power by 2047 has been launched, aiming to secure energy supplies and promote sustainable development.

Overall, the Union Budget 2025 reflects a balanced approach, aiming to stimulate economic growth, provide relief to the middle class, and invest in key sectors to ensure long-term prosperity.

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