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Budget 2025 Key Highlights: The Union Budget for the financial year 2025-26 was tabled in the Parliament by Finance Minister Nirmala Sitharaman earlier today. This was the eighth budget presented by the current FM, the first FM to do so and the first one of Prime Minister Narendra Modi-led government's third term.
The main announcement was that no Income Tax payable up to ₹12 Lakh under new regime.
Finance Minister says Budget aims at 'transformative' reforms in 6 areas including Taxation, financial sector, power sector, urban development, mining, regulatory reforms. These domains remain central to the government’s agenda, aiming to stimulate economic expansion, enhance infrastructure, improve governance, and promote sustainable development across multiple sectors.
"Together, we aim to unlock India's potential under the visionary leadership of Prime Minister Modi," said the Finance Minister as she began her address. "This budget is dedicated to accelerating growth, driven by our aspirations for a 'Viksit Bharat.' Our economy remains the fastest growing among all major economies. The Budget 2025-26 continues our government's efforts to secure inclusive development, uplift household sentiment and enhance the power of India's middle class," she added.
FY25 revised capex at ₹10.18 lakh crore
New Income Tax Bill will be announced next week. No Income Tax payable up to ₹12 Lakh under new regime. Tax slabs will be changed across board. Salaried class with salary over ₹24 lakh will pay 30 percent tax. Tax return filing limit will also be increased to 4 years from 2 years.
Finance Minister Nirmala Sitharaman highlighted the government's decade-long efforts to implement tax reforms aimed at improving taxpayer convenience. Key initiatives include faceless assessments, a taxpayer charter, and quicker return processing, with nearly 99 percent returns now based on self-assessment. Emphasizing the tax department's approach of "trust first, scrutinize later," she reaffirmed the commitment to simplifying compliance.
The government plans to simplify and streamline the customs tariff structure to address duty inversion and promote domestic manufacturing, value addition, and exports. This rationalization is part of a comprehensive review of the customs rate structure announced in the July 2024 Budget.
In addition to the seven tariff rates removed in the 2023-24 Budget, seven more rates will be eliminated, leaving only eight remaining, including a zero rate. While duty incidents will largely be maintained, a few items will see marginal reductions. The government also proposes to levy no more than one cess or surcharge and will exempt the social welfare surcharge on 82 tariff lines.
The Finance Minister unveiled the creation of a ₹1 lakh crore Urban Challenge Fund to transform cities into growth hubs, support innovative redevelopment, and improve water and sanitation infrastructure, as highlighted in the July Budget. The fund will cover up to 25 percent of the cost for bankable projects, with a stipulation that at least 50 percent of the funding comes from bonds, bank loans, or public-private partnerships (PPPs). Each infrastructure ministry will present a three-year list of Public-Private Partnership (PPP) projects, with a focus on three PPP proposals per ministry. An initial ₹10,000 crore has been proposed for the fiscal year 2025-26 to launch the initiative.
Capex: Additionally, the government will provide ₹1.5 lakh crore in interest-free loans for capital expenditure and offer incentives to encourage reforms.
Affordable Housing: Another 40,000 units to be completed in FY26, announces Finance Minister. SWAMI Fund 2 will be established of ₹15,000 crore
The Finance Minister introduced a Nuclear Energy Mission to accelerate India's shift towards clean energy, aiming to develop at least 100 GW of nuclear power by 2047. To encourage private sector involvement, amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will be made. Furthermore, a dedicated ₹20,000 crore research and development initiative for Small Modular Reactors (SMRs) will be launched, with the goal of having at least five indigenously developed SMRs operational by 2033.
The Finance Minister highlighted that MSMEs are the second engine of growth in India, accounting for 45 percent of the country's exports. To further support their development, the Finance Minister has introduced customized credit cards for MSMEs, a fund of funds for startups, and an expanded fund-of-funds (f-o-f) with a wider scope, all designed to improve capital access. Additionally, the government will enhance the investment and turnover limits for MSMEs, increasing them by 2.5 times and 2 times, respectively, to boost their growth and operational efficiency.
The Finance Minister highlighted agriculture as a key priority in Budget 2025, unveiling a new initiative under the Prime Minister Krishi Yojana. The Jan Dhanya Krishi Yojana initiative will focus on 100 districts with low productivity, moderate crop intensity, and below-average credit access. It aims include -- crop diversification, augmenting storage, improving irrigation, and facilitating long and short-term credit for farmers. An estimated 1.7 crore farmers are expected to benefit from these measures.
The Finance Minister also announced that the government will launch a 6-year mission aimed at achieving self-reliance in pulses, with a special focus on tur and masoor. Makhana Board will also be established in Bihar. As part of the National Mission for Edible Oil & Seeds, the program also aims to strengthen domestic production and reduce dependence on imports.
The Finance Minister stated that Kisan Credit Cards (KCC) will continue to support 7.7 crore farmers, fishermen, and dairy farmers with short-term credit access. Additionally, under the revised interest subvention scheme, the loan limit for KCC-backed borrowing will be raised from ₹3,000 to ₹5,000, offering enhanced financial support for agricultural activities.
The Finance Minister announced measures to enhance productivity, quality, and competitiveness in India's footwear and leather sector. A new scheme will support design, component manufacturing, and machinery for non-leather footwear, alongside leather footwear. This initiative is expected to create 22 lakh jobs, generate ₹400 crore, and boost exports to over ₹1.1 lakh crore. Additionally, the toy sector will see a new scheme aimed at establishing India as a global hub for toys, focusing on developing clusters, skills, and a sustainable manufacturing ecosystem for high-quality, innovative toys.
The Finance Minister emphasized investment as the third engine of growth, focusing on people, the economy, and innovation. As part of this, the government is prioritizing the Sashakt Anganwadi and Poshan 2.0 programs, providing nutritional support to over 8 crore children, pregnant women, lactating mothers, and around 20 lakh adolescent girls in aspirational districts and the Northeast, with enhanced cost norms to boost their effectiveness. Additionally, infrastructure will be expanded in 5 IITs established after 2014 to accommodate 6,500 more students, and 5 National Centres of Excellence for skilling will be set up. The government also plans to issue identity cards and register gig workers on the e-Shram portal, aiming to assist 1 crore workers.
The Finance Minister outlined significant power sector reforms focused on improving electricity distribution and transmission. The government will incentivize states to implement reforms in electricity distribution and boost intrastate transmission capacity, aiming to enhance the financial health and operational efficiency of power companies. To assist states in these efforts, an additional borrowing allowance of 0.5 percent of GSDP will be provided, based on their progress in implementing these reforms.
The UDAN scheme has connected 1.5 crore middle-class people to 88 airports through 619 routes. A modified version of UDAN will be launched, expanding to 120 new destinations, with the aim of accommodating an additional 4 crore passengers. Greenfield airports will also be developed in Bihar to further enhance connectivity.
Revised fiscal deficit for FY25: 4.8%
Fiscal deficit target for FY26: 4.4%
For 2024-25, the revised estimate for total receipts (excluding borrowings) stands at ₹31.47 lakh crore, with net tax receipts at ₹25.57 lakh crore.
The revised estimate for total expenditure is ₹47.16 lakh crore, including a capital expenditure of ₹10.1 lakh crore.
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