Finance Minister Nirmala Sitharaman presented the Union Budget 2025 on Feb 1, 2025 for the 8th consecutive time. The budget included several major changes in the tax slabs. Let us look at the key highlights of Budget 2025-26.
Income Tax
A major highlight of the latest budget is the significant increase in the income tax exemption limit. Finance Minister Nirmala Sitharaman announced that individuals earning up to Rs. 12 lakh annually will now be exempt from paying any income tax. This is expected to bring a considerable financial relief to the middle class.
The new tax regime introduces the following slabs:
– Income up to ₹4 lakh: Nil
– ₹4 lakh to ₹8 lakh: 5%
– ₹8 lakh to ₹12 lakh: 10%
– ₹12 lakh to ₹16 lakh: 15%
– ₹16 lakh to ₹20 lakh: 20%
– Above ₹20 lakh: 30%
In addition, there was also big announcements on the TDS front, where the annual limit on rent was raised from Rs 2.40 lakh to Rs 6 lakh, benefiting small taxpayers receiving smaller payments.
The government is also going to introduce a new Income Tax bill next week to take forward the “trust first, scrutinise later” concept.
Agriculture and Rural Development
For development of agriculture, the loan limit for Kisan Credit Cards has been increased to ₹5 lakh from the previous ₹3 lakh, facilitating greater access to subsidised credit for farmers, fishermen, and dairy farmers.
Furthermore, a six-year initiative has been launched to boost the production of pulses and cotton, aiming to reduce import dependence. The program includes procurement of specific pulses at guaranteed prices to support farmers.
Infrastructure Development
Finance Minister Nirmala Sitharaman has announced in her budget speech that a Maritime Development Fund with a corpus of ₹25,000 crore is to be established, with up to 49% government contribution. This fund aims to enhance port infrastructure and promote private sector participation.
In addition, the budget also included an announcement on expansion plans of UDAN scheme (Use Desh ka Aam Nagrik), wherein 120 new destinations will be reached targeting 4 crore passengers over the next decade. This includes support for helipads and smaller airports in hilly and northeastern regions.
Healthcare and Education
The Union Budget 2025–26 has introduced several key initiatives in healthcare, education, and digital infrastructure. To strengthen cancer care facilities, 200 Day Care Centres will be established in district hospitals by 2025–26, ensuring better access to treatment. In a major relief for patients, customs duty exemptions have been granted on 36 lifesaving drugs, while six essential medicines will now be taxed at a reduced rate of 5%.
In the field of medical education, the government plans to add 10,000 new seats in 2025–26, with a long-term target of reaching 75,000 additional seats over the next five years. To foster innovation among students, 50,000 Atal Tinkering Labs will be set up in government schools, encouraging hands-on learning and technological advancements.
Further advancing digital connectivity, the Bharat Net initiative will provide broadband access to all rural secondary schools and primary health centres, bridging the digital divide and enhancing educational and healthcare services in remote areas. These initiatives highlight the government’s focus on improving healthcare accessibility, fostering educational growth, and expanding digital infrastructure across the country.
Credit guarantee cover enhanced for MSME
MSMEs play a significant role in economic development of the country. Currently, over 1 crore registered MSMES contributing to 36% of India’s manufacturing capacity, have come together to position India as a global manufacturing hub. To improve access to credit for these companies, the budget has provided an enhanced credit guarantee cover, leading to ₹1.5 lakh crore of additional credit over the next five years. This will also be granted for well-run exporter MSMEs, for term loans upto ₹20 crore.
Furthermore, the Finance Minister has announced that a new scheme will be launched for 5 lakh women Scheduled Caste and Schedule Tribe first-time entrepreneurs. A National Manufacturing Mission will be initiated for small, medium and large industries to further Make In India.
Insurance for Gig Workers
According to the Budget Speech, online platform workers and gig workers will now be able to get ID cards after registering on the E-shram portal. They will also be provided healthcare under PM Jan Arogya Yojana. This measure is likely to assist nearly 1 crore gig-workers.
Increased allocation for Saksham Anganwadi and Poshan 2.0 scheme
An increase has been announced in the money allocated to Saksham Anganwadi and Poshan 2.0 scheme, in the Budget presentation. The Budget mentioned that “the cost norms for the nutritional support will be enhanced appropriately”.
The Revised Estimate (RE) 2024-25 for Saksham Anganwadi and POSHAN 2.0 scheme stands at ₹20,070.90 crore, while the Budget 2024-25 allocation was ₹21,200 crore. The Budget 2025-26 estimate is ₹21,960 crore.
The Saksham Anganwadi and POSHAN 2.0 integrated nutrition support programme was approved by the Government of India for implementation during the 15th Finance Commission period 202l-22 to 2025-26.
