Key Highlights of the Union Budget 2025-26

Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman presented the Union Budget 2025, which focused on tax relief, economic growth, infrastructure development, and support for numerous key sectors. It clearly emphasises boosting capital expenditure, enhancing disposable income, and supporting domestic industries to shape the country’s economic well-being.

Read on to find key highlights of the budget along with the latest tax slab changes.

Fiscal Strategy

The Finance Minister presented the budget themed around ‘Sabka Vikas’. It stimulates balanced growth in all regions, including middle-class tax relief, zero poverty, quality school education, high-quality healthcare, skilled labour, and support to farmers and women. Let’s look at the revised fiscal strategy for the coming year:

Agriculture: Empowering Farmers

The Union Budget 2025 recognised agriculture as the Indian economy’s backbone. Here are the key components:

• Prime Minister Dhan-Dhaanya Krishi Yojana that covers hundred districts to diversify crops, enhance productivity, store them after the harvest, and promote irrigation infrastructure
• 6-year Mission for Aatmanirbharta in Pulses with a focus on self-sufficiency in Urad, Tur, and Masoor
• Enhanced loan limit for KCC (Kisan Credit Cards) from Rs 3 Lakh to Rs 5 Lakh
• Comprehensive Programme for fruits and vegetables
• Rural prosperity and resilience
• National Mission for High-Yielding Seeds
• Makhana Board in Bihar
• Urea Plant in Assam
• Cotton Productivity
• Fisheries

MSMEs: Strengthening Small Businesses

Since MSMEs are major contributors to Indian exports, the latest budget has increased its turnover and investment limits. Here are some key steps: 

• Revised criteria for classifying micro, small, and medium enterprises

• A new scheme targeting 5 Lakh first-time entrepreneurs from SC, ST, and women 

• Term loans of up to Rs 20 million in the next five years

• National Manufacturing Mission to drive the ‘Make in India’ initiative 

• Integrate small, medium, and large companies into the global value chain

• Special focus on toy manufacturing

• Focus on clean tech manufacturing for climate-friendly development 

• Future-ready workforce for in-demand jobs

• Credit cards for micro-enterprises

Investment: Infrastructure, Innovation, and Skilling

Union Budget 2025 encourages investment in three key areas – people, economy, and innovation. The primary aim is to improve the infrastructure, innovation, and skilling. They are as follows:

Investment in People

• BharatNet project to provide broadband connections in all primary health centres and government secondary schools in the country’s rural areas

• Establishing 50,000 Atal Tinkering Labs in government schools

• Building a Centre of Excellence in AI for education worth Rs 5 billion

• Equipping youth in the technology and manufacturing sectors through five National Centres of Excellence for Skilling with global expertise 

• Providing gig workers with healthcare coverage under the PM Jan Arogya Yojana

• Providing identity cards with registration on the e-shram portal to gig workers

Investment in the Economy

• 3-year PPP project pipeline by the infrastructure ministries

• Urban Challenge Fund worth Rs 1 trillion for the country’s water sanitation and urban development projects

• Loan facilities worth Rs 1.5 trillion to states for capital expenditure

• Reinvestment of Rs 10 trillion on new projects under the Second Asset Monetisation Plan (2025-30) 

Investment in Innovation

• Gyan Bharatam Mission that will survey, record, and conserve more than 10 million manuscripts

• Establishment of a National Digital Repository system for the Indian knowledge systems

• Allocating Rs 200 billion to R&D initiatives in the private sector 

• Supporting urban planning under the National Geospatial Mission

Promoting Export

The Ministries of Commerce, MSME, and Finance are set to lead the Export Promotion Mission, a dedicated initiative to integrate small and medium businesses into global supply chains. Doing business will now be easier through the BharatTradeNet (BTN) digital platform. It aims to streamline trade financing and documentation solutions. Besides these, the Union Budget 2025 supports the country’s manufacturing industry by aligning it with global demands of supply chain.

The key initiatives suggested in the budget include the following:

• Supporting domestic industries of electronic equipment to capitalise on Industry 4.0

• Enhancing infrastructure and warehousing for air cargo, especially for perishable, high-value produce in the horticulture sector

• Creating a National Framework for GCCs (Global Capability Centres) to enhance services from Tier 2 cities

Financial Sector Reforms and Development

The government prioritises financial sector reforms to boost economic development. With that aim, it promotes investment, expands services, and simplifies compliance in various industries. The key initiatives in Union Budget 2025 include the following:

• Increasing the FDI (Foreign Direct Investment) limit from 74 to 100% for insurance companies, provided that the full premium is invested within India

• Establishing a high-level committee for regulatory reforms that will review licenses, regulations, and compliance measures in the non-financial sector

• Promoting investment through the index of states, fostering cooperative federalism

• FSDC (Financial Stability and Development Council) for enhancing responsiveness and evaluating financial regulations

• Ease of doing business through Jan Vishwas Bill 2.0 that decriminalises more than a hundred legal provisions

Tax Reforms

The Union Budget 2025 has introduced numerous amendments to direct and indirect taxes. Some important tax slab changes include the following:

Direct Tax

• Reduced TDS rates and higher thresholds for better clarity

• TDS exemption limit increased from Rs 50,000 to Rs 1 Lakh

• TDS threshold increased from Rs 2.4 Lakh to Rs 6 Lakh

• Increased TDS threshold for LRS remittances from Rs 7 Lakh to Rs 10 Lakh

• No TCS on transactions involving goods sales

• A higher TDS rate is applicable only to citizens without a valid PAN

• Reduced penalties for TCS filing delays 

• Extended time limits for return filing from 24 to 48 months 

• Higher income tax exemption limit for filing within 24-36 months

• Omitted TCS on sale of specific goods above Rs 50 Lakh

Indirect Tax

• Multiple amendments in Section 2 to redefine GST sub-sections, ITC, and other terms and conditions

• Exemption from service tax on insurance services related to Weather-Based Crop Insurance Scheme and Modified National Agricultural Insurance Scheme

• Reduced custom tariff rates for the rationalisation of industrial goods

• Exempted Social Welfare Surcharge on 82 tariff lines subject to cess

• Full BCD exemption on 36 life-saving drugs and concessional rates on many others

• Increased BCD on IFPDs (Interactive Flat Panel Displays) from 10 to 20%

• Exemption for open cell TV parts 

• Tax exemptions on leather products to boost domestic processing

• Reduced BCD on marine products 

New Income Tax Bill 2025

The new Income Tax Bill 2025 aims to eliminate confusion by simplifying the tax laws. By reducing the bill's length by around 50% and using simpler language, the government plans to make taxpayers’ tax duties clearer, so it becomes easier to comply with the new tax regime slabs. Simplifying the tax bill will result in fewer tax demand disputes.

Expenditure of Major Items

Here is an estimate of the expenditure of major items mentioned in Union Budget 2025:

• Interest Payments: Estimated to be Rs 12,76,338 Crore, increased by 25.2% 

• Central Sector Schemes: Estimated to be Rs 16,21,899 Crore, increased by 7.2% 

• Centrally Sponsored Schemes: Estimated to be Rs 5,41,850 Crore, increased by 30.5% 

• Pension: Estimated to be Rs 2,76,618 Crore, increased by 0.6% 

• Capital Expenditure: Estimated to be Rs 11.21 Lakh Crore, which is 3.1% of GDP 

Conclusion

The Finance Minister presented the Union Budget 2025, outlining a fiscal strategy to support economic growth. It focuses on agriculture, investment, MSMEs, taxation, exports, and social development to achieve the goal of Viksit Bharat. Understanding the new tax slab of income tax eases compliance and financial planning. With support from the government, you can cover your expenses with a Personal Loan and achieve your goals with minimal taxation. The competitive Personal Loan interest rate at Hero FinCorp makes borrowing easier and more manageable.

Frequently Asked Questions

1. What is the budget for 2025/26?

The Finance Minister announces the Union Budget each year to account for the government's finances and tax plans for the coming year. According to the Union Budget 2025, the total receipts except borrowings and the total expenditure estimates are around Rs 34.96 Lakh Crore and Rs 50.65 Lakh Crore, respectively. The net tax receipts are around Rs 28.37 Lakh Crore, and the fiscal deficit is around 4.4% of GDP.

2. Which sector benefits from the 2025 budget?

The Union Budget 2025 promotes long-term growth and sustainability in various sectors, including agriculture, energy, technology, infrastructure, and healthcare.

3. Which is the fastest-growing sector in India in 2025?

India's fastest-growing sectors in 2025 include infrastructure, renewable energy, retail, e-commerce, consumer goods, Information Technology, etc. The FMCG and realty sectors are also expected to grow exponentially after Budget 2025.

4. Which is the best future industry by 2025?

Some of the best industries expected to thrive in 2025 include telehealth services, alternative energy, education, cybersecurity, ecommerce, online retail stores, etc.

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