Union Budget 2025 - Key Highlights of the 2025 Budget Explained

​The Union Budget 2025 ​was highly anticipated by both individual and corporate taxpayers. This was mainly due to the recent economic slowdown and the government's initiatives to boost growth.

Many expected tax relief measures that could increase disposable income and encourage investments to indirectly boost economic growth.

But, did the Budget 2025 ​meet these expectations? Did individuals, small-scale enterprises and large businesses get the tax relief that they hoped for? Let us find out.

India Budget 2025- Viksit Bharat and Key Pillars of Economic Growth​

India's Finance Minister, Nirmala Sitharaman, presented the 2025 Budgeton February 1 in Parliament, outlining the government's long-term vision. The ultimate goal is Viksit Bharat - making India a developed nation by 2047.

To achieve this, the government has identified Agriculture, MSME, Investment and Exports ​as the key drivers of growth and development. The budget 2025 serves as a stepping stone for implementing reforms that promote inclusive development.

Budget 2025 Highlights​​

Budget 2025 expectationsprimarily focus on boosting economic growth, introducing reforms in key sectors and tax reliefs. We will look into some of the key Budget announcements of 2025.

Direct Tax Proposals for Tax Relief​

New Tax Rules 2025(New Regime)

​Revised tax slabs for middle-class taxpayers

Tax rebate for individuals opting for the new tax regime is increased to ₹60,000. And it is allowed for up to ₹12 lakhs.

This means salaried individuals opting for the new tax regime with a taxable income of up to ₹12.75 lakhs (standard deduction applied) will be exempt from paying income tax.

Budget 2025 India- TDS/TCS Reforms

• The annual limit of TDS on rent increased from ₹2.40 lakhs to ₹6 lakhs.
• The tax deduction limit for senior citizens increased from ₹50,000 to ₹1 lakh.

Budget 2025 in India- Tax Compliance Reforms

• Extension of time limit to file updated returns (from 2 years to 4 years).
• Extension of the period of registration for small charitable institutions from 5 to 10 years
• Tax benefits applicable to self-occupied properties extended to two properties instead of one for eligible taxpayers

India Budget 2025- International Taxation, Employment and Investment Reforms

• The arm's length price (the fair price that two unrelated or independent parties agree upon in a transaction) for international transactions is now calculated for a block of three consecutive years (previously, it was calculated for every FY). This is mainly applicable to transfer pricing.
• Extension for the tonnage tax scheme for inland vessels
• Extension of deadline to avail the 3-year tax holiday for the new start-ups from March 31, 2025 to March 31, 2030.

Indirect Tax Proposals for Tax Exemptions​​​

• Budget 2025 India- For Industrial Goods

1. Removal of 7 tariff rates

2. Limit to one cess or surcharge per item.

3. Equivalent cess on most items and a lower cess for certain items

• Budget 2025 in India- For Lifesaving Medicines

1. 36 lifesaving medicines added to the duty-exempt list, 6 medicines to the 5% duty list and 37 medicines and 13 patient assistance programmes to the exempt list

• Budget 2025 in India- For Specific Sectors

1. For Make in India- Exemptions on imports for LED/LCD TV cells, textile looms and more

2. For promoting Maintenance, Repairs and Operations (MRO)- 10-year exemption for ship-building goods

3. For promoting Exports- D​uty-free inputs for leather and handicraft sectors

4. For Trade Facilitation- Faster assessments and extended filing timelines

Strengthening Agriculture and Rural Prosperity​

• Prime Minister's Dhan-Dhaanya Krishi Yojana- To cover 100 districts and boost agricultural activity
• Enhanced loan of 5 lakhs through Kisan Credit Cards- For farmers, fishermen and dairy farmers
• 6-year Mission for Aatmanirbharta in Pulses- To enhance quality, productivity and management of Tur, Urad and Masoor dal.
• National Mission on High-Yielding Seeds- For the development of seeds with high yield, climate resilience and pest resistance
• Rural Economic Development - Developing rural community hubs, credit services and digital services to boost rural economy

Boosting MSMEs, Start-ups and Employment​

• Budget 2025 India- Revision in Classification Criteria for MSMEs

• Budget 2025 in India- Revision in Credit Availability

• ​Budget 2025 India- For Micro Enterprises and first-time Entrepreneurs

1. Credit cards with a ₹5 lakh limit for micro-enterprises

2. Term loans of up to ₹2 crores for first-time entrepreneurs (including women, SC, ST)

• ​​Budget 2025 in India- For Labour-Intensive Sectors​

1. Development initiatives for Made in India toy products

2. Focus Product Scheme for Footwear & Leather Sectors to provide employment for over 22 lakh persons and generate turnover of over ₹4 lakh crore and exports of over ₹1.1 lakh crore in these sectors

3. National Institute of Food Technology in Bihar to enhance entrepreneurship and employment opportunities for youth

Driving Investments, Innovation and Growth​​​

• Budget 2025 in India- For People

1. Establish 50,000 Atal Tinkering labs in government schools

2. Set up a Centre of Excellence with a budget of ₹500 crore in Artificial Intelligence

3. Establish broadband connectivity in primary health centres and government schools

4. Introduce digital form Indian language books under the Bharatiya Bhasha Pustak Scheme

5. Assist registration on the e-Shram portal under the PM Jan Arogya Yojana for the unorganised workers to provide them with a Universal Account Number (UAN)

• Budget 2025 India- For Investment

1. Allocation of ₹1.5 lakh crores to offer 50-year interest-free loans to states for developing infrastructure

2. Launch the second Asset Monetisation Plan - 2025-30 to monetise government assets and reinvest in infrastructure projects for up to ₹10 lakh crores

3. Allocation of ₹1 lakh crore to develop “Cities as Growth Hubs", “Creative Redevelopment of Cities" and “Water and Sanitation"

4. Allocation of ₹25,000 crore for long-term financing under the Maritime Development Fund

5. Establish connectivity to 120 new destinations and transport 4 crore passengers in the next 4 years under the regional airport development program

• Budget 2025 in India- For Innovation

1. Offer 10,000 PM Research Fellowships for technological research

2. Allocate ₹20,000 crore to assist research, development and innovation projects by private sector companies

3. Establish the second Gene Bank with 10 lakh germplasm lines aimed at ensuring food and nutrition security

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Key Measures to Promote Exports​

• Establish BharatTradeNet (BTN), a unified platform for managing international trade and integrating with Global Supply Chain
• Implement the National framework to support Global Capability Centres (GCC) in tier 2 cities for employment opportunities
• Establish infrastructure and warehouse support for air cargo, focussed especially on rich perishable horticulture products

Key Financial Sector and Regulatory Reforms​

• ​The FDI limit for insurance companies will increase from 74 to 100%
• Financial Stability and Development Council (FSDC) to examine the impact of financial regulations
• A High-Level Committee will be established to review non-financial sector licences and regulations
• Introduce Jan Vishwas Bill 2.0 for decriminalising over 100 law provisions

Financial Outlook and Economic Implications​​​

At the financial forefront, the Union Budget 2025 outlines India's revenue receipts at ₹34.2 lakh crores and capital receipts at ₹16.4 lakh crores for the FY 2025-26. Effective capital expenditure and revenue expenditure are projected at ₹15.5 lakh crores and ₹39.4 lakh crores, respectively, for the FY 2025-26. Furthermore, the fiscal deficit is estimated at 4.4% of GDP for 2025-26.

Increased capital expenditure signals a focus on long-term growth initiatives by the government. This can boost overall economic activity, create jobs and improve the overall quality of life.

On the other hand, the increased revenue expenditure and projected fiscal deficit highlight potential challenges in managing the economy by stimulating growth and maintaining fiscal responsibility.

Key Takeaways from Budget 2025

The Union Budget 2025, focussed on the ultimate goal of Vikshit Bharat 2047, outlines various significant initiatives for the nation's overall economic growth.

The progressive measures for agriculture, MSMEs, investments, and exports pave the way for expansion and inclusive growth. The tax relief proposed on direct and indirect taxes further boosts disposable income and consumption.

While the increased revenue expenditure and projected fiscal deficit pose challenges, these can be mitigated by the planned developmental initiatives outlined.