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Union Budget 2025-26

A Detailed Breakdown


The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, lays the foundation for India's economic trajectory for the next fiscal year. With a focus on growth acceleration, inclusivity, and investment-driven reforms, the budget outlines key initiatives across agriculture, MSMEs, investment, exports, and fiscal policy.

Key Budget Theme

The budget is structured around four engines of growth:

green grass field during daytime
Agriculture

Strengthening farming and rural prosperity

MSMEs

Empowering small businesses and startups

Investment

Driving infrastructure and economic expansion

blue red and yellow intermodal containers
Exports

Boosting global trade opportunities


Agriculture and Rural Development

Prime Minister Dhan-Dhaanya Krishi Yojana:

  • Aims to enhance productivity in 100 districts with low output.
  • Focus on irrigation, crop diversification, and better credit access.

Mission for Aatmanirbharta in Pulses:

  • Special emphasis on Tur, Urad, and Masoor to achieve self-sufficiency.
  • Increased procurement by NAFED and NCCF.

Support for Farmers:

  • Kisan Credit Card (KCC) loan limit increased from Rs 3 lakh to Rs 5 lakh.
  • Establishment of a Makhana Board in Bihar.
  • Urea plant in Assam to boost fertilizer production.

Boost to MSMEs and Startups

  • MSME Classification Limit Increased: Investment and turnover criteria enhanced to 2.5x.
  • Credit Guarantee Cover Raised:
    • From Rs 5 crore to Rs 10 crore for micro and small enterprises.
    • From Rs 10 crore to Rs 20 crore for startups.
  • New Fund of Funds: Rs 10,000 crore additional support for startups.
  • Special Scheme for First-Time Entrepreneurs: Rs 2 crore loan support for women, SC/ST entrepreneurs.
  • Footwear & Leather Focus: Scheme to generate 22 lakh jobs.

Investment in Infrastructure and Economy

  • Public-Private Partnership (PPP) Projects: Three-year infrastructure pipeline for ministries.
  • Urban Challenge Fund: Rs 1 lakh crore for city development.
  • Shipbuilding Reforms: Credit notes and tax incentives for the industry.
  • Regional Connectivity Expansion:
    • Modified UDAN Scheme for 120 new destinations.
    • New Greenfield Airports in Bihar.
  • Nuclear Energy Expansion:
    • Development of 100 GW nuclear energy by 2047.
    • Rs 20,000 crore for Small Modular Reactors (SMRs).

Export Growth and Global Trade

  • Bharat Trade Net: Digital platform for seamless trade documentation.
  • Export Promotion Mission: Sector-specific strategies for global competitiveness.
  • Tax Incentives for Exporters: Reduced duty on air cargo warehousing and marine exports.

Taxation and Fiscal Policy Reforms

Fiscal Policy and GDP Outlook

  • Fiscal Deficit Target:
    • Revised estimate for FY 2024-25 at 4.8% of GDP.
    • Target for FY 2025-26 set at 4.4% of GDP.
  • Total Receipts (excluding borrowings): Rs 34.96 lakh crore.
  • Total Expenditure: Rs 50.65 lakh crore.
  • Net Tax Receipts: Rs 28.37 lakh crore.
  • Market Borrowings:
    • Net borrowings from dated securities: Rs 11.54 lakh crore.
    • Gross market borrowings: Rs 14.82 lakh crore.

Direct Tax Changes

  • New Personal Income Tax Regime:
    • No tax for income up to Rs 12 lakh.
    • New slabs:
      • Rs 0-4 lakh – Nil
      • Rs 4-8 lakh – 5%
      • Rs 8-12 lakh – 10%
      • Rs 12-16 lakh – 15%
      • Rs 16-20 lakh – 20%
      • Rs 20-24 lakh – 25%
      • Above Rs 24 lakh – 30%
  • TDS and TCS Rationalization:
    • Senior citizens’ TDS exemption limit increased to Rs 1 lakh.
    • Rental TDS threshold increased to Rs 6 lakh.
    • TCS on foreign remittances for education loans removed.

Indirect Tax Changes

  • Customs Duty Reduction:
    • Lifesaving drugs, lithium-ion battery components, and shipbuilding materials exempted.
    • Knitted fabrics, electronic parts, and interactive displays duty increased.
  • GST Reforms:
    • Input Tax Credit (ITC) process streamlined.
    • New penalties for non-compliance with track-and-trace regulations.

Conclusion

The Union Budget 2025-26 aims to drive self-reliance, ease of doing business, and economic inclusion. With tax relief for the middle class, MSME support, agricultural reforms, and large-scale infrastructure investments, the government envisions a pathway to a Viksit Bharat (Developed India).

Stay tuned for further updates and expert analysis on how these measures will impact various sectors of the economy.

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