HIGHLIGHTS | Union Budget 2025: No tax on incomes upto Rs 12 lakh, announces FM Nirmala Sitharaman in big relief for middle class
The Budget for April 2025 to March 2026 fiscal (FY26) proposed to raise foreign investment limit in insurance sector to 100 per cent from current 74 per cent and continued spending spree on infrastructure while raising allocations for social sectors as well as providing for measures for poor, youth, farmers and women.
Union Finance Minister Nirmala Sitharaman presents the Union Budget 2025-26
CHENNAI: Finance Minister Nirmala Sitharaman on Saturday announced significant income tax cuts for the middle class and unveiled a blueprint for next generation reforms as she looked to shore up a slowing economy amid global uncertainties.
Individuals earning up to Rs 12.75 lakh in a year will not have to pay any taxes after she raised the exemption threshold from Rs 7 lakh. She also altered tax slabs for people earning above this threshold to help save up to Rs 1.1 lakh in taxes for those with income up to Rs 25 lakh in a year. The tax cuts, which will cost the exchequer about Rs 1 lakh crore, will benefit 6.3 crore people, or more than 80 per cent of taxpayers, who earn up to Rs 12 lakh a year.
The Budget for April 2025 to March 2026 fiscal (FY26) proposed to raise foreign investment limit in insurance sector to 100 per cent from current 74 per cent and continued spending spree on infrastructure while raising allocations for social sectors as well as providing for measures for poor, youth, farmers and women.
All this she did while managing to stick to the fiscal consolidation roadmap, projecting a fiscal deficit of 4.4 per cent of the GDP in FY26 as against an estimated 4.8 per cent in the current year ending March 31.
Also announced were duty cuts on intermediaries and certain life saving drugs.
Read key highlights from the Budget speech here:
Finance Minister Nirmala Sitharaman outlined key changes in customs duties that will make several items cheaper and some costlier. Cancer medicines, mobile phones, and leather goods will get easier on the pocket as will many other goods and items.
On the other hand, three items including knitted fabrics will get costlier.
Here are more key budgetary allocations:
1. Sports: The government's flagship Khelo India programme has been allocated Rs 1,000 crore for the financial year 2025-26. This is Rs 200 crore more than the grant of Rs 800 crore in 2024-25. The programme scouts and nurture athletes at the grassroots level. Overall, the Ministry for Youth Affairs and Sports was designated Rs 3,794.30 crore, a jump of Rs 351.98 crore.
2. Training of govt staff: More than Rs 334 crore has been allocated to the personnel ministry for the next fiscal to train government employees, both in the country and abroad. A sum of Rs 100 crore has been earmarked for administrative reforms.
3. Defence: Rs 6,81,210 crore allocated for the defence budget for 2025-26, up from last year's outlay of Rs 6,21,940 crore. The total capital outlay has been pegged at Rs 1,92,387 crore. The revenue expenditure has been put at Rs 4,88,822 crore, including Rs 1,60,795 crore for pensions. Under capital expenditure, Rs 48,614 crore has been set aside for aircraft and aero engines while Rs 24,390 crore has been allocated for the naval fleet. An amount of Rs 63,099 crore has been set aside for other equipment.
4. Water: Jal Jeevan Mission, which aims to provide tap water connection to all rural households, has been extended till 2028 with an enhanced Budget outlay.
More announcements:
--- National Manufacturing Mission to be set up to cover small, medium and large industries
--- 'Makhana Board' will be established in Bihar to improve production and processing of fox nut
--- A 5-year mission to promote cotton production
--- A national mission on high-yielding seeds
- New personal income reforms expected to substantially reduce taxes of middle class and leave more money in their hands, boosting household consumption, savings and investment
- Govt to forgo Rs 1 lakh crore on direct taxes & Rs 2,600 crore on indirect taxes on account of changes in tax rates
No income tax will be payable for upto income of Rs 12 lakh - FM
Announcements on personal income tax to be made now
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Tax deducted at source (TDS) to be trimmed and concessions given for senior citizens - FM
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Finance Minister Nirmala Sitharaman on Saturday proposed to extend duty exemptions on capital goods used in the production of lithium-ion batteries.
The move is aimed at aiding domestic manufacturing of lithium-ion batteries, a key component in electric vehicles and mobile phones.
"To the list of exempted capital goods, I propose to add 35 additional capital goods for EV battery manufacturing, and 28 additional capital goods for mobile phone battery manufacturing," she said.
Revamp Moto co-founder and CEO Pritesh Mahajan said the proposal to fully exempt Basic Customs Duty (BCD) on cobalt powder, lithium-ion battery waste, scrap, and 12 other critical minerals is a crucial step in ensuring the availability of key raw materials for domestic manufacturing.
This will not only lower production costs but also incentivise companies to scale up operations, drive technological advancements, and create high-value job opportunities, he told news agency PTI.
* 36 life-saving drugs for cancer, rare diseases exempted from basic customs duty
* 6 life-savings drugs to be added to list of drugs attracting concessional duty, says FM. "I also propose to add six lifesaving medicines to the list attracting concessional customs duty of 5 per cent. Full exemption and concessional duty will also respectively apply on the bulk drugs for manufacture of the above," the minister says
* Specified drugs and medicines under Patient Assistance Programmes run by pharmaceutical companies are fully exempt from BCD, provided the medicines are supplied free of cost to patients, she said. "I propose to add 37 more medicines along with 13 new patient assistance programmes," she said.