The eighth budget presented by Finance Minister Nirmala Sitharaman on February 1, 2025, outlines the financial plan for fiscal year 2025–26 and marks a significant moment in India’s economic policy. The budget emphasizes strengthening India’s role on the global stage by supporting key sectors, expanding infrastructure, fostering innovation, and promoting inclusive growth.
Key Highlights of Budget 2025–26
The Budget 2025–26 centers on growth, inclusion, and innovation, with measures aimed at agriculture, MSMEs, infrastructure, exports, and fiscal stability.
1. Taxation & Fiscal Policies
- New Income Tax Slabs for FY 2025–26:
- Up to ₹4,00,000 – No tax
- ₹4,00,001 to ₹8,00,000 – 5%
- ₹8,00,001 to ₹12,00,000 – 10%
- ₹12,00,001 to ₹16,00,000 – 15%
- ₹16,00,001 to ₹20,00,000 – 20%
- ₹20,00,001 to ₹24,00,000 – 25%
- Above ₹24,00,000 – 30%
- Standard Deduction Increased: The standard deduction under the new tax regime has been raised to ₹75,000.
- TDS Threshold on Rent: Exemption limit increased from ₹2.4 lakh to ₹6 lakh per annum.
- TDS Exemption for Senior Citizens: Interest deduction limit for senior citizens doubled from ₹50,000 to ₹1,00,000.
- NSS Withdrawals After August 29, 2024: Withdrawals from the National Savings Scheme made tax-free.
- New Income Tax Bill: A new bill is proposed to simplify and clarify the tax framework.
2. Financial Sector & Foreign Investment
- Insurance FDI Increased to 100%: Foreign direct investment in the insurance sector raised from 74% to 100% to attract global capital.
- Tariff Rationalization: Seven additional tariff rates removed, leaving eight principal slabs to simplify trade and customs procedures.
3. Support for MSMEs and Small Businesses
- MSMEs as the Second Engine of Growth: With MSMEs contributing significantly to exports, classification limits are raised to support expansion.
- Customised MSME Credit Cards: Credit cards with a limit of ₹5 lakh for micro and small enterprises to ease access to working capital.
- Jan Vishwas 2.0: Decriminalisation of over 100 provisions in existing laws to reduce compliance burdens for businesses.
4. Boosting the Startup Ecosystem
- ₹10,000 Crore Fund of Funds: A dedicated fund to support startups, innovation, and digital transformation across sectors.
5. Infrastructure and Urban Development
- ₹1 Lakh Crore Urban Challenge Fund: Designed to revitalize cities, improve water and sanitation infrastructure, and enable urban redevelopment.
- PM Gati Shakti Data for Private Sector: Logistics data access for the private sector to improve supply chain efficiency and project planning.
- Expansion of IITs: Five IITs, beginning with IIT Patna, will be expanded to accommodate an additional 6,500 students, enhancing technical education capacity.
6. Education & Skilling
- 50,000 Atal Tinkering Labs: New labs in government schools to foster innovation, creativity, and hands-on learning.
- Broadband in Schools: Broadband connectivity to be extended to all government primary and secondary schools to support digital learning.
- Centre of Excellence for AI in Education: A ₹500 crore outlay to integrate AI tools and practices into teaching and learning.
- Five National Centres of Excellence for Skilling: These centres will focus on industry-aligned training to improve employability and international job prospects.
7. Energy and Sustainability
- Nuclear Power Expansion: A long-term plan to reach 100 GW of nuclear capacity by 2047, supporting clean energy goals.
- Legal Amendments: Changes to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act to encourage private investment in nuclear projects.
8. Tourism and Export Promotion
- Top 50 Tourist Destinations: Development of 50 key destinations in partnership with states to boost domestic and international tourism.
- Export Promotion Mission: Initiatives to simplify export procedures, improve credit access, and introduce “Bharat Trade Net” for streamlined documentation.
9. Social Security and Digital Economy
- Gig Worker Recognition: A social security scheme for one crore gig workers, including identity cards to support employment benefits.
- Saksham Anganwadi & Poshan 2.0: Strengthened child nutrition and women’s empowerment programs to improve health outcomes.
- PM SVANidhi Expansion: Enhanced credit support and facilities for street vendors to boost livelihoods.
- Gramin Credit Score: A rural credit-scoring initiative to improve financial access for rural entrepreneurs and small businesses.
10. Agriculture and Farmers
- Self-Reliance in Pulses: A six-year plan to achieve self-sufficiency in pulses, focusing on tur, urad, and masoor.
- Kisan Credit Card Expansion: KCC loan limits increased from ₹3 lakh to ₹5 lakh to benefit 7.7 crore farmers, fishers, and dairy producers.
- PM Dhan Dhanya Krishi Yojana: Targeting 100 low-output districts to boost production and improve post-harvest storage.
- Makhana Board in Bihar: A new body to improve processing, add value, and expand export opportunities for makhana.
- National Mission for Edible Oil & Seeds: Aimed at increasing domestic production of edible oils and seeds to reduce import dependence.
- Crop Diversification & Irrigation Expansion: Measures to support 1.7 crore farmers through better loans, irrigation facilities, and post-harvest infrastructure.
11. Healthcare and Affordable Medicine
- Lower Medicine Costs: Steps to reduce prices of essential and life-saving medicines, including treatments for cancer and chronic diseases.
- New Cancer Centres: Establishment of specialized cancer treatment centres to strengthen healthcare access and outcomes.
12. Fiscal Outlook and Economic Growth
- Fiscal Deficit Targets:
- FY25: 4.8% of GDP
- FY26 Projection: 4.4% of GDP
- Debt Reduction Strategy: The FRBM framework outlines a plan to progressively reduce government debt over time.
Final Thoughts: A Budget for Growth, Innovation, and Inclusion
The Union Budget 2025–26 prioritizes economic growth, digital transformation, and fiscal prudence while aiming to support farmers, small businesses, startups, and the middle class. By encouraging private sector participation, enhancing domestic production, and upgrading infrastructure, the budget underscores India’s commitment to sustainable development and global competitiveness. The measures reflect a drive toward a more inclusive, technology-led economy as the country progresses toward its 2047 goals.