The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, introduces significant reforms aimed at stimulating economic growth, providing relief to the middle class, and bolstering various sectors.
Taxation Reforms
A major highlight is the increase in the income tax exemption limit. Under the new tax regime, individuals earning up to ₹12 lakh annually are exempt from income tax. Revised tax slabs have been introduced for incomes above this threshold, while the old tax regime remains unchanged.
Additionally, the limit for Tax Deducted at Source (TDS) on interest for senior citizens in union budget 2025 has been doubled from ₹50,000 to ₹1 lakh, and the annual TDS limit on rent has increased from ₹2.4 lakh to ₹6 lakh. Withdrawals from the National Savings Scheme made on or after August 29, 2024, are now tax-exempt. The deadline to file updated income tax returns has been extended from two to four years. A new Income Tax Bill is also set to be introduced, aiming to simplify the tax regime and reduce compliance burdens.
Agriculture and Rural Development
The budget places a strong emphasis on agriculture through the introduction of the Prime Minister Dhan-Dhaanya Krishi Yojana. This initiative aims to support 1.7 crore farmers by facilitating short-term loans of up to ₹5 lakh for farmers, fishermen, and dairy farmers.
A six-year mission focusing on self-reliance in pulses, particularly Tur, Urad, and Masoor, has been launched. Additionally, a Makhana Board will be established in Bihar to promote this unique agricultural product.
Investment in Research and Innovation
To foster innovation, the budget allocates ₹20,000 crore for a private sector-driven research, development, and innovation initiative. The Prime Minister Research Fellowship will offer 10,000 fellowships for technological research in IITs and IISc.
Furthermore, a second Gene Bank, housing 10 lakh germplasm lines, will be established to ensure future food and nutritional security.
Export Promotion and Industry Support
The budget introduces measures to incentivize electronics and electric vehicles by granting exemptions for components like open cells used in LED/LCD TVs and capital goods for lithium-ion batteries.
The Maintenance, Repair, and Overhaul (MRO) sector will benefit from a 10-year exemption on goods used for shipbuilding and ships meant for breaking. Trade facilitation measures include setting time limits for finalizing provisional assessments and allowing voluntary declarations of material facts after clearance with interest but without penalty. Wet blue leather has been fully exempted from basic customs duties to promote domestic consumption and enhance exports.
Healthcare Initiatives
In the healthcare sector, the budget exempts 36 life-saving drugs from Basic Customs Duty and adds 37 new medicines and 13 patient assistance programs to improve affordability and accessibility.
The Production Linked Incentive (PLI) scheme for pharmaceuticals receives an allocation of ₹2,445 crore, continuing the government’s push for self-reliance in Active Pharmaceutical Ingredient (API) and MedTech production.
Conclusion
The Union Budget 2025-26 reflects a comprehensive approach to stimulate consumption, encourage investment, and promote equitable growth across various sectors. By providing tax relief to the middle class, supporting farmers, investing in research and innovation, and promoting exports, the budget aims to position India on a path toward sustained economic prosperity.
