India Union Budget 2025: FM Nirmala Sitharaman Brings Tax Relief

Finance Minister Nirmala Sitharaman presented the India Union Budget 2025-26

Finance Minister Nirmala Sitharaman presented the Union Budget 2025-26 in Parliament on February 1, 2025. This was her eighth consecutive budget and the first full budget of the Modi Government 3.0.
The budget proposes a total expenditure of ₹50.65 lakh crore, a 7.4% increase from the previous fiscal year. Major highlights include a historic income tax rebate, a strong push for infrastructure, job creation, and economic reforms.

Prime Minister Narendra Modi called it Viksit Bharat Budget, reflecting the government’s commitment to fulfilling the aspirations of 140 crore Indians.

The #ViksitBharatBudget2025 reflects our Government’s commitment to fulfilling the aspirations of 140 crore Indians. https://t.co/Sg67pqYZPM
— Narendra Modi (@narendramodi) February 1, 2025

However, the opposition criticized the budget, stating that it fails to address inflation and the rising cost of living. They argue that the government has not provided direct relief for small businesses that are still struggling post-pandemic. Additionally, they claim that the budget does not adequately tackle the ongoing unemployment crisis, leaving millions of young professionals uncertain about job prospects.

Rahul Gandhi stating that it’s a “band-aid for bullet wounds” and accused the government of failing to address real economic challenges.

Key Highlights of Budget 2025-26

No Income Tax for Earnings up to ₹12 Lakh
Nil tax slab extended to Rs 4 lakh from Rs 3 lakh
₹11.21 Lakh Crore for Capital Expenditure
22 Lakh Jobs to be created under government job schemes (Focus Product Scheme)
‘Makhana Board’ for Bihar Announced
120 New Regional Airports Under Modified UDAN Scheme
Greenfield Airports Planned for Bihar
10,000 Additional Medical Seats to be added
New Scheme for First-Time Entrepreneurs
50 Major Tourist Sites to be developed
Expansion of ‘Aatmanirbharta’ Mission in Pulses

Taxation: A Game-Changer for the Middle Class

In her budget speech, the Finance Minister announced that individuals earning an income of up to ₹12 lakh will be exempt from income tax, excluding special rate income such as capital gains. Additionally, salaried employees are entitled to a standard deduction of ₹75,000 under the new tax regime, effectively making their taxable income nonexistent for those earning up to ₹12,75,000. Finance Minister Nirmala Sitharaman stated that the income tax rebate announced in the Budget will benefit the Indian economy.

Revised Income Tax Slabs FY 2025-26 under Old Tax Regime

₹0-4 lakh: Nil, ₹4-8 lakh: 5%, ₹8-12 lakh: 10%, ₹12-16 lakh: 15%, ₹16-20 lakh: 20%, ₹20-24 lakh: 25%, Above ₹24 lakh: 30%

TDS on rent: Annual limit raised from ₹2.4 lakh to ₹6 lakh.
Senior Citizen Benefits: Tax deduction limit doubled from ₹50,000 to ₹1 lakh.
MSME Taxation: Investment & turnover limits increased to boost small businesses.
What’s Becoming Cheaper & Costlier?

What’s Becoming Cheaper?

36 lifesaving drugs and medicines exempted from basic custom duty.

Basic custom duty on high-quality ethernet switches reduced from 20% to 10%.
Mobile phone production costs lowered due to duty exemptions on 28 key components.
Medical equipment and raw materials for shipbuilding and leather industries see duty reductions.

Seafood processing costs reduced due to duty cuts on fish-based imports.

What’s Becoming Costlier?

Interactive Flat Panel Displays: Basic custom duty increased from 10% to 20%.
Textiles and Knitted Fabrics: Duty increased from 10% or 20% to 20% or ₹115 per kg, whichever is higher.

Infrastructure & Capital Expenditure

₹11.21 lakh crore allocated for infrastructure projects.
Greenfield Airports in Bihar to boost regional air connectivity.
Expansion of Patna Airport and Brownfield Airport at Bihta.
₹1.5 lakh crore for state infrastructure funding.

₹10 lakh crore for urban redevelopment projects.

Job Creation & MSME Support

22 lakh new jobs to be created under government job schemes
₹2 crore term loans for first-time entrepreneurs.
MSME classification revised to encourage startups.
Toy sector to receive incentives for indigenous production.

Agriculture & Rural Development

Makhana Board in Bihar to enhance production and exports.
Aatmanirbharta in Pulses Mission: ₹5 lakh crore allocated for Tur, Urad, and Masoor dal production.
Enhanced Kisan Credit Card (KCC): ₹5 lakh loan limit for farmers.

UDAN Scheme Expansion

Modified UDAN scheme to connect 120 new airports and serve 4 crore passengers in 10 years.
More helipads and small airports in hilly and northeastern regions.

Healthcare & Education

₹98,311 crore allocated for health sector.
10,000 additional medical seats to be added this year.
National Institutes of Medical Sciences to be set up
₹266,817 crore for education including AI and digital learning.

Key Questions Going Forward

One of the primary questions arising from the budget is whether the tax relief measures will effectively drive economic growth by increasing disposable income and boosting consumer spending. Another major concern is whether India will be able to generate the promised 22 lakh jobs across various sectors, particularly in MSMEs and new employment schemes. Furthermore, the success of MSME and rural development programs remains uncertain, and their effectiveness in uplifting smaller businesses and rural economies will be closely monitored in the coming months.

Conclusion: A Budget for Growth & Relief

The Union Budget 2025-26 brings a landmark income tax rebate, strong infrastructure projects, and employment schemes. While the government calls it a “Viksit Bharat Budget”, the opposition remains critical.

With ₹50.65 lakh crore in spending, the next fiscal year will test how well these policies translate into real economic growth.