On February 1, 2025, the Union Budget for the financial year 2025-26 was unveiled in Parliament, shaping India’s economic roadmap. Ms. Sitharaman Initiated her speech by mentioning the budget is designed to growth. It is to enhance financial confidence among households and strengthen the purchasing power middle class. concluding with major relief for taxpayers, the new policy ensures that individuals earning up to ₹12 lakh annually will not have to pay income tax. Also, a significant increase from the previous ₹7 lakh limit.
As a part of budget, the government proposes direct deduction of ₹75,000 to encourage investments. Accordingly, now the income tax is exempted to the individuals who are earning. In addition, the current budget imposes 5% on incomes who are earning between ₹4 lakh to ₹8 lakh.
Under Section 87A of the 1961 Income Tax Act, some exemptions may apply . The central government has adjusted slabs, but detailed guidelines for income-based exemptions are yet to be released.
To provide benefits to all taxpayers, tax slabs and rates are being revised. The burden on the middle class in new system will be lower, allowing them to retain more of their income. This encourage them to increased savings and greater investment.
Opting for the new tax regime allows you can take advantage of these revised tax slabs.
Revised Tax Slabs in the New Regime:
- No tax (Exempt) between ₹0 – ₹4 lakh
- 5% tax between ₹4 – ₹8 lakh
- 10% tax between ₹8 – ₹12 lakh
- 15% tax between ₹12 – ₹16 lakh
- 20% tax between ₹16 – ₹20 lakh
- 25% tax between ₹20- ₹24 lakh
- 30%tax Above ₹24 lakh
In the country still the new tax system has not been introduced. In this taxation framework, earnings up to ₹2.5 lakh is not taxed. However ₹12,500 is imposed on income between ₹2.5 lakh to ₹5 lakh. Under section 87A the government has provided rebates. Therefore, the overall tax liability stays at ₹5 lakh.
According to the new tax regime the government has also increased the tax exemption limit. In previous years budget, the income tax slabs were made changed. Income up to ₹7 lakh was exempted from tax through rebates in the revised tax regime. The government has further adjusted the tax system , exempting income up to ₹12.5 lakhs. This brings significantly benefits taxpayers and is aimed at boosting the economic growth by increasing disposable income.
To individuals with an income of up to ₹12 lakh government is providing rebates, apart from special rate income like capital gains. As a result, who are earning with in this income range owe no tax after considering the rebate.
The total benefit of slab rate changes and rebate at different income levels can be illustrated with examples.
- As per the new regime, for the individual income up to ₹12 lakh, the taxpayer receives a benefit of ₹80,000. This equals 100% of the tax payable under the existing rates. considering the rebate and slab adjustments no tax is payable.
- Income ranges up to ₹18 lakh, the tax payer gets a benefit of ₹70,000, (as per now existing tax system 30% of the tax is payable). This reduces the overall tax liability but does not eliminate it entirely.
- Income ranges up to ₹25 lakh, A benefit of ₹1,10,000 is provided,(as per now existing tax system 30% of the tax is payable). This reduces the tax burden significantly but does not make the income tax-free.
Finance Minister stated that, revenue of about ₹ 1 lakh crore in direct taxes and ₹ 2600 crore in indirect taxes will be forgone.
In the Lok Sabha, Sitharaman unveiled her record eighth consecutive budget.
The Budget which was presented in Lok Sabha was mainly focused on ‘garib, youth, anndatta and nari’ (poor, youth, farmers and women). The budget will introduce changes in 6 domains – taxation, urban development, mining, financial sector, power and regulatory reforms.
The Economic Survey, presented in Parliament a day ago, forecasts India’s economy to grow between 6.3% and 6.8% for the 2025-26 financial year. It pointed to the country’s strong economic position, including a balanced external account, fiscal discipline, and steady private consumption. The survey also highlighted the government’s focus on driving long-term industrial development by placing more emphasis on research and development (R&D), supporting MSMEs, and advancing the capital goods industry.
Agriculture as the first Backbone:

- PM Dhan Dhyan Krishi Yojana: The Finance Minister introduced a new agricultural program targeting 100 districts with low crop yields. It promotes modern farming practices and improved credit access to support farmers.
- Empowering Makhana Farming: A Customized Makhana Board will be set up in Bihar to improve cultivation, processing. It also improves value addition and market reach, supporting Makhana farmers.
- Advancing Agriculture & Rural Prosperity: The government is actively supporting sustainable farming practices like crop diversification and developing irrigation infrastructure. benefiting 1.7 crore farmers. The aim is to generate sustainable livelihoods in rural areas, making migration a choice rather than a necessity.
- Empowering Domestic Urea Supply: our Government had reopened three dormant urea plants in Eastern region , and taking significant steps toward self-sufficiency in urea production by setting up a fertilizer plant in Namrup, Assam, with an annual capacity of 12.7 lakh metric tons.
- Expanding Seed Productivity: A National Mission on High Yielding Seeds will be launched. The purpose is to develop and propagate seeds with high yield, commercial availability of more than 100 seed varieties should be released.
- Fisheries: In fish production aquaculture globally india ranks second-largest position. The government will implement a comprehensive policy. It is for responsible fishing in India’s Exclusive Economic Zone and High Seas, with special focus on the Andaman & Nicobar and Lakshadweep Islands.
- Cotton sector development program: Ensuring growth and stability for cotton farmers, pleased initiate a ‘Mission for Cotton Productivity’. A 5-year mission has been announced to increase cotton yield, ensuring a steady supply of high-quality cotton.
- Enhanced credit support to farmers: credit support for farmers is being strengthened by raising the loan limit under the Modified Interest Subvention Scheme from ₹3 lakh to ₹5 lakh, benefiting those using the Kisan Credit Scheme.
MSME’s as the second pillar:
- The Mission for Cotton Productivity includes both manufacturing and services, with a special focus on 5.7 crore MSMEs.
- Currently, India has over 1 crore registered MSMEs, providing jobs to 7.5 crore people and contributing 36% of manufacturing output. These businesses also account for 45% of India’s exports with their high-quality products.
- To help MSMEs scale up, upgrade technology, and access better funding, the government will increase investment and turnover limits for MSME classification by 2.5 times and 2 times, respectively. This will boost their growth and create more jobs for the youth.
- For Micro and Small Enterprises, the limit has been increased from ₹5 crore to ₹10 crore. This is expected to generate an additional credit of ₹1.5 lakh crore over the next five years.
- For Startups, the limit has been raised from ₹10 crore to ₹20 crore. Additionally, the guarantee fee has been moderated to 1% for loans in 27 focus sectors crucial to Atmanirbhar Bharat.
- For well-run exporter MSMEs, term loans are now available up to ₹20 crore.
- Launching customized credit cards with a ₹5 lakh limit for micro enterprises registered on the Udyam portal. In the first year, to support their financial needs and growth 10 lakh credit cards will be issued .
- A new initiative will be introduced to assist 5 lakh women, SC, and ST entrepreneurs, offering term loans of up to ₹2 crore to support first-time business owners in starting and expanding their ventures.
- Over a ₹30,000 limit is provided to Street vendors with UPI-linked credit cards , enabling them to improve their financial access and transaction convenience.
- 1 crore gig workers will be granted social security benefits, and ID cards will be issued to enable them to access government services.
Investment as a third pillar:

which includes investing in people, strengthening the economy, and fostering innovation.
- Saksham Anganwadi and Poshan 2.0: Thisprogramsupportsover8 crore children, 1 crore pregnant women and lactating mothers, and20 lakh adolescent girls inaspirational districts andthenortheast byenhancingnutritionalsupport.
- Atal Tinkering Labs: 50,000 labs will be set up in government schools over the next 5 years to encourage innovation and scientific thinking among students.
- Broadband Connectivity: TheBharat net project willprovidebroadband access togovernment secondary schools andprimary health centres inrural areas.
- Bhartiya Bhasha Pustak Scheme: Digital Indian language books will be provided for school and higher education. This is to help students better understand their subjects.
National Centres of Excellence for Skilling:
- Five centres will be established with global partnerships to upskill youth for “Make for India, Make for the World” manufacturing. These will focus oncurriculum development, trainer training, andskills certification.
- Expansion of IIT Capacity: The number of students in 23 IITs has doubled from 65,000 to 1.35 lakh in 10 years. Infrastructure will be expanded in 5 IITs and IIT Patna to accommodate 6,500 additional students.
- Centre of Excellence in AI for Education: A new AICentre dedicated to education will be established. It will be done with an investment of ₹500 crore.
- Expansion of Medical Education: In the last decade, 1.1 lakh medical seats have been added, marking a 130% increase. An additional 10,000 seats will be created next year, with plans to add 75,000 more seats.
- Day Care Cancer Centres: The government will set up Day Care Cancer Centres in all district hospitals within the next 3 years. This includes the establishment of 200 centres by 2025-26.
Exports as a fourth pillar:

- Export Promotion Mission: An Export Promotion Mission will be established with clear sectoral and ministerial targets. It will focus on providing easy access to export credit, cross-border factoring support, and helping MSMEs handle non-tariff challenges in international markets.
- Bharat TradeNet (BTN): Bharat TradeNet will be set up as a digital platform for trade documentation and financing solutions to support international trade, aligning with global standards and complementing the Unified Logistics Interface Platform.
- Support for Global Supply Chains: The government will aid the development of domestic manufacturing capacities to integrate India’s economy with global supply chains, identifying key sectors for growth.
- Facilitation Groups: Facilitation groups, including industry representatives and senior officers, will focus on key products and supply chains.
- Opportunities in Industry 4.0: The government will support the domestic electronics industry to create opportunities in Industry 4.0. It is for benefiting youth with high skills and talent.
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