The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, focuses on boosting economic growth, providing relief to taxpayers, and enhancing investments in key sectors. With tax cuts, increased spending on infrastructure, and measures to support farmers, this budget aims to strengthen India’s economic foundation. Here’s a detailed breakdown of its key highlights, tax reforms, economic impact, GDP vision, and changes in the cost of goods and services.
Key Highlights of Budget 2025
- Tax Reforms and Relief for the Middle Class
- No tax for the person with the annual income upto 12 lakh.
- New tax slab structure: 5% tax for ₹4-8 lakh and 10% for ₹8-12 lakh.
- Standard deduction increased to ₹75,000.
- Boost for Agriculture and Rural Development
- PM Dhan-Dhaanya Krishi Yojana to develop 100 agricultural districts, benefiting 1.7 crore farmers.
- Short-term agricultural loans of up to ₹5 lakh for 7.7 crore farmers under the Kisan Credit Card scheme.
- Increased subsidies on fertilizers and minimum support price (MSP) hikes for key crops.
- Incentives for Science, Innovation, and Startups
- ₹20,000 crore allocated for research, development, and innovation.
- PM Research Fellowship offers 10,000 scholarships for technological research.
- Special incentives for startups, including extended tax exemptions.
- Infrastructure and Industrial Development
- ₹10 lakh crore allocated for infrastructure, including roads, railways, and smart cities.
- Tax exemptions on EV components and lithium-ion batteries to promote electric vehicle production.
- Expansion of domestic manufacturing under the ‘Make in India’ initiative.
- Fiscal Outlook and Deficit Control
- Fiscal deficit projected at 4.4% of GDP to maintain economic stability.
- Increased revenue collection from GST and direct taxes to support government spending.
Tax Regime For FY 2025-2026
| Tax Regime Comparison | |||||
|---|---|---|---|---|---|
| Tax Slab For FY 24-25 | Rates | Tax Slab For FY 25-26 | Rates | ||
| Upto Rs 3 lakh | NIL | Upto Rs 4 lakh | NIL | ||
| Rs 3 lakh – Rs 7 lakh | 5% | Rs 4 lakh – Rs 8 lakh | 5% | ||
| Rs 7 lakh – Rs 10 lakh | 10% | Rs 8 lakh – Rs 12 lakh | 10% | ||
| Rs 10 lakh – Rs 12 lakh | 15% | Rs 12 lakh – Rs 16 lakh | 15% | ||
| Rs 12 lakh – Rs 15 lakh | 20% | Rs 16 lakh- Rs 20 lakh | 20% | ||
| Above Rs 15 lakh | 30% | Rs 20 lakh – Rs 24 lakh | 25% | ||
| Above Rs 24 lakh | 30% | ||||
Vision of the 2025 Budget
The 2025 Budget is designed to accelerate India’s economic growth while ensuring inclusive development. The key vision areas include:
- Strengthening the Middle Class and Increasing Disposable Income
- 2025: Tax exemption limit increased from ₹7 lakh to ₹12 lakh, benefiting approximately 10 crore taxpayers.
- 2024: The exemption limit was ₹7 lakh, with tax relief mostly for higher income groups.
- Expected increase in disposable income by about ₹1.5 lakh crore annually in 2025, compared to ₹1 lakh crore expected in 2024.
- Boosting Agricultural Growth and Rural Development
- 2025: ₹20,000 crore allocated under the PM Dhan-Dhaanya Krishi Yojana to develop 100 agricultural districts, benefiting 1.7 crore farmers.
- 2024: The focus was on increasing MSP and loan subsidies, with ₹12,000 crore for agricultural schemes.
- 2025 sees a 66% increase in funding for farmer-related schemes and more targeted development.
- ₹10,000 crore allocated for fertilizers and subsidies, up from ₹8,500 crore in 2024.
- Promoting Research, Innovation, and Startups
- 2025: ₹20,000 crore allocated for research and development in emerging technologies.
- 2024: Research and development funding stood at ₹15,000 crore, with less emphasis on cutting-edge sectors.
- Launch of PM Research Fellowship with 10,000 fellowships for technological research, up from 5,000 fellowships in 2024.
- ₹5,000 crore earmarked for startups, compared to ₹3,500 crore last year, showing a 43% increase.
- Infrastructure-Led Growth
- 2025: ₹10 lakh crore allocated for infrastructure development, expected to create 5 crore jobs.
- 2024: ₹8.5 lakh crore was allocated to infrastructure, with a focus primarily on urban projects.
- 2025 increases infrastructure spending by 17.6%, with significant investments in electric vehicle (EV) infrastructure.
- EVs: Tax exemptions on EV components and lithium-ion batteries to support the production of 5 million EVs annually by 2030, compared to 3 million EVs targeted in 2024.
- Strengthening India’s Manufacturing Sector
- 2025: ₹2.5 lakh crore allocated to boost manufacturing, focusing on reducing import dependency.
- 2024: ₹2 lakh crore allocated to ‘Make in India’, primarily for consumer electronics and heavy industries.
- 2025 sees a 25% increase in funding, with specific focus on scaling electric vehicle and battery production.
- 10 million lithium-ion batteries targeted for production, compared to 6 million in 2024.
- Fiscal Responsibility and Economic Stability
- 2025: Fiscal deficit projected at 4.4% of GDP.
- 2024: Fiscal deficit was set at 4.6% of GDP, with an aim to reduce it to 4.4% in 2025.
- 2025 demonstrates stronger fiscal discipline, with projections of ₹22 lakh crore in revenue from taxes and GST, compared to ₹20 lakh crore in 2024.
The government’s vision through this budget is to create a self-reliant, innovative, and inclusive India that fosters economic opportunities for all sections of society.
Who is Getting How Much Benefit from the New Budget?
- Salaried and Middle-Class Individuals
- Tax exemption limit increased from ₹7 lakh to ₹12 lakh.
- Standard deduction raised to ₹75,000.
- More savings and disposable income due to lower tax rates.
- Farmers and Rural Population
- 7.7 crore farmers to receive loans of up to ₹5 lakh under the Kisan Credit Card scheme.
- 1.7 crore farmers to benefit from the PM Dhan-Dhaanya Krishi Yojana.
- Higher MSP and subsidies on fertilizers to boost rural income.
- Startups and Young Entrepreneurs
- ₹20,000 crore allocated for research and innovation.
- 10,000 fellowships for technological research under the PM Research Fellowship.
- Tax exemptions and financial support for new businesses.
- Infrastructure and Manufacturing Sector
- ₹10 lakh crore allocated for infrastructure development, leading to job creation.
- Incentives for domestic production of electronics, electric vehicles, and lithium-ion batteries.
- Economy and Investors
- Fiscal deficit maintained at 4.4% to ensure economic stability.
- Growth in consumer spending expected due to tax cuts.
- Better infrastructure leading to higher private investments.
Economic Impact of the Budget 2025
- Middle-Class Relief and Consumer Spending
With significant tax cuts and increased disposable income for middle-class households, consumer spending is expected to rise. This can boost demand in sectors like retail, real estate, and automobiles, driving economic growth.
- Growth in Agriculture and Rural Economy
The focus on farmer support and rural development will likely enhance agricultural productivity and increase rural purchasing power, contributing to overall GDP growth.
- Boost to Research and Innovation
Increased investment in R&D and startup-friendly policies will encourage innovation, helping India become a global hub for technology and manufacturing.
- Strengthening of Infrastructure
Heavy investments in roads, railways, and urban development will improve connectivity, create jobs, and attract private investments.
- Fiscal Prudence and Economic Stability
Despite the tax relief measures, the government’s commitment to maintaining a fiscal deficit of 4.4% ensures macroeconomic stability and investor confidence.
Changes in Prices: What’s Getting Cheaper and What’s Getting Expensive?
Cheaper
- Electric Vehicles (EVs): Tax exemptions on components and lithium-ion batteries will reduce the price of EVs, making them more affordable.
- Solar Panels and Renewable Energy Equipment: Tax incentives will lower the cost of solar panels, promoting clean energy adoption.
- Electric Two-wheelers: Reduced taxes on batteries and parts will make electric two-wheelers cheaper.
- Affordable Housing: Increased funding for housing schemes and reduced taxes on raw materials like cement and steel will lower construction costs.
- Smartphones and Electronics: Lower import duties on key electronic components will make gadgets more affordable.
- Petrol Vehicles: Lower excise duties on certain petrol vehicle components and tax cuts for small vehicles will make petrol cars and two-wheelers more affordable.
More Expensive
- Alcohol and Tobacco Products: Higher excise duties on alcohol and tobacco to discourage consumption.
- Luxury Goods: Taxes on luxury items like high-end cars and watches will increase their prices.
- Cigarettes: Higher excise taxes on cigarettes will raise their prices, as part of anti-smoking efforts.
- Gold and Jewelry: The budget proposes a slight increase in import duties on gold, raising jewelry prices.
- Imported Goods: As part of ‘Atmanirbhar Bharat,’ some imported goods will face higher taxes to boost local production.
Conclusion
The India Budget 2025 presents a well-balanced approach to economic growth and fiscal discipline. By providing tax relief, supporting key sectors, and investing in research, innovation, and infrastructure, the government aims to create a self-reliant and globally competitive India.
With its focus on boosting middle-class savings, empowering farmers, and strengthening the startup ecosystem, this budget lays the foundation for sustainable development and long-term economic resilience. The inclusion of a GDP growth target of 10.1% and strategic fiscal measures signals a promising future for India.