Union Budget 2025: Key takeaways you need to know

Finance Minister Nirmala Sitharaman presented the Union Budget for 2025-26, marking the first full budget under Modi 3.0. With an eye on achieving "Viksit Bharat" by 2047, the budget outlines a growth forecast of 6.4% for FY25 and 6.3-6.8% for FY26, focusing on key reforms to drive the country's economic progress.
While job growth shows promise, the continued expansion of the economy and employment opportunities will rely on the successful implementation of critical structural reforms, according to the India Economic Survey 2025. Here are the key updates from this year's budget.
The most significant announcement is a major overhaul of personal income tax. Zero tax for income up to Rs 12 lakh under the new regime will benefit a large swathe of taxpayers. Revised slabs range from 5% for income between Rs 4 and 8 lakh, up to 30% for those earning above Rs 24 lakh. This translates to substantial savings, with an Rs 18 lakh earner saving Rs 70,000 and a Rs 12 lakh earner saving Rs 80,000.
FM announced the following new income tax slabs under the new regime:
- Rs 4 to 8 lakh: 5%
- Rs 8 to 12 lakh: 10%
- Rs 12 to 16 lakh: 15%
- Rs 16 to 20 lakh: 20%
- Rs 20 to 24 lakh: 25%
- Above Rs 24 lakh: 30%
A person with an annual income of Rs 18 lakh will benefit by Rs 70,000 in tax, while those earning Rs 12 lakh annually will receive a benefit of Rs 80,000. The tax deduction limit on interest income for senior citizens will be doubled to Rs 1 lakh, while the TDS limit on rent will be increased to Rs 6 lakh.
The Finance Minister stated, "Together, we aim to unlock India's potential under the leadership of Prime Minister Modi," as she began her address. She said, "Honourable Speaker, I present the Union Budget for 2025-26, which continues our efforts to accelerate growth."
Highlighting the budget's focus, she emphasised, "This budget is dedicated to accelerating growth, driven by our aspirations for a 'Viksit Bharat.' Our economy remains the fastest-growing among all major economies," she added.
Sitharaman outlined a plan to reduce debt as a percentage of GDP, with the 2024-25 fiscal deficit projected at 4.8%, total receipts at ₹31.47 lakh crore, and expenditure at ₹47.16 lakh crore, including ₹10.1 lakh crore for capital spending.
Prime Minister Modi earlier emphasised that the upcoming budget is tailored for the common man, aiming to fulfil the aspirations of the poor, farmers, women, and youth, reflecting the core values of GYAN (Garib, Yuva, Annadata, and Nari Shakti).
Sitharaman announced several changes to TDS rules, including reducing the number of rates and thresholds for deductions. The budget also raises the interest tax limit for senior citizens from Rs 50,000 to Rs 1,00,000, increases the TDS limit on rent from Rs 2.40 lakh to Rs 6 lakh, and hikes the TCS limit on remittances under the LRS from Rs 7 lakh to Rs 10 lakh.
The Union Budget covers key sectors like taxation, power, urban development, mining, finance, and regulatory reforms, aiming to drive growth, improve infrastructure, and ensure sustainable development.
The Finance Minister announced a Nuclear Energy Mission to support India's clean energy transition, aiming for 100 GW of nuclear power by 2047. Amendments to the Atomic Energy and Civil Liability for Nuclear Damage Acts will promote private sector involvement, while a ₹20,000 crore R&D initiative for Small Modular Reactors (SMRs) will be launched, with five indigenously developed SMRs expected to be operational by 2033.
Shifting the focus to MSMEs, which serve as a vital growth engine, With 5.7 crore MSMEs, including over one crore registered businesses, this sector employs 7.5 crore people and contributes 36% to the country’s manufacturing output.
MSMEs are instrumental in positioning India as a global manufacturing hub, responsible for 45% of the country’s exports. To fuel their growth and enhance efficiency, the government intends to raise investment and turnover limits for MSMEs by 2.5 times and 2 times, respectively. This move aims to support MSMEs in scaling operations, fostering innovation, and creating more job opportunities, particularly for the youth.
Sitharaman unveiled an Investment Friendliness Index for states in 2025 to foster competitive federalism and a new FSDC mechanism to evaluate financial regulations. She also noted the Jan Vishwas Act 2023, which decriminalized over 1,080 provisions to ease the business environment.
The minister announced a new agricultural district programme under Prime Minister Krishi Yojana, targeting 100 low-productivity districts to boost crop diversification, irrigation, and credit access. The initiative aims to benefit 1.7 crore farmers with improved productivity and sustainable practices.
Sitharaman announced plans to strengthen the domestic electronics industry and create youth employment by developing a national framework to promote Global Capability Centers (GCCs) in Tier-2 cities. The government will also improve air cargo infrastructure for perishable goods and streamline customs protocols for greater efficiency, emphasizing that reforms have been key to the government's policies over the past decade.
Sitharaman outlined the government’s decade-long tax reforms to improve taxpayer convenience, including faceless assessments, a taxpayer charter, and faster return processing, with nearly 99% of returns based on self-assessment. She reaffirmed the tax department’s “trust first, scrutinize later” approach and reiterated the commitment to easing compliance. Sitharaman also announced that a new income tax bill will be introduced next week as part of ongoing reform efforts.
Sitharaman announced tax proposals to ease business operations, simplify compliance, and support the middle class, including personal income tax reforms, rationalisation of TDS and TCS, and measures to boost employment and investment.
Budget 2025 proposes removing TCS on education-related remittances funded by loans from specified institutions and eliminating TCS on goods sales to ease compliance.