Summary
The 2025 Union Budget includes multiple substantial tax reforms that focus on helping middle-class citizens and low-income families. Throughout the past ten years, the Modi administration established an ongoing plan that reduced taxes, therefore creating favorable tax conditions for both salary earners and business owners.
In this insight, we will discuss essential Budget 2025 tax information before examining India's tax reduction history.
Evolution of Income Tax Policies in India
2014: Introduction of "Nil Tax" Policy
As its first significant policy, the "Nil Tax" policy was introduced by the Modi administration in 2014 to provide tax exemption for persons earning an annual income below ₹2.5 lakh.
2019: Income Tax Exemption Raised to ₹5 Lakh
Taxpayers with lower incomes obtained increased relief from the 2019 policy decision to raise the exemption limit to ₹5 lakh.
2023: Continuation of ₹5 Lakh Exemption
In 2023, Union Finance Minister Nirmala Sitharaman declared through an official statement that persons making less than ₹5 lakh per year would maintain non-taxable status as per the new taxation system.
Latest Income Tax Slabs FY 2025-26 Under New Income Tax Regime
| Income Tax Slab | Income Tax Rate |
| ₹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% |
Key Highlights from Budget 2025
1. No Income Tax Up to ₹12.75 Lakh
Salaried employees can escape income taxes after reporting up to ₹12.75 lakh in annual income because the government grants ₹75,000 standard deductions.
2. ₹80,000 Tax Benefit for ₹12 Lakh Income
The Union Finance Minister adopted a policy that provides taxpayers earning ₹12 lakh per year with an ₹80,000 tax benefit to maintain their 0% effective tax rate.
3. Simplified New Tax Regime
According to Finance Minister Nirmala Sitharaman, the new tax framework will lower middle-class taxation, which will increase household spending and saved money.
4. Extended Incorporation Period for Startups
Startup companies now have 5 years of tax exemption time during which they can gain benefits from tax incentives.
5. Extended Tax Return Update Time
Taxpayers now enjoy expanded flexibility since the time limit for updating tax returns stretches from two years to four years.
6. Reduction in TDS Thresholds
The Revenue Secretary announced decreased tax deduction levels at source, which simplified both business compliance and payment regulations for all professionals.
7. Exemption of BCD on Capital Goods for EV Battery Manufacturing
Basic Customs Duty exemption for several capital goods used in EV battery manufacturing production allows new plants to spend savings on their investments.
8. Addition of 36 Life-Saving Drugs to Tax-Free List
All life-saving pharmaceuticals under this category gained exemption from customs obligations so healthcare costs can decrease.
9. A New Income Tax Law Proposal Is Set to Arrive Next Week
The upcoming week will introduce a new income tax bill, which will optimize taxation rules.
10. Increased FDI Limit in Insurance
An increase in the foreign direct investment to 100% in the insurance sector through the foreign direct investment (FDI) limit now welcomes more international investment.
Budget 2025: Specific-Sector Announcements
1. The EV sector, together with mobile batteries
35 capital equipment items for EV battery manufacturing, together with 28 capital equipment items for mobile phone battery production, will be included in the exemption list.
2. Expansion in IITs
Finance Minister Nirmala Sitharaman started her IIT expansion announcement by focusing on IIT Patna and then followed with plans for other institutions in the network.
Growth in IIT Capacity:
"The total number of enrolled students in the 23 IITs has experienced a 100% rise in the last ten years and now numbers at 1.35 lakh, according to Sitharaman."
Infrastructure Development:
A total of 6,500 new students will receive admission to infrastructure-built facilities throughout the five IITs that started operations after 2014. Hostel facilities, together with the required infrastructure, will receive expansion as a part of this initiative. Further expansion of IIT Patna facilities remains in the vision of the administration, according to her statement.
3. Nuclear Energy Growth Plan
The clean energy transition strategy of India involves the development of 100 gigawatts of nuclear energy capacity, which will be operational by 2047.
4. Enhanced Kisan Credit Card (KCC) Limit
Farmers can now access better Kisan Credit Cards through the recently increased limit of ₹5 lakh, which replaced the previous limit of ₹3 lakh.
5. MSME Growth Initiatives
The coverage extension of the MSME sector increased to ₹10 crore from the previous threshold of ₹5 crore, permitting businesses to undertake larger projects.
6. ₹10,000 Crore AIF Fund for Startups
Additional funds totaling ₹10,000 crore will be established as an Alternative Investment Fund (AIF) to provide financial support for developing startups.
7. Boosting India's Tourism: Key Announcements
The government established a strategic alliance with state governments to enhance the development of the top 50 national tourist attractions. Through this program, the government wants to build better infrastructure while developing connections and it will drive sustainable tourism methods.
The government has created a strategy that rewards states with performance-based incentives according to their commitment to developing tourism hubs.
8. Skill Development & Homestay Loans
The tourism sector's skilled professionals hold a key strategic position, which led the Center to launch an extensive skill-development training program focusing on young people. This initiative will develop a competent workforce that can deliver top-quality hospitality service. The authorities will provide MUDRA loans through the MUDRA scheme to start homestay businesses in order to increase small business ventures during the tourism surge.
9. E-Visa Facilities for International Tourists
The government plans to increase foreign visitor numbers through recently announced e-visa facility expansions. The initiative makes visa applications simpler by decreasing processing times with the goal of promoting international tourism while helping India achieve easier travel experiences for overseas visitors.
10. PM Modi's Vision: #ViksitBharatBudget2025
Following the budget reveal, Prime Minister Narendra Modi addressed the nation to focus on the government's intention to achieve the dreams of 140 crore Indians. The PM highlighted how the budget focuses on savings, economic growth, and the empowerment of middle-class and low-income groups.
11. Financial Support for Startups & MSMEs
Through the "Credit Guarantee Cover" scheme expansion, the government added ₹1.5 lakh crore worth of credit that will run across five years for economic development purposes. This expansion allows pending aviation companies to obtain up to ₹20 crore of loans so they can advance their innovation infrastructure. MSMEs now have access to term loans worth up to ₹20 crore for obtaining financial assistance to support their businesses.
12. Provides tax exemptions to senior citizens as well as financial benefits to support them.
National Savings Scheme (NSS) withdrawals for senior citizens will come with complete exemptions under government policies. Tax relief benefits are designed for middle-class citizens who earn between 12 lakh rupees each year annually.
13. Healthcare for Gig Workers & Agricultural Reforms
The PM Jan Arogya Yojana now provides healthcare benefits to gig workers and grants these workers access to government schemes through identity cards. Both farmers benefited from the Kisan Credit Card (KCC) loan limit increase because it was raised to ₹5 lakh. The government established "Mission for Aatmanirbharta in Pulses" to increase domestic production of pulses.
14. PM Dhan-Dhaanya Krishi Yojana to Benefit 1.7 Crore Farmers
The PM Dhan-Dhaanya Krishi Yojana serves as an essential component of the Union Budget 2025 that was politically developed by Prime Minister Narendra Modi. The scheme targets support to 1.7 crore farmers both nationwide and in particular selects 100 districts known for their low agricultural productivity. Through this program, the organizers aim to improve farming operations and increase production while building up rural financial systems.
Key lesson from the budget 2025.
At the end of these insights, you have to stay informed about these updates to make better financial decisions and take advantage of tax benefits. A well-planned budget is important for keeping the economy stable and making sure money is used wisely. The Budget 2025 introduces key changes, focusing on tax relief, government spending, and economic stability.
Lower income tax rates, especially for the middle class, will help people save more and spend more, boosting the economy. More funds have been allocated to infrastructure, healthcare, and social welfare to support overall growth.
What is the budget for 2025?
What is the new tax regime in the budget 2025?
₹4-8 lakh is taxed at 5%
₹8-12 lakh is taxed at 10%
₹12-16 lakh is taxed at 15%
What is cheaper after budget 2025?
What is a no tax slab?
Stay tuned for more insight on budget 2025 and its impact on various sectors!
