What To Expect From Union Budget 2025-26?

“A country is not just its soil, a country is its people.”

– Gurajada Appa Rao, Telugu poet and playwright

Our Finance Minister, Nirmala Sitharaman, announced that the Union Budget of 2025-56 is based on the theme of the great Telugu poet and playwright ‘Desamante Matti Kaadoi, Desamante Manushuloi’. 

Adhering to the theme of the budget, the Finance Minister announced the four engines driving the development plan of the budget. The four engines are as follows:

1. Agriculture

2. Micro, Small & Medium Enterprises (MSMEs)

3. Investment

4. Exports 

These four engines will work together to achieve the vision of the government of a “Viksit Bharat.”

Highlights Of The Budget 2025-26

The Budget focusing on achieving “Viksit Bharat” by 2047, has primarily focused on development and economic growth. Following are the highlights of the budget:

Focus Areas

The Budget primarily provides for development measures across ten broad areas focusing on the poor (garib), youth, farmers (annadata) and women (nari). These areas are:

• Spurring agricultural growth and productivity.

• Building rural prosperity and resilience.

• Promoting inclusive growth.

• Boosting manufacturing and furthering 'Make in India'.

• Supporting MSMEs.

• Enabling employment-led development.

• Investing in people, the economy, and innovation.

• Securing energy supplies.

• Promoting exports.

• Nurturing innovation.

Agriculture

For agriculture, the Budget provides for:

• Proposes the 'Prime Minister Dhan-Dhaanya Krishi Yojana' to improve agricultural productivity in 100 districts.

• Introduction of a multi-sectoral 'Rural Prosperity and Resilience' programme to address underemployment through skilling and technology.

• Focus on achieving self-sufficiency ('aatmanirbharta') in pulses with a 6-year mission, and a comprehensive program for vegetables and fruits.

• A Makhana Board will be established in Bihar to improve the production, processing, value addition, and marketing of makhana.

• A National Mission on High Yielding Seeds will be launched to strengthen the research ecosystem and develop high-yield, pest-resistant, and climate-resilient seeds.

• The loan limit under the Modified Interest Subvention Scheme for Kisan Credit Cards (KCC) will be enhanced from ₹3 lakh to ₹5 lakh.

MSMEs

For the development of MSMEs, the Budget has proposed for:

• The investment and turnover limits for the classification of all MSMEs will be enhanced to 2.5 and 2 times respectively.

• The credit guarantee cover will be enhanced for Micro and Small Enterprises to ₹10 crore and for Startups to ₹20 crore.

• Customized Credit Cards with a ₹5 lakh limit will be introduced for micro-enterprises registered on the Udyam portal.

• A new Fund of Funds with a fresh contribution of ₹10,000 crore will be set up for startups.

• A scheme will be launched for 5 lakh first-time entrepreneurs, offering term loans up to ₹2 crore during the next 5 years.

Investment In People

The Budget has included the following investments in people:

• 50,000 Atal Tinkering Labs will be set up in government schools in the next 5 years to foster a scientific temper among young minds.

• Broadband connectivity will be provided to all government secondary schools and primary health centres in rural areas.

• The Bharatiya Bhasha Pustak Scheme will provide digital-form Indian language books for school and higher education.

• Five National Centres of Excellence for Skilling will be set up with global expertise to equip youth with skills for manufacturing.

• Additional infrastructure will be created in 5 IITs started after 2014 to facilitate education for 6,500 more students and also at IIT Patna.

• A Centre of Excellence in Artificial Intelligence for Education will be set up with an outlay of ₹500 crores.

• 10,000 additional medical education seats will be added in the next year towards the goal of adding 75,000 seats in the next 5 years.

• Gig workers of online platforms will be provided with healthcare under PM Jan Arogya Yojana.

Infrastructure

The Budget has emphasized Public Private Partnerships. It has provided for:

• An outlay of ₹1.5 lakh crore is proposed for interest-free loans to states for capital expenditure and incentives for reforms.

• The second Asset Monetization Plan for 2025-30 aims to generate ₹10 lakh crore for new projects.

• The Jal Jeevan Mission will be extended to 2028.

• The Government will set up an Urban Challenge Fund of ₹1 lakh crore to implement proposals for urban development.

• A Nuclear Energy Mission for research & development of Small Modular Reactors (SMR) with an outlay of ₹20,000 crore will be set up.

• The Shipbuilding Financial Assistance Policy will be revamped, and a Maritime Development Fund with a corpus of ₹25,000 crore will be set up.

• Greenfield airports will be facilitated in Bihar.

Innovation

The Budget has incorporated the following for innovation:

• Has allocated Rs. 20,000 crores for research, development and innovation initiatives. 

• The PM Research Fellowship scheme will be expanded. 

• A 2nd Gene Bank with 10 lakh germplasm lines will be set up.

• A National Geospatial Mission will be started.

Export

For export, the Budget has provided for the following:

• An Export Promotion Mission will be set up with sectoral and ministerial targets.

• A digital public infrastructure, ‘BharatTradeNet’ (BTN), will be set up for international trade.

• A national framework will be formulated for promoting Global Capability Centres in tier 2 cities.

Tax And Financial Reforms

One of the key announcements of the Budget 2025-26 is the tax reforms. These tax reforms include:

• The new regime will have no income tax payable up to an income of ₹12 lakh, which is an average income of ₹1 lakh per month, excluding special rate incomes such as capital gains. This limit will be ₹12.75 lakh for salaried taxpayers due to a standard deduction of ₹75,000.

• The tax slabs and the rates are as follows:

• Due to the announcement of no tax till Rs. 12 Lakhs, the following benefits will be there:

• There are revisions to tax rates across different income slabs, which are expected to substantially reduce taxes for the middle class.

• Tax rebates are provided to those with incomes up to ₹12 lakh.

• The tax deduction limit on interest for senior citizens is being doubled from ₹50,000 to ₹1 lakh.

• The annual limit of ₹2.40 lakh for TDS on rent is being increased to ₹6 lakh.

• The threshold for TCS on remittances under the RBI's Liberalized Remittance Scheme (LRS) is proposed to increase from ₹7 lakh to ₹10 lakh.

• TCS on remittances for education purposes out of loans from specified financial institutions will be removed.

• The time limit to file updated returns will be extended from two to four years.

Exemptions Under The Budget 2025-26

The Budget has included several exemptions across various sectors. The following are the key exemptions:

Drugs And Medicines

• 36 life-saving drugs and medicines have been included in the list of products wholly exempted from Basic Customs Duty (BCD).

• 6 life-saving medicines have also been added to the list inviting concessional duty of 5%. The whole drugs used to manufacture the medicines above will attract full exemption along with the concessionary duty.

• In addition to these 37 medicines and 13 new patient assistance programs, this list is enlarged further in a category in which BCD fully is not charged while distributing them free of cost to the patients by companies running pharmaceutical firms.

Critical Minerals

• Cobalt powder and waste, the scrap of lithium-ion batteries, lead, zinc, and 12 other critical minerals are fully exempt from BCD.

Textiles

• Two more types of shuttleless looms have been added to the list of fully exempted textile machinery.

Electronic Goods

• BCD on parts of Open Cells used for manufacturing LCD/LED TVs is now exempted.

• 35 additional capital goods for EV battery manufacturing and 28 additional capital goods for mobile phone battery manufacturing are added to the list of exempted capital goods.

Shipping Sector

• The exemption of BCD on raw materials, components, consumables, or parts for the manufacture of ships will continue for another 10 years.

• The same exemption is proposed for shipbreaking.

Handicraft Goods

• Nine items have been added to the list of duty-free inputs for the manufacture of handicrafts.

Leather Sector

• Wet blue leather is fully exempt from BCD.

Other Exemptions

• Ground installation for satellites including its spares and consumables.

• Goods used in the building of launch vehicles and launching of satellites.

• Withdrawals made from the National Savings Scheme (NSS) on or after 29th August 2024, for any amount deposited under the scheme and the interest accrued on it for which a deduction has been allowed, are exempt.

Budget Allocation To Various Ministries

A total of Rs. 50.65 lakh crores has been allocated to various ministries. The list of budget allocated to some of the key ministries is as follows:

Budget Allocation To Other Countries

The Centre has allocated Rs. 20,516 Crores to the Ministry of External Affairs. The allocation to other countries is as follows:

Conclusion

The Union Budget 2025-26 is a step towards the foundation of "Viksit Bharat" through growth in agriculture, MSMEs, investment, and exports. It will help to promote inclusive economic development while maintaining financial stability through tax reforms, infrastructure expansion, and innovation-driven initiatives.

FAQs

A few FAQs on the Union Budget of 2025-26 are:

Q1. What are the important tax reforms announced in this Budget?

This Budget has introduced revised tax slabs where there is no income tax payable up to Rs 12 lakhs, a step which is benefitting the middle class mostly. It also talks about increased tax deduction limits for senior citizens and revised TDS limits on rent.

Q2. What are the initiatives for agriculture in this budget?

The Budget has introduced ‘Prime Minister Dhan-Dhaanya Krishi Yojana’ to improve the productivity of the agriculture sector. Apart from that the Budget also proposes the Rural Prosperity and Resilience program, and a focus on self-sufficiency in pulses, vegetables, and fruits.

Q3. What are some important infrastructure initiatives in the budget?

The budget focuses on public-private partnerships, interest-free loans to states for capital expenditure, asset monetization, and extending the Jal Jeevan Mission. Such steps are intended to improve infrastructure and boost economic productivity.