Budget 2025-26: Highlights and major announcements

02-02-2025

On 1 February 2025, Union Minister for Finance and Corporate Affairs Smt Nirmala Sitharaman presented her 8th consecutive Union Budget 2025-26 in Parliament.
The national budget is prepared by the Budget Division under the Department of Economic Affairs (DEA) of the Ministry of Finance and is presented to the Parliament for discussion and approval.
Theme: "Sabka Vikas" – Balanced growth for all regions

Provision	Key points
Article 112	President shall in respect of every financial year cause to be laid before both the Houses of Parliament a statement of the estimated receipts and expenditure of the Government of India for that year, referred to as the “annual financial statement’’.
Article 113	No demand for a grant shall be made except on the recommendation of the President.
Article 114	No amount can be withdrawn from the Consolidated Fund of India(CFI) without authorization from the Parliament.
Article 266	All revenues received by the government shall be credited to the "Consolidated Fund of India”. All other public money, such as provident fund, Postal insurance, etc, shall be credited to the Public Account of India.
Article 267	Parliament may by law establish a Contingency Fund of India to meet unexpected or unforeseen expenditures.

Principles of Viksit Bharat

The budget outlines the following broad principles to achieve a prosperous India:

Zero-poverty
100% good quality school education
Access to high-quality, affordable, and comprehensive healthcare
100% skilled labour with meaningful employment
70% women in economic activities
Farmers making our country the ‘food basket of the world’

The budget focuses on 5 key objectives:

Accelerate growth
Secure inclusive development
Invigorate private sector investments
Uplift household sentiments
Enhance spending power of India’s rising middle class

Focus Areas:

Poor (Garib)
Youth
Farmer (Annadata)
Women (Nari)

Transformative Reforms

The budget aims to initiate reforms in the following sectors to augment India’s growth potential and global competitiveness:

Taxation
Power Sector
Urban Development
Mining
Financial Sector
Regulatory Reforms

Budget Estimates 2025-26

Metric	Estimate
Total Receipts (excl. borrowings)	₹ 34.96 lakh crore
Total Expenditure	₹ 50.65 lakh crore
Net Tax Receipts	₹ 28.37 lakh crore
Fiscal Deficit	4.4% of GDP
Gross Market Borrowings	₹ 14.82 lakh crore
Capex Expenditure	₹ 11.21 lakh crore (3.1% of GDP)

Trends of the budget are as follows:

Engines of Growth

The budget highlights the following sectors as engines of growth in the journey to Viksit Bharat:

Agriculture as the 1st Engine of Development

Initiative	Key Points
Prime Minister Dhan-Dhaanya Krishi Yojana	- Developing Agri Districts Programme, Covering 100 districts with low productivity, moderate crop intensity, and below-average credit parameters, Benefiting 1.7 crore farmers - Launched in partnership with the states
Building Rural Prosperity and Resilience	- Comprehensive multi-sectoral programme, Phase-1 covering 100 developing agri-districts - Focus on addressing under-employment in agriculture through skilling, investment, technology, and invigorating the rural economy, Launched in partnership with states
Aatmanirbharta in Pulses	- 6-year mission, Focus on Tur, Urad, and Masoor - NAFED and NCCF to procure these pulses from farmers during the next 4 years
Comprehensive Programme for Vegetables & Fruits	- Promote production, efficient supplies, processing, and remunerative prices for farmers - Launched in partnership with states
Makhana Board in Bihar	- Improve production, processing, value addition, and marketing of makhana
National Mission on High Yielding Seeds	- Strengthen the research ecosystem, Targeted development and propagation of seeds with high yield, Commercial availability of more than 100 seed varieties
Fisheries	- Framework for sustainable harnessing of fisheries from Indian Exclusive Economic Zone and High Seas, Special focus on the Andaman & Nicobar and Lakshadweep Islands
Mission for Cotton Productivity	- 5-year mission, Facilitate significant improvements in productivity and sustainability of cotton farming, Promote extra-long staple cotton varieties
Enhanced Credit through KCC	- Loan limit under the Modified Interest Subvention Scheme enhanced from ₹ 3 lakh to ₹ 5 lakh for loans taken through the KCC
Urea Plant in Assam	- Annual capacity of 12.7 lakh metric tons, Located at Namrup, Assam

MSMEs as the 2nd Engine of Development

Initiative	Key Points
Revision in Classification Criteria	- Investment limit enhanced to 2.5 times,Turnover limit enhanced to 2 times, Applies to all MSMEs
Credit Cards for Micro Enterprises	- Customized Credit Cards with ₹ 5 lakh limit for micro enterprises registered on Udyam portal - 10 lakh cards to be issued in the first year
Fund of Funds for Startups	- New Fund of Funds with a fresh contribution of ₹ 10,000 crore, Expanded scope
Scheme for First-time Entrepreneurs	- New scheme for 5 lakh women, Scheduled Castes, and Scheduled Tribes first-time entrepreneurs - Provide term-loans up to ₹ 2 crore in the next 5 years
Focus Product Scheme for Footwear & Leather Sectors	- Enhance productivity, quality, and competitiveness of India’s footwear and leather sector - Facilitate employment for 22 lakh persons, Generate turnover of ₹ 4 lakh crore, Exports of over ₹ 1.1 lakh crore
Measures for the Toy Sector	- Scheme to create high-quality, unique, innovative, and sustainable toys, Making India a global hub for toys
Support for Food Processing	- National Institute of Food Technology, Entrepreneurship and Management to be set up in Bihar
Manufacturing Mission	- National Manufacturing Mission covering small, medium, and large industries - Furthering the “Make in India” initiative

Investment as the 3rd Engine of Development

Investing in People

Initiative	Key Points
Saksham Anganwadi and Poshan 2.0	- Enhanced cost norms for nutritional support
Atal Tinkering Labs	- 50,000 Atal Tinkering Labs to be set up in Government schools in the next 5 years
Broadband Connectivity	- Broadband connectivity to all Government secondary schools and primary health centres in rural areas under the Bharatnet project
Bharatiya Bhasha Pustak Scheme	- Provide digital-form Indian language books for school and higher education
National Centres of Excellence for Skilling	- 5 National Centres of Excellence for skilling with global expertise and partnerships - Equip youth with skills for “Make for India, Make for the World” manufacturing
Expansion of Capacity in IITs	- Additional infrastructure in 5 IITs started after 2014, Facilitate education for 6,500 more students
Centre of Excellence in AI for Education	- Total outlay of ₹ 500 crore
Expansion of medical education	- 10,000 additional seats in medical colleges and hospitals next year - Adding to 75,000 seats in the next 5 years
Day Care Cancer Centres	- Set up in all district hospitals in the next 3 years, 200 Centres in 2025-26
Strengthening urban livelihoods	- Scheme for socio-economic upliftment of urban workers - Help improve incomes and sustainable livelihoods
PM SVANidhi	- Revamped scheme with enhanced loans from banks, UPI-linked credit cards with ₹ 30,000 limit
Social Security Scheme for Online Platform Workers	- Identity cards, registration on e-Shram portal, Healthcare under PM Jan Arogya Yojna for gig workers

Investing in the Economy

Initiative	Key Points
Public Private Partnership in Infrastructure	- Infrastructure-related ministries to come up with a 3-year pipeline of projects in PPP mode, States also encouraged
Support to States for Infrastructure	- Outlay of ₹ 1.5 lakh crore for 50-year interest-free loans to states for capital expenditure and incentives for reforms
Asset Monetization Plan 2025-30	- 2nd Plan for 2025-30 to plough back capital of ₹ 10 lakh crore in new projects
Jal Jeevan Mission	- Extended until 2028 with an enhanced total outlay
Urban Challenge Fund	- ₹ 1 lakh crore fund for ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’, and ‘Water and Sanitation’, Allocation of ₹ 10,000 crore for 2025-26
Nuclear Energy Mission for Viksit Bharat	- Amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act - Research & development of Small Modular Reactors (SMR) with an outlay of ₹ 20,000 crore, 5 indigenously developed SMRs to be operational by 2033
Shipbuilding	- Revamped Shipbuilding Financial Assistance Policy, Large ships above a specified size to be included in the infrastructure harmonized master list (HML)
Maritime Development Fund	- Corpus of ₹ 25,000 crore, Up to 49% contribution by the Government, Balance from ports and private sector
UDAN - Regional Connectivity Scheme	- Modified scheme to enhance regional connectivity to 120 new destinations - Carry 4 crore passengers in the next 10 years, Support helipads and smaller airports in hilly, aspirational, and North East region districts
Greenfield Airport in Bihar	- Greenfield airports in Bihar, Expansion of Patna airport capacity - Brownfield airport at Bihta
Western Koshi Canal Project in Mithilanchal	- Financial support for the Western Koshi Canal ERM Project in Bihar
Mining Sector Reforms	- Policy for recovery of critical minerals from tailings
SWAMIH Fund 2	- ₹ 15,000 crore fund for expeditious completion of another 1 lakh dwelling units - Contribution from the Government, banks, and private investors
Tourism for employment-led growth	- Top 50 tourist destination sites to be developed in partnership with states through a challenge mode

Investing in Innovation

Initiative	Key Points
Research, Development and Innovation	- ₹ 20,000 crore allocated to implement private sector-driven Research, Development and Innovation initiative
Deep Tech Fund of Funds	- Explored to catalyze the next generation startups
PM Research Fellowship	- 10,000 fellowships for technological research in IITs and IISc with enhanced financial support
Gene Bank for Crops Germplasm	- 2nd Gene Bank with 10 lakh germplasm lines for future food and nutritional security
National Geospatial Mission	- Develop foundational geospatial infrastructure and data
Gyan Bharatam Mission	- Survey, documentation, and conservation of manuscript heritage, Cover more than 1 crore manuscripts, Undertaken with academic institutions, museums, libraries, and private collectors

Exports as the 4th Engine of Development

Export Promotion Mission

Initiative	Key Points
Export Promotion Mission	- Driven jointly by the Ministries of Commerce, MSME, and Finance, Sectoral and ministerial targets
BharatTradeNet	- Unified platform for international trade, Trade documentation and financing solutions
National Framework for GCC	- Guidance to states for promoting Global Capability Centres, Focus on emerging tier 2 cities

Reforms as Fuel: Financial Sector Reforms and Development

Initiative	Key Points
FDI in Insurance Sector	- FDI limit raised from 74% to 100% for companies investing the entire premium in India
Credit Enhancement Facility by NaBFID	- NaBFID to set up a ‘Partial Credit Enhancement Facility’ for corporate bonds for infrastructure
Grameen Credit Score	- Public Sector Banks to develop ‘Grameen Credit Score’ framework - Serve the credit needs of SHG members and people in rural areas
Pension Sector	- Forum for regulatory coordination and development of pension products
High Level Committee for Regulatory Reforms	- Review of all non-financial sector regulations, certifications, licenses, and permissions
Investment Friendliness Index of States	- will be Launched in 2025 to further the spirit of competitive cooperative federalism
Jan Vishwas Bill 2.0	- Decriminalize more than 100 provisions in various laws

Part B: Direct Tax

Personal Income Tax

Initiative	Key Points
Tax-Free Income Limit	- No personal income tax payable up to income of ₹ 12 lakh (₹ 1 lakh per month) - Excludes special rate income such as capital gains
Tax-Free Limit for Salaried Taxpayers	- ₹ 12.75 lakh for salaried taxpayers due to standard deduction of ₹ 75,000
Benefits of New Structure	- Substantially reduce taxes for the middle class, Boost household consumption, savings, and investment, Leave more money in the hands of the middle class
New Income-Tax Bill	- Clear and direct tex, Simple to understand for taxpayers and tax administration - Lead to tax certainty and reduced litigation
Revenue Foregone	- About ₹ 1 lakh crore in direct taxes

Revised Tax Rate Structure

TDS/TCS Rationalization for Easing Difficulties

Initiative	Key Points
TDS Rationalization	- Reduction in the number of rates and thresholds above which TDS is deducted
TDS Limit for Senior Citizens	- Doubled from ₹ 50,000 to ₹ 1 lakh for tax deduction on interest
TDS Limit on Rent	- Increased from ₹ 2.40 lakh to ₹ 6 lakh annually
TCS Threshold for LRS	- Increased from ₹ 7 lakh to ₹ 10 lakh
Higher TDS Deduction	- Applies only in non-PAN cases
Decriminalization of TCS Delay	- Decriminalization for cases of delay in payment of TCS up to the due date of filing statement

Reducing Compliance Burden

Initiative	Key Points
Small Charitable Trusts/Institutions	- Increased registration period from 5 years to 10 years
Self-Occupied Properties	- Benefit of claiming the annual value as nil extended for two such properties without any condition

Ease of Doing Business

Initiative	Key Points
Arm's Length Price Scheme	- Scheme for determining arm's length price of international transactions for a block period of three years
Safe Harbour Rules	- Expansion of scope to reduce litigation and provide certainty in international taxation
National Savings Scheme (NSS)	- Exemption of withdrawals made by individuals on or after August 29, 2024
NPS Vatsalya Accounts	- Similar treatment as normal NPS accounts, subject to overall limits

Employment and Investment

Initiative	Key Points
Tax Certainty for Electronics Manufacturing	- Presumptive taxation regime for non-residents providing services to resident companies establishing or operating electronics manufacturing facilities
Safe Harbour for Tax Certainty	- Introduction of a safe harbour for non-residents storing components for supply to specified electronics manufacturing units

Tonnage Tax Scheme for Inland Vessels

Initiative	Key Points
Tonnage Tax Scheme Extension	- Benefits of the existing tonnage tax scheme extended to inland vessels registered under the Indian Vessels Act, 2021, Promotes inland water transport in the country

Indirect Tax

Rationalization of Customs Tariff Structure for Industrial Goods

Initiative	Key Points
Removal of Tariff Rates	- 7 tariff rates removed (in addition to seven removed in 2023-24), 8 remaining tariff rates, including ‘zero’ rate
Application of Cess	- Appropriate cess to maintain effective duty incidence, Marginal reduction in incidence for a few items
Levy of Cess/Surcharge	- Not more than one cess or surcharge, Social Welfare Surcharge on 82 tariff lines exempted
Revenue Foregone	- About ₹ 2,600 crore in indirect taxes

Relief on Import of Drugs/Medicines

Initiative

Key Points

Exemption from BCD

(Basic Customs Duty)

- 36 lifesaving drugs and medicines fully exempted from BCD

- Specified drugs and medicines under Patient Assistance Programmes fully exempted

- 37 more medicines added along with 13 new patient assistance programmes

Concessional Customs Duty

- 6 lifesaving medicines to attract concessional customs duty of 5%

Support to Domestic Manufacturing and Value Addition

Initiative	Key Points
Critical Minerals	- Cobalt powder and waste, scrap of lithium-ion battery, Lead, Zinc, and 12 more critical minerals fully exempted from BCD
Textiles	- 2 more types of shuttle-less looms fully exempted from textile machinery, BCD rate on knitted fabrics revised from “10% or 20%” to “20% or ₹ 115 per kg, whichever is higher”
Electronic Goods	- BCD on Interactive Flat Panel Display (IFPD) increased from 10% to 20%, BCD reduced to 5% on Open Cell and other components, BCD on parts of Open Cells exempted
Lithium Ion Battery	- 35 additional capital goods for EV battery manufacturing exempted - 28 additional capital goods for mobile phone battery manufacturing exempted
Shipping Sector	- Exemption of BCD on raw materials, components, consumables, or parts for the manufacture of ships extended for another 10 years, Same dispensation to continue for ship breaking
Telecommunication	- BCD reduced from 20% to 10% on Carrier Grade ethernet switches

Export Promotion

Initiative	Key Points
Handicraft Goods	- Time period for export extended from six months to one year, further extendable by another three months if required, 9 items added to the list of duty-free inputs
Leather Sector	- BCD on Wet Blue leather fully exempted, Crust leather exempted from 20% export duty
Marine Products	- BCD reduced from 30% to 5% on Frozen Fish Paste (Surimi) for manufacture and export of its analogue products, BCD reduced from 15% to 5% on fish hydrolysate for manufacture of fish and shrimp feeds
Domestic MROs for Railway Goods	- Railways MROs to benefit similarly to aircraft and ships MROs in terms of import of repair items - Time limit extended for export of such items from 6 months to one year and made further extendable by one year

Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman also said that Democracy, Demography and Demand are key pillars of Viksit Bharat journey. She said that the middle class gives strength of India’s growth and the Government has periodically hiked the ‘Nil tax’ slab in recognition to their contribution. She said the proposed new tax structure will substantially boost consumption, savings and investment, by putting more money in the hands of the middle class.

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Budget 2025-26: Highlights and major announcements