Union Budget 2025

General Budget Classification

The Union Budget is classified into two parts:

• Capital Budget:

  • Capital Receipts: Loans from RBI, foreign governments, or citizens; disinvestment proceeds.  

  • Capital Expenditures: Investments in infrastructure, health facilities, education, machinery, etc.  

• Revenue Budget:

  • Revenue Receipts:

    • Tax Revenues: Income tax, corporate tax, GST, excise duty, customs duty, etc.

    • Non-Tax Revenues: Government fees, fines, profits from public sector undertakings, etc.  

  • Revenue Expenditures: Day-to-day expenses of the government, including salaries, pensions, subsidies, etc.  

Fiscal Outlook and Budget Estimates in Budget 2025

For the fiscal year 2025-26, total receipts are estimated at ₹35.50 lakh crore, with total expenditure at ₹51.00 lakh crore. The fiscal deficit is targeted at 4.5% of GDP, continuing the path of fiscal consolidation.  

Union Budget Highlights 2025

Presented by Finance Minister Nirmala Sitharaman on February 1st, 2025, the following are the key highlights:

1. Agriculture & Rural Development:

   • Kisan Credit Card Boost: The Kisan Credit Card limit has been enhanced from ₹3 lakh to ₹5 lakh, providing increased financial support to farmers.  

2. Education & Healthcare:

   • Expanding IITs: Infrastructure in 5 IITs established after 2014 will be further developed. IIT Patna will see significant expansion.

   • Medical Education Growth: 10,000 additional seats will be added to medical colleges next year, with a target of 75,000 new seats over the next five years, addressing the growing need for healthcare professionals.  

   • AI Excellence: ₹500 crore has been allocated for a Centre of Excellence in Artificial Intelligence, fostering innovation and research in this crucial field.  

3. Social Welfare & Infrastructure:

   • Gig Worker Welfare: A new social welfare scheme will be introduced for gig workers, providing them with enhanced security and benefits.  

   • Jal Jeevan Mission Extended: The vital Jal Jeevan Mission, aimed at providing clean drinking water to all households, has been extended until 2028.  

   • Urban Development: An Urban Challenge Fund of ₹1 lakh crore will be established to address the development needs of urban areas.  

   • Bihar Airport Development: In addition to Patna airport, greenfield airports will be facilitated in Bihar, improving connectivity and boosting economic activity. 

4. Research & Development & Tourism:

   • Private Sector R&D: ₹20,000 crore has been allocated to encourage private sector investment in Research and Development, driving innovation and technological advancement.  

   • Tourism Promotion: The top 50 tourist destinations in India will be developed, with a special focus on destinations linked to Buddha, promoting cultural tourism.  

   • Medical Tourism: "Heal in India" will be promoted to establish India as a leading destination for medical tourism.  

5. Financial Sector:

   • Insurance Sector Boost: The FDI limit for the Insurance sector will be raised to 100% if the entire premium is invested in India, attracting foreign investment and strengthening the sector.  

   • KYC Streamlining: A revamped KYC (Know Your Customer) Registry will be rolled out, simplifying the process and reducing compliance burdens.  

6. Customs & Trade:

   • Tariff Rationalization: The government will rationalize the tariff structure to simplify customs procedures and promote ease of doing business.  

   • Life-Saving Drugs: 36 life-saving drugs have been exempted from customs duty, and a 5% duty has been imposed on 6 other life-saving drugs, ensuring affordability and access to essential medicines. 

7. Direct and Indirect Taxes:

   • New Income Tax Bill: A new Income Tax Bill will be introduced soon, aiming to simplify the tax system and make it more efficient.  

   • Tax Reforms for Middle Class: Personal Income Tax reforms will be implemented to provide relief to the middle class.  

   • No Tax up to ₹12 Lakh: No income tax will be levied on income up to ₹12 lakh, benefiting a large segment of the population.

   • Income Tax Slab Changes: Income tax slabs have been revised, potentially leading to lower tax burdens for various income groups.  

   • TDS/TCS Rationalization: TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) provisions will be rationalized to simplify compliance.  

   • Increased TDS Limit on Rent: The limit for TDS on rent has been increased from ₹2.4 lakh to ₹6 lakh.

   • Increased TDS Limit for Senior Citizens: The TDS limit for senior citizens has been enhanced from ₹50,000 to ₹1,00,000.

   • TCS Removed on Education Remittances: TCS has been removed on remittances for education purposes, making it easier for students to pursue education abroad.  

   • Extended Time Limit for Updated Returns: The time limit for filing updated returns has been extended to 4 years from the present 2 years.

Key Budget Priorities

The budget outlines the followizng priorities to achieve 'Viksit Bharat':

• Sustainable and Green Growth: Promoting renewable energy, energy efficiency, and sustainable practices across all sectors.

• Digital Economy: Expanding digital infrastructure, promoting digital inclusion, and fostering innovation in emerging technologies.  

• Infrastructure Modernization: Investing in modern and sustainable infrastructure to improve connectivity and boost economic growth.

• Inclusive Development: Empowering marginalized communities, promoting social justice, and ensuring access to basic services.  

• MSME Growth: Supporting MSMEs through access to finance, technology, and market linkages.  

• Agriculture Transformation: Modernizing agriculture, promoting diversification, and ensuring food security.  

• Skill Development and Education: Equipping youth with the skills needed for the future economy.

• Healthcare Enhancement: Strengthening healthcare infrastructure and improving access to quality healthcare.

• Fiscal Prudence: Maintaining fiscal discipline and ensuring sustainable economic growth.  

New Tax Regime Benefits

The Union Budget 2025 further refines the new tax regime, making it more attractive for taxpayers. Further simplification of tax slabs have been done.

Changes in New Tax Regime Tax Slabs 

The Union Budget 2025 declares some changes in the new tax regime slabs as per the following: 

Other Initiatives Announced in Union Budget 2025

• Focus on research and development, particularly in green technologies and digital technologies.  

• Initiatives to promote innovation and entrepreneurship.

• Strengthening of social safety nets and welfare programs