The Union Finance Minister of India Nirmala Sitharaman on February 1, 2025 presented her eighth consecutive budget for the fiscal 2025-26. Sitharaman in her speech, termed the budget GYAN an acronym for Garib, Yuva, Annadata (farmers) and Naari, highlighting the focus areas for the Bharatiya Janata Party-led government.
Further the 2025-26 budget also introduces reforms across key sectors of taxation, nuclear energy, mining and urban development with a special focus on Bihar, keeping in mind the upcoming state elections.
Significant changes in Income Tax
The budget introduces big moves in reforming the taxation sector, with changes to personal finances and introduction of the new income tax bill.
Highlighting the extension in the deadline for filing tax returns to four years, Sitharaman announced that taxpayers will not have to pay income tax on earnings up to ₹12 lakh.
At present, taxpayers can choose either between the old system which allows exemptions for rent and insurance, or the new system, which has lower tax rates but doesn’t offer many exemptions.
Here’s the structure of the new tax regime:
Income | Tax Rate |
Rs 0-4 lakh | Nil |
Rs 4-8 lakh | 5%
|
Rs 8-12 lakh | 10%
|
Rs 12-16 lakh | 15% |
Rs 16-20 lakh | 20%
|
Rs 20-24 lakh | 25%
|
Above Rs 24 lakh | 30% |
The budget also increases the income tax exemption limit to ₹12 lakh from the earlier ₹7 lakh and raises the Tax Deducted at Source (TDS) on rental income to ₹6 lakh from the previous ₹2.4 lakh. In a significant aid to senior citizens, the Union budget has announced that they can now earn up to ₹1 lakh in interest without paying tax on it.
Health
In an attempt to ease health care access, the budget has proposed the inclusion of 36 life-saving drugs and medicines in the exempt from basic customs duty list. Additionally, Sitharaman said that six life-saving medicines will be added to the list, attracting a reduced customs duty of 5%.
The budget has also announced that starting 2025, the government will set up daycare centres in district hospitals for cancer patients, aiming for 200 centres in the first year.
Further, in a boost to medical education, the budget allocates increasing the seats in medical colleges and hospital, starting with 10,000 seats in 2025, reaching 75,000 seats over five years.
Agriculture
The Finance Minister said that the government will launch the 'Prime Minister Dhan-Dhaanya Krishi Yojana' in collaboration with states to improve agriculture in 100 low-productivity districts, benefiting 1.7 crore farmers. The budget also announced that farmers, fisherfolk and dairy farmers could now avail of loans of up to ₹5 lakh from the earlier ₹3 lakh, via the Kisan Credit Cards.
To support scores of cotton farmers, Sitharaman announced the five year sustainability initiative, Mission for Cotton Productivity, a move to enhance farming and production of new varieties of cotton.
Infrastructure
The Union government will allocate ₹1.5 lakh crore in interest-free loans to states over a 50-year period.
The government's existing Jal Jeevan Mission, which focuses on getting potable tap water to households has been extended to 2028, with increased focus on improving infrastructures.
Education
Focusing on the newer technology institutes, the budget has announced adding facilities to cater to 6,500 more students in IITs built post 2014, when the Bharatiya Janata Party first came to power.
The budget has allowed set aside ₹500 crore, to build a new educational Centre of Excellence in Artificial Intelligence.
Nuclear Energy
As a part of transitioning towards cleaner energy sources, India aims to generate at least 100 gigawatts (GW) of electricity from nuclear power by 2047. To reach this target, the government intends to collaborate closely with private companies and amend the Atomic Energy Act and the Civil Liability for Nuclear Damage Act.
The Finance Minister introduced A Nuclear Energy Mission for Small Modular Reactors (SMRs) with an allocation of ₹20,000 crore. By 2033, the goal is to have at least 5 SMRs indigenously developed.
Special focus on Bihar
The budget announced big gifts for Bihar, ahead of a crucial assembly election in the state. From farming, education, aviation, the budget has added key upgrades to aid the state's development.
The state is set to revamp its air routes with new Greenfield airports (those built on undeveloped land), a brownfield airport (built on existing airport infrastructure) and capacity expansion plans for the existing Patna airport.
Bringing aid to the state's growing fox nuts or makhana industry, the budget has announcement setting up of a Makhana board to focus on cultivation, processing and marketing of the popular snack.
The government has also announced bettering the infrastructure at the Indian Institute of Technology Patna and building a National Institute of Food Technology, Entrepreneurship, and Management in the state.
Financial assistance will be provided for the Western Koshi Canal ERM Project, benefiting farmers across 50,000 hectares in Bihar's Mithilanchal region.