Union Budget 2025-26: Key Highlights, Impact, and Insights

The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, is a pivotal event that outlines India’s economic roadmap for the coming fiscal year. 

With the theme “Sabka Vikas” (Inclusive Growth), the budget focuses on stimulating balanced development across all regions, emphasizing agriculture, MSMEs, investment, and exports as the four engines driving the journey towards a Viksit Bharat (Developed India).

Whether you’re a business owner, individual taxpayer, investor, or part of the agrarian community, understanding the significant changes and proposals can help you make informed decisions. 

In this comprehensive analysis, we’ll break down the key aspects of the Budget live 2025-26, examine its impact on various sectors, and highlight how it influences the economic landscape for businesses and individuals in India.

1. Key Changes in Taxation Under Union Budget 2025

The Union Budget 2025-26 introduces significant reforms in the income tax structure, aiming to enhance transparency, alleviate the financial burden on the middle class, and promote financial inclusion.

Download Latest PDF of the speech

Income tax slabs union budget 2025

One of the most noteworthy announcements is the revision of the personal income tax slabs:

Income	Tax Rate
Income up to ₹4 Lakhs	NIL
₹4 Lakhs – ₹8 Lakhs	5% Tax
₹8 Lakhs – ₹12 Lakhs	10% Tax
₹12 Lakhs – ₹16 Lakhs	15% Tax
₹16 Lakhs – ₹20 Lakhs	20% Tax
₹20 Lakhs – ₹24 Lakhs	25% Tax
Above ₹24 Lakhs	30% Tax

Key Highlights:

• No income tax on annual income up to ₹12 Lakhs (average monthly income of up to ₹1 Lakh).
• Salaried individuals earning up to ₹12.75 Lakhs per annum will pay zero tax due to a standard deduction of ₹75,000.
• Over 90 Lakh taxpayers paid additional tax to update their income.
• Government revenue loss of approximately ₹1 Lakh crore due to these reforms.
• The time limit for Income Tax Returns has been extended from 2 years to 4 years.
• Nearly 33,000 taxpayers settled disputes for the Vivad Se Vishwas Scheme.

TDS/TCS Rationalization

• Senior Citizens: Tax deduction on interest income increased from ₹50,000 to ₹1 Lakh.
• TDS on Rent: Threshold increased from ₹2.4 Lakhs to ₹6 Lakhs per annum.
• TCS Payments: Delay in TCS payments decriminalized.

These tax reforms are designed to put more money into the hands of the middle class, stimulate consumer demand, encourage investment, and foster economic growth across all sectors.

2. Key Proposals for the Business Sector 

The Union Budget 2025-26 includes measures focused on supporting businesses, particularly in the MSME and startup sectors, recognizing them as key drivers of economic growth.

Support for MSMEs

1. Credit Availability: Enhancement of credit with guarantee cover for MSMEs from ₹5 Crore to ₹10 Crore.

2. Investment and Turnover Limits: For MSME classification, investment and turnover limits are enhanced to 2.5 times and 2 times, respectively.

3. Women, SC/ST Entrepreneurs: New scheme providing term loans up to ₹2 Crore to 5 Lakh for first-time entrepreneurs over the next 5 years.

Startup Incentives

1. Tax Exemptions: Extension of the period of incorporation for eligible startups by 5 years.

2. Research and Development: Allocation of ₹20,000 Crore to implement private sector-driven R&D initiatives.

These initiatives aim to strengthen the business environment, create job opportunities, and enhance the competitiveness of Indian enterprises.

3. Impact on the Agriculture and Rural Sector 

Agriculture is recognized as the first engine of growth in the budget, with several initiatives announced to boost productivity, sustainability, and rural prosperity.

In alignment with the government’s vision to uplift the agricultural sector, several key initiatives have been introduced to address the challenges faced by farmers and enhance rural development.

i) Prime Minister Dhan-Dhaanya Krishi Yojana

Coverage: 100 districts with low agricultural productivity

Objectives:

1. Increase Agricultural Productivity: Improve overall crop yields and promote crop diversification.
2. Improvement in Infrastructure: Strengthening post-harvest storage systems and enhancing irrigation facilities to support agricultural growth.
3. Credit Access: Facilitate the availability of both long-term and short-term credit to farmers for sustained growth and development.

ii) Mission for Aatmanirbharta in Pulses

Duration: 6 years

Focus Areas:

• Special emphasis on three key pulses: Tur, Urad, and Masoor.

Procurement:

• Central agencies like NAFED (National Agricultural Cooperative Marketing Federation of India) and NCCF (National Cooperative Consumers’ Federation) will procure as much as farmers offer during the next four years, ensuring better market access for pulse growers.

iii) Kisan Credit Cards (KCC)

Loan Limit Increase: The loan limit for KCC holders has been raised from ₹3 Lakhs to ₹5 Lakhs under the modified interest subvention scheme.

Beneficiaries: 1.7 Crore farmers stand to benefit from this enhanced financial support, empowering them with greater access to credit for agricultural activities.

Other Agricultural Initiatives

• Comprehensive Programme for Vegetables & Fruits.
• National Mission on High Yielding Seeds.
• Five-year Mission for Cotton Productivity.

These measures reflect the government’s commitment to strengthening the rural economy and ensuring that agriculture remains a cornerstone of India’s economic growth.

4. Healthcare and Education Reforms 

Recognizing the importance of healthcare and education in building a robust economy, the Union Budget 2025-26 prioritizes reforms in these sectors.

i) Healthcare Initiatives

• Increased Healthcare Spending: Significant boost in funding focusing on affordable healthcare for all citizens.
• Public Health Infrastructure: Investments in expanding medical facilities and supporting healthcare workers.
• Gig Workers’ Healthcare: Gig workers will be included under PM Jan Arogya Yojana (Ayushman Bharat scheme).

ii) Education Initiatives

• Atal Tinkering Labs: Setting up 50,000 labs in government schools over the next 5 years to foster innovation.
• Bharatiya Bhasha Pustak Scheme: Providing digital Indian language books for school and higher education.
• Broadband Connectivity: Provision to all government secondary schools under the Bharatnet project.
• Upskilling Centers: Establish five national centers of excellence for skilling with global expertise.

These measures aim to build a healthier, more educated workforce, contributing to the nation’s long-term growth.

5. Infrastructure Development and Green Energy

Investing in infrastructure and green energy initiatives is a significant Union Budget 2025-26 focus.

Urban Development

• Urban Challenge Fund: Allocation of ₹1 Lakh Crore for ‘Cities as Growth Hubs’, creative redevelopment, water, and sanitation.
• Jal Jeevan Mission: Extension till 2028 with a focus on quality infrastructure and maintenance through community participation.
• Regional Connectivity: Modified UDAN Scheme to enhance connectivity to 120 new destinations.
• Asset Monetization Plan 2025-30: Second plan to plough back capital of ₹10 Lakh Crore into new projects.

Green Energy Initiatives

• Nuclear Energy Mission: Allocation of ₹20,000 Crore for R&D of Small Modular Reactors.
• Renewable Energy Projects: Continued support and incentives for solar and wind power initiatives.

These infrastructure developments will be crucial in driving India’s economic growth, making it more sustainable and resilient in the face of future challenges.

6. GST on Gold, Jewellery, and Gems

While the budget speech did not explicitly mention changes to GST rates on gold, jewelry, and gems, measures have been proposed to support the industry.

• GST Rate on Gold and Jewellery: The government has proposed reducing the GST on gold and jewelry from 3% to 1.5% to make these products more accessible to consumers. 
• Facilitating Exports of Handicrafts: Fully exempted Basic Customs Duty (BCD) on Wet Blue Leather for value addition and employment.
• Raw Materials for Ship Building: BCD exemption extended for another 10 years.
• Manufacture of Open Cells: BCD on parts of open cells exempted to promote domestic manufacturing.

These proposals aim to streamline the gold trade and significantly boost the jewelry industry, benefiting manufacturers and consumers by reducing tax-related costs.

How Will the Union Budget 2025-26 Impact Your Business? 

The Union Budget 2025-26 brings numerous changes that can impact your business, whether you’re an entrepreneur or a corporate entity. Here’s how it can benefit you:

• Tax Savings: Lower taxes and incentives for businesses in the MSME and startup sectors will provide relief and boost profitability.
• Access to Finance: Easier access to credit and the government’s focus on innovation and R&D will allow businesses to expand and invest in new technologies.
• Growth in Rural Markets: The focus on rural development means businesses targeting rural India can expect increased opportunities, particularly in sectors like agriculture, retail, and healthcare.

Conclusion 

The Union Budget 2025-26 offers a comprehensive roadmap for India’s economic future. From changes in taxation to new proposals for business, agriculture, healthcare, and infrastructure, the budget addresses the country’s most pressing needs while fostering growth and innovation.

Individuals and businesses can make strategic decisions to thrive in the evolving economic landscape by staying informed about these reforms. The government’s focus on “Sabka Vikas” underscores its commitment to inclusive growth, ensuring every citizen benefits from India’s development journey.

For personalized guidance and professional consultation related to taxation, business registration, and compliance, please contact Registerkaro.

Frequently Asked Questions (FAQs) 

Q1: What are the main highlights of the Union Budget 2025-26?
A: The budget emphasizes tax reforms, MSME support, agricultural sustainability, and infrastructure development, with key initiatives like revised income tax slabs, increased credit for MSMEs, and support for innovation.

Q2: How will the Union Budget 2025-26 benefit businesses in India?
A: MSMEs and startups will benefit from tax cuts, increased credit, and incentives for growth, while infrastructure and rural development initiatives open new markets for expansion.

Q3: Are there any changes in income tax rates in the Union Budget 2025-26?
A: Income tax slabs have been revised, with zero tax for individuals earning up to ₹12 Lakhs annually and a ₹75,000 standard deduction for salaried individuals.

Q4: What is the government’s plan for infrastructure development?
A: The budget allocates substantial funds for urban and rural infrastructure, including a ₹1 Lakh Crore Urban Challenge Fund and regional connectivity projects under the Modified UDAN Scheme.

Q5: How does the budget support the agriculture sector?
A: Initiatives like the Dhan-Dhaanya Krishi Yojana, the Mission for Aatmanirbharta in Pulses, and increased KCC loan limits aim to boost productivity, sustainability, and farmers’ income.