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The Union Budget 2025-26, presented by Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman, outlines a vision for "Sabka Vikas," aimed at balanced growth across all regions. The budget recognizes Agriculture, MSMEs, Investment, and Exports as the four engines of India's economic development, with significant reforms in taxation, urban development, financial sectors, and regulatory frameworks.

Key Highlights

Taxation Relief for Middle-Class and Salaried Individuals

• No income tax for individuals earning up to ₹12 lakh per annum under the new tax regime.

• Salaried individuals earning up to ₹12.75 lakh per annum to pay NIL tax due to a standard deduction of ₹75,000.

• Updated income tax returns filing period extended from two to four years.

• TDS on rent increased from ₹2.4 lakh to ₹6 lakh.

• Delay in TCS payment decriminalized.

Strengthening Economic Growth: The Four Engines

1st Engine: Agriculture

• 'Prime Minister Dhan-Dhaanya Krishi Yojana' to cover 100 low agricultural productivity districts, benefiting 1.7 crore farmers.

• Launch of "Mission for Aatmanirbharta in Pulses" focusing on Tur, Urad, and Masoor.

• Kisan Credit Card (KCC) loan limit increased from ₹3 lakh to ₹5 lakh under the modified interest subvention scheme.

• Investment in post-harvest storage, irrigation, and crop diversification.

2nd Engine: MSMEs

• Credit guarantee cover for MSMEs increased from ₹5 crore to ₹10 crore.

• National Manufacturing Mission to promote "Make in India" initiatives.

• ₹2 crore term loans to be provided to 5 lakh first-time entrepreneurs from SC/ST communities and women.

• Government-backed scheme for India's toy manufacturing industry.

3rd Engine: Investment

• 50,000 Atal Tinkering Labs to be established in government schools over the next five years.

• ₹1 lakh crore Urban Challenge Fund for “Cities as Growth Hubs.”

• ₹20,000 crore allocated for private-sector-driven R&D and innovation initiatives.

• Nuclear Energy Mission launched for Small Modular Reactors with ₹20,000 crore allocation.

• ₹15,000 crore SWAMIH Fund to complete 1 lakh stressed housing units.

• Broadband connectivity to all government schools and rural health centers under BharatNet Project.

• Gig workers to receive identity cards, e-Shram registration, and healthcare under PM Jan Arogya Yojana.

4th Engine: Exports

• Export Promotion Mission launched to help MSMEs expand into global markets.

• FDI limit in insurance increased from 74% to 100%.

• Development of infrastructure and warehousing for air cargo, particularly for perishable goods.

• Boost to domestic electronics manufacturing for Industry 4.0 integration.

Taxation & Fiscal Policy

• Fiscal deficit target for FY25 at 4.8%, with a target to reduce it to 4.4% in FY26.

• Government to maintain fiscal discipline while boosting investments.

• New tax rate structure under the revised tax regime:

  Income Bracket (₹)	Tax Rate
  0 – 4 Lakh	NIL
  4 – 8 Lakh	5%
  8 – 12 Lakh	10%
  12 – 16 Lakh	15%
  16 – 20 Lakh	20%
  20 – 24 Lakh	25%
  Above 24 Lakh	30%

• ₹1 lakh crore revenue loss expected due to income tax cuts, benefiting middle-class taxpayers.

Customs and Manufacturing Boost

• Customs duty exemptions for 36 lifesaving drugs, including those for cancer and rare diseases.

• Exemptions on raw materials for shipbuilding and EV battery manufacturing for 10 years.

• BCD on Interactive Flat Panel Display (IFPD) increased to 20%, while it is reduced to 5% on open cells to support local manufacturing.

Financial Sector Reforms

• Introduction of "Jan Vishwas Bill 2.0" to decriminalize over 100 provisions in various laws.

• Light-touch regulatory framework to ease compliance for businesses.

• Mechanism under FSDC to evaluate financial regulations and enhance responsiveness.

• Introduction of "Investment Friendliness Index of States" in 2025 to encourage cooperative federalism.

Infrastructure & Urban Development

• Modified UDAN scheme to enhance regional air connectivity to 120 new destinations.

• Jal Jeevan Mission extended until 2028 with a focus on quality and rural water infrastructure.

• Expansion of National Geospatial Mission for urban planning and smart cities.

Education & AI Innovation

• Centre of Excellence in AI for Education with ₹500 crore outlay.

• Bharatiya Bhasha Pustak Scheme for digital textbooks in Indian languages.

• Expansion of AI-based education solutions and skilling initiatives for emerging tech jobs.

Conclusion

The Union Budget 2025-26 builds on India's commitment to economic stability, tax rationalization, inclusive growth, and sustainable development. With a strong focus on strengthening the four engines of growth, the government aims to empower the middle class, boost MSMEs, enhance investments, and expand export potential while maintaining fiscal prudence. The proposed reforms, tax reductions, and infrastructure investments are expected to accelerate India's journey towards becoming a $5 trillion economy.

This budget solidifies India's vision for a Viksit Bharat, ensuring a strong, inclusive, and self-reliant economy for the future.