In her record eighth Budget Presentation, Indian Finance Minister Nirmala Sitharaman tried to reach out to the aggrieved salaried group by announcing an exemption of tax on income up to Rs. 12 lakh (USD, 13,841), a move that is expected to boost the spending capacity of the middle class.
Amid high food inflation and shrinking disposable incomes that affected the country’s growth story, the FM, who has been accused of unleashing tax terrorism earlier, announced transformative reform in taxation while addressing farmers, the poor and youth besides women.
The FM said the salaried class will not pay any income tax upto Rs 12.75 lakh per annum in the new tax regime while recognising the four engines of growth- agriculture, MSME actor, investment and exports.
From sporting a Madhubani saree to mentioning Bihar again and again in the budget speech in the first part, the FM ensures that the voters take note of her announcements in poll-bound Bihar (later this year), helmed by NDA ally the JDU of Chief Minister Nitish Kumar.
Nirmala Sitharaman announced the setting up of a Makhana board in Bihar to help Makhana farmers get benefits from the Central schemes.
In another key annoucement, the FM raised the FDI limit for the insurance sector from 74 to 100 per cent, for those companies which invest the entire premium in India.
Highlights of Budget 2025-2026
DIRECT TAX
No personal income tax payable upto income of Rs 12 lakh (i.e. average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime.
This limit will be Rs 12.75 lakh for salaried tax payers, due to standard deduction of Rs 75,000.
The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment.
The new Income-Tax Bill to be clear and direct in text so as to make it simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation.
Revenue of about ₹ 1 lakh crore in direct taxes will be forgone.
Revised tax rate structure
In the new tax regime, the revised tax rate structure will stand as follows:
0-4 lakh rupees: Nil
4-8 lakh rupees: 5 percent
8-12 lakh rupees: 10 percent
12-16 lakh rupees: 15 percent
16-20 lakh rupees: 20 percent
20- 24 lakh rupees: 25 percent
Above 24 lakh rupees: 30 percent
AGRICULTURE AS THE 1ST ENGINE OF DEVELOPMENT
Prime Minister Dhan-Dhaanya Krishi Yojana – Developing Agri Districts ProgrammeThe programme to be launched in partnership with the states, covering 100 districts with low productivity, moderate crop intensity and below-average credit parameters, to benefit 1.7 crore farmers.
Building Rural Prosperity and Resilience
A comprehensive multi-sectoral programme to be launched in partnership with states to address under-employment in agriculture through skilling, investment, technology, and invigorating the rural economy.
Phase-1 to cover 100 developing agri-districts.
Government to launch a 6-year “Mission for Aatmanirbharta in Pulses” with focus on Tur, Urad and Masoor.
NAFED and NCCF to procure these pulses from farmers during the next 4 years.
A comprehensive programme to promote production, efficient supplies, processing, and remunerative prices for farmers to be launched in partnership with states.
A Makhana Board to be established to improve production, processing, value addition, and marketing of makhana.
A National Mission on High Yielding Seeds to be launched aiming at strengthening the research ecosystem, targeted development and propagation of seeds with high yield, and commercial availability of more than 100 seed varieties.
Government to bring a framework for sustainable harnessing of fisheries from Indian Exclusive Economic Zone and High Seas, with a special focus on the Andaman & Nicobar and Lakshadweep Islands.
Mission for Cotton Productivity
A 5-year mission announced to facilitate significant improvements in productivity and sustainability of cotton farming, and promote extra-long staple cotton varieties.
Enhanced Credit through KCC
The loan limit under the Modified Interest Subvention Scheme to be enhanced from ₹ 3 lakh to ₹ 5 lakh for loans taken through the KCC.
A plant with an annual capacity of 12.7 lakh metric tons to be set up at Namrup, Assam.
MSMEs AS THE 2ND ENGINE OF DEVELOPMENT
Customized Credit Cards with ₹ 5 lakh limit for micro enterprises registered on Udyam portal, 10 lakh cards to be issued in the first year.
A new Fund of Funds, with expanded scope and a fresh contribution of ₹ 10,000 crore to be set up.
A new scheme for 5 lakh women, Scheduled Castes and Scheduled Tribes first-time entrepreneurs to provide term-loans upto ₹ 2 crore in the next 5 years announced.
Focus Product Scheme for Footwear & Leather Sectors
To enhance the productivity, quality and competitiveness of India’s footwear and leather sector, a focus product scheme announced to facilitate employment for 22 lakh persons, generate turnover of ₹ 4 lakh crore and exports of over ₹ 1.1 lakh crore.
Measures for the Toy Sector
A scheme to create high-quality, unique, innovative, and sustainable toys, making India a global hub for toys announced.
Support for Food Processing
A National Institute of Food Technology, Entrepreneurship and Management to be set up in Bihar.
Manufacturing Mission – Furthering “Make in India”
A National Manufacturing Mission covering small, medium and large industries for furthering “Make in India” announced.
INVESTMENT AS THE 3RD ENGINE OF DEVELOPMENT
Investing in People
The cost norms for the nutritional support to be enhanced appropriately.
Atal Tinkering Labs
50,000 Atal Tinkering Labs to be set up in Government schools in next 5 years.
Broadband Connectivity to Government Secondary Schools and PHCs
Broadband connectivity to be provided to all Government secondary schools and primary health centres in rural areas under the Bharatnet project.
Bharatiya Bhasha Pustak Scheme
Bharatiya Bhasha Pustak Scheme announced to provide digital-form Indian language books for school and higher education.
5 National Centres of Excellence for skilling to be set up with global expertise and partnerships to equip our youth with the skills required for “Make for India, Make for the World” manufacturing.
Expansion of Capacity in IITs
Additional infrastructure to be created in the 5 IITs started after 2014 to facilitate education for 6,500 more students.
A Centre of Excellence in Artificial Intelligence for education to be set up with a total outlay of ₹ 500 crore.
10,000 additional seats to be added in medical colleges and hospitals next year, adding to 75000 seats in the next 5 years.
Day Care Cancer Centres in all District Hospitals
Government to set up Day Care Cancer Centres in all district hospitals in the next 3 years, 200 Centres in 2025-26.
Strengthening urban livelihoods
A scheme for socio-economic upliftment of urban workers to help them improve their incomes and have sustainable livelihoods announced.
PM SVANidhi
Scheme to be revamped with enhanced loans from banks, UPI linked credit cards with ₹ 30,000 limit, and capacity building support.
Social Security Scheme for Welfare of Online Platform Workers
Government to arrange for identity cards, registration on e-Shram portal and healthcare under PM Jan Arogya Yojna, for gig-workers.
Investing in the Economy
Infrastructure-related ministries to come up with a 3-year pipeline of projects in PPP mode, States also encouraged.
An outlay of ₹1.5 lakh crore proposed for the 50-year interest free loans to states for capital expenditure and incentives for reforms.
Asset Monetization Plan 2025-30
Second Plan for 2025-30 to plough back capital of ₹ 10 lakh crore in new projects announced.
Jal Jeevan Mission
Mission to be extended until 2028 with an enhanced total outlay.
Urban Challenge Fund
An Urban Challenge Fund of ₹ 1 lakh crore announced to implement the proposals for ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’ and ‘Water and Sanitation’, allocation of ₹ 10,000 crore proposed for 2025-26.
Nuclear Energy Mission for Viksit Bharat
Amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act to be taken up.
Nuclear Energy Mission for research & development of Small Modular Reactors (SMR) with an outlay of ₹20,000 crore to be set up, 5 indigenously developed SMRs to be operational by 2033.
Shipbuilding
The Shipbuilding Financial Assistance Policy to be revamped.
Large ships above a specified size to be included in the infrastructure harmonized master list (HML).
Maritime Development Fund
A Maritime Development Fund with a corpus of ₹ 25,000 crore to be set up, with up to 49 per cent contribution by the Government, and the balance from ports and private sector.
UDAN – Regional Connectivity Scheme
A modified UDAN scheme announced to enhance regional connectivity to 120 new destinations and carry 4 crore passengers in the next 10 years.
Also to support helipads and smaller airports in hilly, aspirational, and North East region districts.
Greenfield Airport in Bihar
Greenfield airports announced in Bihar, in addition to the expansion of the capacity of Patna airport and a brownfield airport at Bihta.
Western Koshi Canal Project in Mithilanchal
Financial support for the Western Koshi Canal ERM Project in Bihar.
A policy for recovery of critical minerals from tailings to be brought out.
SWAMIH Fund 2
A fund of ₹ 15,000 crore aimed at expeditious completion of another 1 lakh dwelling units, with contribution from the Government, banks and private investors announced.
Tourism for employment-led growth
Top 50 tourist destination sites in the country to be developed in partnership with states through a challenge mode.
Investing in Innovation
Research, Development and Innovation
₹20,000 crore to be allocated to implement a private sector driven Research, Development and Innovation initiative announced in the July Budget.
Deep Tech Fund of Funds
Deep Tech Fund of Funds to be 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 to be set up for future food and nutritional security.
National Geospatial Mission
A National Geospatial Mission announced to develop foundational geospatial infrastructure and data.
Gyan Bharatam Mission
A Gyan Bharatam Mission for survey, documentation and conservation of our manuscript heritage with academic institutions, museums, libraries and private collectors to be undertaken to cover more than 1 crore manuscripts announced.
EXPORTS AS THE 4TH ENGINE OF DEVELOPMENT
Export Promotion Mission
An Export Promotion Mission, with sectoral and ministerial targets, driven jointly by the Ministries of Commerce, MSME, and Finance to be set up.
BharatTradeNet
‘BharatTradeNet’ (BTN) for international trade to be set-up as a unified platform for trade documentation and financing solutions.
National Framework for GCC
A national framework to be formulated as guidance to states for promoting Global Capability Centres in emerging tier 2 cities.
REFORMS AS FUEL: FINANCIAL SECTOR REFORMS AND DEVELOPMENT
FDI in Insurance Sector
The FDI limit for the insurance sector to be raised from 74 to 100 per cent, for those companies which invest 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 to serve the credit needs of SHG members and people in rural areas.
A forum for regulatory coordination and development of pension products to be set up.
High Level Committee for Regulatory Reforms
A High-Level Committee for Regulatory Reforms to be set up for a review of all non-financial sector regulations, certifications, licenses, and permissions.
Investment Friendliness Index of States
An Investment Friendliness Index of States to be launched in 2025 to further the spirit of competitive cooperative federalism announced.
Jan Vishwas Bill 2.0
The Jan Vishwas Bill 2.0 to decriminalize more than 100 provisions in various laws.
