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Union Budget 2025: Zero Income Tax upto ₹12 Lakh Income under New Tax Regime, announces Sitharaman

Rashi Rawal

New Delhi: Finance Minister Nirmala Sitharaman presented the 2025 Union Budget, and as it was hinted earlier by Prime Minister Narendra Modi and President Droupdi Murmu, the Budget turned out to be ‘pro-middle class’. In a bid to cheer, the middle-class finance minister Nirmala Sitharaman announced on Saturday that zero income tax will be levied till ₹12 lakh income under the revised new tax regime. Nirmala Sitharaman also added that a new and “simpler” income tax bill will be introduced next week.

Also, now all taxpayers will be able to file IT returns for the last 4 years together. Earlier this limit was 2 years. Whereas for senior citizens, the TDS limit has been increased from ₹50 thousand to ₹1 lakh.

For the Year 2025-26, the finance minister said that the total receipts other than borrowing are estimated at Rs 34.96 Lakh crore. She added that total expenditure is estimated at Rs 50.65 lakh crore. Talking about fiscal deficit which is estimated to be 4.4 percent of GDP whereas to finance the fiscal deficit, the net market borrowings from dated securities are estimated at ₹11.54 lakh crore.

It was the first complete budget of Modi Govt 3.0 and was presented by Finance Minister Nirmala Sitharaman for the 8th time consecutively. Finance Minister Nirmala Sitharaman said that this budget is part of the efforts to accelerate growth, achieve overall development, increase investment in the private sector, strengthen domestic sensibilities and increase the spending capacity of the middle class.

Top 75 Highlights of Budget 2025 By FM Nirmala Sithraman

1. No Income Tax upto Income of Rs 12 Lakhs, New Slab Rates for all Taxpayers benefiting Middle Class
2. FM proposes to introduce the New Income Tax Bill next week
3. The New Bill be Half of the present Income Tax law in terms of chapters and words
4. TDS on Senior Citizen Rs 1 lakhs plus on interest TDS on Rent Rs 6 Lakhs onwards
5. 90 Lakhs filed updated returns Now you can file Income Tax Returns for past 4 years in ITR U
6. The focus is on inclusive development and boosting middle-class spending.
7. Budget aims to accelerate growth and unlock the nation’s potential.
8. Budget will initiate reforms in primarily 6 domains — taxation, urban development, mining, financial sector, power and regulatory reforms.
9. Plant with annual capacity of 12.7 lakh metric tons to be set up at Namrup, Assam
10. 3 dormant urea plants in the Eastern region had been reopened
11. Investment limit for #MSME classification to be made 2.5 times. Turnover limits for MSME classification to be doubled
12. Government to provide support to National Cooperatives Development Corporation for its lending operations for cooperative sector
13. Kisan Credit Card: Facilitates loans for 7.07 crore farmers. Loan limit will be increased from Rs3 lakh to Rs5 lakh under KCC
14. Boosts Footwear, Leather & Toys Industry!
15. New scheme for footwear & leather sector to create 22 lakh jobs, ₹4L Cr revenue & ₹1.1L Cr+ exports.
16. Toys sector to get a dedicated scheme to make India a global manufacturing hub! 17. Announces 5-year mission to promote cotton production
18. 5 national centres will be set up for skilling in partnerships in manufacturing. Expansion of capacity in IITs – 100% increase in last 10 years. Additional infra will be created for 6500 more students in new IITs.
19. New Fund of Funds for Startups to be set up
20. Fresh contribution of another ₹ 10,000 crore, in addition to the existing government contribution of Rs. 10,000 crore.
21. New Scheme for 5 lakh Women, Scheduled Castes and Scheduled Tribes first-time entrepreneurs
22. Centre of excellence in #AI for education to be set up with outlay of Rs. 500
23. To add 75000 medical seats in the next 5 years
24. The government will establish a national institute of food technology, entrepreneurship and management in Bihar.
25. The Centre will launch a 6-year programme for Atamnirbharta in pulses
26. Credit guarantee cover to be enhanced for MSMEs and start-ups
27. 75 thousand seats will increase in IIT
28. Cancer hospitals will open in every district Broadband facility will be available in primary schools
29. The government will create a ₹1 lakh crore Urban Challenge Fund aimed at transforming cities into growth hubs. The fund will finance 25% of the cost of bankable projects, with an allocation of ₹10,000 crore for 2025-26.The remaining 50% will be funded through bonds, bank loans, and public-private partnerships (PPPs).
30. FM announces Dhan Dhanya Krishi Yojna in partnership with states. Scheme to cover 100 Districts. Says 1.7 crore farmers will be benefited.
31. A new scheme has been launched to offer term loans with a five-year tenure, benefiting 5 lakh women from SC/ST communities.
32. The Finance Minister announced a dedicated scheme for India’s footwear and leather sector, expected to generate employment for 22 lakh individuals, achieve a revenue of ₹4 lakh crore, and boost exports to over ₹1.1 lakh crore.
33. For the toys sector, the government will implement a scheme to make India a global manufacturing hub.
34. Saksham Anganwadi and Poshan 2.0 programs will provide vital nutritional support to 8 crore children, 1 crore mothers, and 20 lakh adolescent girls, focusing on lactating women, adolescent girls, and children.
35. 50.000 Atal Tinkering Laboratories (ATLs) will be set up in government schools in the next 5 years to foster scientific temper in young minds. Broadband connectivity is to be provided to all secondary schools.
36. Five National Centres of Excellence for Skilling will be established to equip the youth with the necessary skills for global opportunities. The Finance Minister also promised global skilling partnerships to enable India to become a key player in global manufacturing.
37. The PM Swanidhi Scheme will be revamped with higher loan limits and the introduction of a ₹30,000 UPI-linked credit card. The government will also facilitate identity card issuance and registration on the e-Shram portal for gig workers, providing insurance coverage for nearly 1 crore workers.
38. 3-year pipeline of projects by states to be given that can be implemented in private-public partnership (PPP) mode. Each infrastructure-related ministry is to come up with a 3-year plan to be implemented in PPP mode. The outlay of ₹1.5 lakh crore is proposed for 50-year interest-free loans.
39. Extend Jal Jeevan mission with an enhanced outlay, focus on quality infrastructure and O&M. 15 crore households have been provided portable tap water access under Jal Jeevan Mission
40. 100GW nuclear enegery by 2047 is essential for energy transition
41. The modified UDAN scheme will be launched to connect 120 new destinations and cater to 4 crore passengers over the next 10 years.
42. India’s cities are set for transformation! The ₹1L Cr Urban Challenge Fund will fuel creative redevelopment, enhance water & sanitation infra, and turn cities into growth hubs. With ₹10K Cr allocated for FY 2025-26, the future of urban India looks ambitious!
43. hrust on investment in infrastructure continues with focus on PPP projects and asset monetization among others
44. Each infrastructure-related ministry to come up with a 3-year pipeline of PPP infra projects
45. Financial assistance will be provided for Western Kosi Canal Project in Mithilanchal region of Bihar
46. Focus Product Scheme for Footwear & Leather Sectors is expected to facilitate employment for 22 lakh persons, turnover of ₹4 lakh crore and exports of over ₹ 1.1 lakh crore
47. Scheme to Make India a Global Toys Hub; To create high-quality toys representing the Made In India brand
48. Mudra loans to be provided to homestays, says FM.
49. Medical tourism and ‘heal in India’ to be promoted in partnership with private sector. Top 50 tourism destination sites will be developed in partnership with states
50. Extension of Jal Jivan Mission till 2028, It started in 2019. 100% household receive clean water through tap.
51. The government will offer a national guidance framework to help states promote Global Capability Centres (GCCs) and enhance their growth.
52. Centralized KYC system soon
53. Jan Vishwas 2.0 bill to decriminalise over 100 provisions in existing laws.
54. Banks will be required to maintain a Grameen credit score for self-help groups to facilitate better financial access and support.
55. Govt to draft model bilateral investment treaty to attract foreign investment
56. Insurance FDI hiked from 74% to 100%
57. The revised estimate of the total receipts other than borrowings is Rs 31.47 lakh crore of which the net tax receipts are Rs 25.57 lakh crore.
58. Scheme to cover 100 districts with low productivity, moderate crop intensity and below-average credit parameters
59. 10,000 fellowships to be provided under the PM Research Fellowship scheme in next five years, for technological research in IITs and IISc
60. Investing in Research, Development and Innovation ₹ 20,000 crore for private-sector driven Research, Development and Innovation initiative announced in the July Budget
61. National Geospatial Mission to be launched to develop foundational geospatial infrastructure and data
62. India ranks second largest globally in fish production and aquaculture. Seafood exports are valued at 60,000 Crore Rupees. To unlock the untapped potential of the marine sector, the government will bring in an enabling framework for sustainable harnessing of fisheries from the Indian exclusive economic zone and high seas with a special focus on the Andaman and Nicobar and Lakshadweep Islands.
63. FastTrack Merger for companies
64. Propose removal of 7 tariff rates over an above those in removed in earlier budget. Only 8 tariff rates to remain after the new move.
65. Fiscal Deficit at 4.4% of GDP
66. Propose removal of 7 tariff rates over an above those in removed in earlier budget. Only 8 tariff rates to remain after the new move.
67. The threshold limit for TCS on LRS remittances has been increased from ₹7 lakh to ₹10 lakh.
68. The TDS threshold limit on rent has been raised to ₹6 lakh.
69. It is proposed to remove TCS on education loans up to ₹10 lakh from specified financial institutions.
70. The new income tax bill will retain nearly half of the existing provisions and introduce personal income tax reforms with a focus on the middle class. It will also rationalise the tax deducted at source (TDS) and tax collected at source (TCS) regime by reducing the number of rates and adjusting thresholds.
71. TCS on sales removed
72. Scheme to be introduced for determining arm’s length price of international transaction for a block period of three years, to streamline transfer pricing and to provide an alternative to yearly examination
73. Tax exemption to be provided on withdrawals made from National Savings Scheme by individuals on or after 29th August, 2024
74. Compliance burden for small charitable trusts & institutions to be reduced, by increasing their registration period from 5 years to 10 years
75. Taxpayers to be allowed to claim annual value of two self-occupied properties as nil without any condition

 

Budget Estimates as per FM Nirmala Sitharaman 

Total receipts other than borrowing are estimated at ₹34.96 lakh crore.
Total expenditure is estimated at ₹50.65 lakh crore.
Fiscal Deficit is estimated to be 4.4% of GDP.
To finance the fiscal deficit, the net market borrowings from dated securities are estimated at ₹11.54 lakh crore.

 

Public-Private Partnership in Infrastructure

Each infrastructure-related ministry to come up with a three-year pipeline of projects that can be implemented in PPP mode. States will also be encouraged to do so and can seek support from the India Infrastructure Project Development Fund, which is a scheme to prepare PPP proposals. An outlay of 1.5 lakh crore is proposed for the 50-year interest-free loans to states for capital expenditure and incentives for reforms

Nuclear Energy Mission for Viksit Bharat

FM Sitharaman announced, “Development of at least 100 GW of #NuclearEnergy by 2047, which is crucial for our energy transition efforts. To foster an active partnership with the private sector towards this goal, amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will be pursued.

 

36 Life-saving drugs become duty-free

FM Nirmala Sitharaman said, “Those suffering from Cancer, chronic or other severe diseases; I propose to add 36 life-saving drugs and medicines to the list of medicines fully exempted from basic customs duty.”

FM Announces Expansion of Capacity in IITs

Sitharaman said, Total number of students in 23 IITs have increased 100% from 65,000 to 1.35 lakh in the past 10 years. Additional infrastructure will be created in the five IITs, started after 2014 to facilitate education for 6,500 more students. Center of Excellence in AI for Education will be set up. A center of excellence in artificial intelligence for education will be set up with a total outlay of ₹500 crores.

 

Nirmala Sitharaman announced, “Modified ‘Udaan’ scheme will carry four crore additional passengers in the next 10 years… the scheme will also support helipads, and smaller airports in hilly, aspirational and northeast regional districts.”

Greenfield airports will be facilitated in Bihar to meet the future needs of the state, announced FM Sitharaman, after which Opposition began sloganeering in Parliament.

FM announces Zero Income Tax till ₹12 Lakh Income under New Tax Regime

FM Announces New Fund of Funds for Startups 

A new scheme under the budget focuses on empowering 5 lakh women, Schedule cast and tribe first-time entrepreneurs by providing term loans up to Rs 2 crore over the next five years. The budget 2025 includes a new Rs 10,000 crore Fund of Funds Startup enhancing the existing government contribution of the same amount, aimed at fostering entrepreneurship in India.


FM Announces new classification criteria for MSMEs 

 

FM Sitharaman announces Urea Plant in Assam

FM announces a Plant with an annual capacity of 12.7 lakh metric tons to be set up at Namrup, Assam. 3 dormant urea plants in the Eastern region had been reopened.

FM Sitharaman announces National Institute of Food Technology, Entrepreneurship and Management in Bihar

National Institute of Food Technology, Entrepreneurship and Management to be set up in Bihar.  To provide a strong fillip to food processing activities in the entire Eastern region. 

 

Nirmala Sitharaman on Dhan Dhaanya Krishi Yojna 

PM Dhan Dhaanya Krishi Yojana – developing agri districts program…Our government will undertake a PM Dhan Dhaanya Krishi Yojana in partnership with states. Through the convergence of existing schemes and specialised measures, the program will cover 100 districts with low productivity, moderate crop intensity and below-average credit parameters. It aims to enhance cultural productivity

Nirmala Sithraman on MSMEs

MSMEs, the second engine of the Union Budget 2025…Currently over one crore registered MSMEs, generating 37 per cent of our manufacturing, have come together to position India as a global manufacturing hub, these MSMEs are responsible for 45 per cent of our exports. To help them, the investment and turnover limits for classification of all MSMEs will be enhanced to 2.5 and two times respectively. This will give them the confidence to grow and generate employment for our youth

FM Nirmala Sitharaman starts reading Union Budget 2025. Watch Live here:

Congress Leader Jairam Ramesh on Budget 2025

Budget has an intent, content – it both make the extent of the budget. We don’t have much expectations from the budget that some big announcements will be made and that will encourage private investment… Let’s see if there will be some tax relaxation for the middle class or not. Also, we need to see if the investors get some relaxation from the ‘tax terrorism’. We have demanded some reforms in GST. Modi 3.0 is being discussed all over the world, let’s see when GST 2.0 comes

 

Union Finance Minister Nirmala Sitharaman arrives at the Parliament. She will present the Union Budget at 11 am. Earlier she met President Droupadi Murmu at the Rashtrapati Bhavan.

Finance Minister Nirmala Sitharaman along with Minister of State for Finance Pankaj Chaudhary and senior officials of the Ministry of Finance met President Droupadi Murmu at Rashtrapati Bhavan before presenting the Union Budget.  President Droupadi Murmu on this occasion granted best wishes and fed FM Sitharaman ‘Dahi Cheeni’.

The unveiling of the Economic Survey on Friday sets the stage for Finance Minister Nirmala Sitharaman to present the Union Budget for 2025-26 in Parliament on Saturday (February 1), which is expected to continue the government’s policy of giving a big push to economic growth with equity. The government has prioritised improving the quality of life in rural areas to ensure equitable and inclusive development, according to the Economic Survey 2024-25.

The survey highlights financial inclusion as a key focus, with rural households and small businesses getting easier access to credit through microfinance institutions, self-help groups and other intermediaries. It outlines key initiatives in infrastructure, rural housing, sanitation, clean fuel, social protection, and connectivity, along with efforts to boost rural livelihoods.

Accordingly, the agriculture and rural sectors are expected to get increased allocations in the Budget as are welfare schemes to uplift the poor. The Finance Minister is also expected to continue with the government’s policy of stepping up investments in big-ticket infrastructure projects to spur growth and create more jobs in the economy in the Budget for 2025-26.

The Economic Survey has also highlighted that a significant investment in infrastructure is required over the next ten years to achieve India’s development goals. While there are varying estimates on the exact amount needed, there is general agreement that current spending on infrastructure must increase to meet these goals.

With this in mind, the government has placed a strong focus on infrastructure over the past five years. As a result, capital spending by the central government on major infrastructure sectors has grown at an average rate of 38.8 per cent from FY20 to FY24, the survey has pointed out. There may be concessions for the middle-class which is pinning hope on a reduction in income-tax rates, along with a hike in standard deduction.

Under the old tax regime, the basic income exemption limit is set at Rs 2.50 lakh, while for those opting for the new tax regime, the limit is fixed at Rs 3 lakh. The lower income tax burden would place more disposable income in the hands of the people to accelerate demand and give a further fillip to growth.

The economic survey has also highlighted that rising private consumption is playing a key role in helping India’s domestic economy remain steady amidst global uncertainties.

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