Finance Minister Nirmala Sitharaman presented the Union Budget for the financial year 2025-26, focusing on empowering taxpayers and fostering job creation, despite a shift in the government's priorities on infrastructure spending. Here are the five key takeaways from the budget:
1) Massive Income Tax Cuts Bring Relief to Taxpayers
Middle-class taxpayers, who have long expressed concerns over high taxes, are now set to benefit from substantial income tax cuts. The Finance Minister announced a significant increase in the income tax rebate limit, raising it to Rs 12 lakh annually, up from the previous Rs 7 lakh. The new tax structure also ensures that individuals with an income of Rs 24 lakh or above will now be subject to the highest tax rate of 30%. This measure will leave taxpayers with more disposable income, which the government hopes will fuel consumption and, in turn, stimulate growth and job creation.
Income Tax Slabs Under New Regime
| Income Range |
Tax Rate |
| Rs 4 to 8 lakh |
5% |
| Rs 8 to 12 lakh |
10% |
| Rs 12 to 16 lakh |
15% |
| Rs 16 to 20 lakh |
20% |
| Rs 20 to 24 lakh |
25% |
| Rs 24 lakh and above |
30% |
2) Fiscal Discipline Maintained: Deficit to Reduce
Despite the significant tax relief, the government has committed to maintaining fiscal discipline. The fiscal deficit for 2025-26 is expected to be reduced to 4.4% of GDP, a positive signal for the economy. This demonstrates the government's focus on controlling borrowing, ensuring that interest rates do not spike, and avoiding inflationary pressures.
3) Capital Expenditure Growth Slows Down
While capital expenditure (capex) was a key focus in previous budgets, it appears to have taken a backseat this year. The government missed its capex target for the current financial year by nearly Rs 1 lakh crore, and the budgeted allocation for the coming year is less than Rs 10,000 crore higher than the previous year. However, it remains significant when compared to historical norms.
4) Focus on Employment Generation
This budget shifts its focus towards creating more jobs, addressing a major concern for the government. The Production Linked Incentive (PLI) scheme, which initially favored capital-heavy industries, now gives more attention to sectors like textiles and leather, which traditionally generate more jobs for the same level of economic activity.
5) Push for Regulatory Reforms
In a bid to make business operations smoother, the Finance Minister announced the creation of a committee to explore necessary regulatory reforms. While this step is a welcome move, it comes somewhat late, over a decade after the current government took office.
These key highlights of Budget 2025 point to a government keen on boosting the economy through tax relief and job creation while maintaining fiscal prudence.
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