On February 1, 2025, India's Finance Minister Nirmala Sitharaman presented the Union Budget, introducing significant reforms aimed at stimulating economic growth, enhancing consumer spending, and promoting sustainable development.
Key Highlights of the Union Budget 2025:
1. Personal Income Tax Reforms:
To bolster the middle class and increase disposable income, the government has revised the income tax slabs under the new tax regime:
- Income up to ₹12 lakh: No tax liability.
- Standard Deduction: Increased to ₹75,000 from the previous ₹50,000.
This means individuals earning up to ₹12.75 lakh annually will be exempt from income tax.
For incomes above ₹12.75 lakh, the updated tax rates are as follows:
These adjustments are anticipated to boost household consumption, savings, and investment.
2. Agricultural Initiatives:
The budget places a strong emphasis on agriculture with the introduction of the Prime Minister Dhan-Dhaanya Krishi Yojana, targeting 100 districts and benefiting approximately 1.7 crore farmers. Additionally, a six-year mission focusing on pulses aims to reduce import dependence by enhancing the production of Tur, Urad, and Masoor dals.
3. Support for Startups and MSMEs:
Recognizing the pivotal role of startups and Micro, Small, and Medium Enterprises (MSMEs) in economic growth, the government has abolished the angel tax, facilitating easier capital acquisition for early-stage startups. Furthermore, a new scheme will provide term loans for MSMEs to purchase machinery and equipment without collateral, bolstering their operational capabilities.
4. Infrastructure and Innovation:
An allocation of ₹20,000 crore has been designated to implement a private sector-driven Research, Development, and Innovation initiative. This fund aims to stimulate advancements across various sectors, fostering a culture of innovation and technological progress.
5. Energy and Sustainability:
The budget underscores the importance of energy security and transition, with investments directed towards nuclear, solar, and pumped storage projects. The government also plans to set emission targets for hard-to-abate sectors, promoting a shift towards cleaner energy sources.
6. Corporate Taxation and Business Environment:
To enhance the ease of doing business, the government has proposed the establishment of a high-level committee for regulatory reforms and the creation of an investment friendliness index. These measures aim to attract both domestic and foreign investments, fostering a more conducive business environment.
Finally:
The Union Budget 2025 reflects the government's commitment to fostering economic growth through comprehensive reforms in taxation, agriculture, innovation, and sustainability. By alleviating the tax burden on the middle class and supporting key sectors, the budget aims to stimulate consumption, encourage investment, and pave the way for a resilient and prosperous economy.