Union Budget 2025-26: What’s New, What’s Next

Overview

The Union Budget 2025-26 is more than just a financial blueprint—it’s a strategy to utilize India’s resources effectively. This budget plays a crucial role in shaping India’s economic policies, influencing GDP growth, inflation and employment levels. With a clear focus on creating Viksit Bharat (Developed India), this budget prioritizes economic growth, social equity, and, relief for middle-class taxpayers and small businesses. It is designed to empower all segments of society, including salaried professionals, small entrepreneurs, or farmers. By balancing long-term prosperity and the immediate needs of everyday citizens, the budget lays the foundation for a thriving, inclusive economy.

Get ready for a roadmap that combines big ambitions with practical, people-friendly solutions, ensuring everyone has a stake in India’s growth story!

 
Key focus Areas

The Budget 2025-26 targets the following key growth engines:

 

Theme wise key focus areas of Union Budget 2025-26

 

Main Theme	Sub-Themes	Key Focus Areas
Viksit Bharat (Developed India)	Inclusive growth, long-term sustainability, fiscal prudence	Balanced economic expansion, poverty alleviation
Four Growth Engines	Agriculture, MSMEs, Investment, Exports	Strengthening self-reliance, job creation
Economic Growth & Infrastructure	Capex allocation, Asset monetization, Industrial corridors	Enhancing productivity, modernizing transport & logistics
Taxation & Fiscal Management	Fiscal deficit reduction, Rationalized taxation, GST reforms	Fiscal discipline, Ease of Doing Business
Social Welfare & Inclusivity	Rural development, Women empowerment, Education, Healthcare	Improving livelihoods, skill development
Make in India & Digital Economy	AI, Fintech, Crypto regulation, Manufacturing incentives	Boosting domestic industry, digital transformation
Green Growth & Sustainability	Renewable energy, Electric vehicles, Climate resilience	Achieving net-zero targets, energy security

By focusing on sectors like Agriculture, MSMEs, Investment, and Exports, the budget aims to create a balanced ecosystem where growth is shared by all, ensuring a brighter future for every segment of society.

Vision for Viksit Bharat

The vision of Viksit Bharat is anchored in a robust foundation of sustainable economic growth, with a clear commitment to achieving zero poverty, universal education, affordable healthcare, and high employment. This budget is designed to not only propel India toward becoming a global economic powerhouse but also ensure that the benefits of growth reach every corner of society. By focusing on creating equal opportunities, the budget balances ambitious growth targets with the urgent social welfare needs of the population, ensuring that no one is left behind in the nation’s progress. It’s a holistic approach that strives for both prosperity and equity, making sure that inclusive development becomes the cornerstone of India’s rise as a developed nation.

Targets Ahead

Category	Targets
Physical Targets	Ø  Agriculture: Coverage of 100 districts under ‘Prime Minister Dhan-Dhaanya Krishi Yojana’ to boost productivity, crop diversification, irrigation, and post-harvest storage. Ø  Education & Skilling: Establishment of 50,000 Atal Tinkering Labs in government schools over the next five years. Ø  Healthcare: Broadband connectivity for all government primary health centres in rural areas under BharatNet. Ø  Infrastructure: A three-year pipeline of projects under PPP mode with a renewed focus on capital expenditure. Ø  Water Supply: Jal Jeevan Mission extended till 2028 to ensure rural piped water supply and improve infrastructure maintenance.
Financial Targets	Ø  Investment in Infrastructure: ₹1.5 lakh crore interest-free loans for states to boost capital expenditure. Ø  Asset Monetization: ₹10 lakh crore under the second Asset Monetization Plan 2025-30 for reinvestment in infrastructure. Ø  MSME Credit Access: Loan limits for Kisan Credit Cards increased from ₹3 lakh to ₹5 lakh. Ø  Taxation: Standard deduction for salaried individuals raised from ₹50,000 to ₹75,000; revised TDS structure to ease compliance for small businesses and digital transactions. Ø  Startups & MSMEs: Tax benefits extended to encourage new enterprises, particularly in fintech and manufacturing.
New Initiatives	Ø  Agriculture: Launch of a six-year “Mission for Aatmanirbharta in Pulses” to enhance domestic production of key pulses. Ø  Women Entrepreneurs: New credit scheme for 5 lakh women, SC/ST first-time entrepreneurs, with term loans up to ₹2 crore over the next five years. Ø  Make in India: A National Manufacturing Mission to develop India’s small, medium, and large industries. Ø  AI & Tech: Establishment of a Centre of Excellence in Artificial Intelligence for education with a total outlay of ₹500 crore. Ø  Digital Economy: reduced TDS rates on online gaming to improve liquidity. Ø  Crypto: Stricter regulatory oversight on crypto exchanges; reduced TDS rates on crypto transactions.

Tax Reforms and Simplification

The latest budget brings forward significant tax reforms designed to ease the burden on the middle class, offering relief through various measures aimed at simplifying the tax system and increasing efficiency. The changes focus on streamlining processes and ensuring that salaried individuals, families, and startups benefit from lower tax liabilities and simplified procedures.

 

Key Highlights of the Tax Reforms:

1.New Income Tax Slabs for the Middle Class

One of the standout reforms is the introduction of new tax slabs under the revised tax regime. Notably, there will be no tax up to ₹12 Lakhs of total income, excluding incomes taxable at special rates (such as capital gains). The new tax slab structure is as follows:

Total Income (Rs.)	Tax Rates under new tax regime
0-4 Lakhs	Nil
4 Lakhs- 8 Lakhs	5%
8 Lakhs- 12 Lakhs	10%
12 Lakhs- 16 Lakhs	15%
16 Lakhs- 20 Lakhs	20%
20 Lakhs- 24 Lakhs	25%
Above 24 Lakhs	30%

2. Increased Rebate under Section 87A

The rebate under Section 87A has been significantly increased from ₹25,000 to ₹60,000, providing further relief to individuals in the lower and middle-income brackets.

 

3. Simplification of TDS and TCS Provisions

The budget also proposes reducing various Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) rates while increasing threshold limits, making it easier for individuals to comply with tax provisions.

 

4. Extension of Time for Filing Updated Returns

The government has also made it easier for taxpayers to file updated returns. Starting from the assessment year 2025-26, taxpayers will be allowed to file updated returns within 4 years (up from 2 years), giving them more flexibility and time to rectify any errors or omissions in their filings.

 

5.Simplified Transfer Pricing Provisions

The budget proposes simplifying transfer pricing provisions to further ease compliance for businesses, encouraging more straightforward and transparent reporting.

 

6.Increased Relief for Startups

To support startups, the budget includes a major relief in the form of 100% tax deductions for startups for 5 consecutive years within the first 10 years of their operations, an increase from the previous 3-year period.

Agriculture and Rural Development Initiatives

The Budget 2025-26 places a strong focus on revitalizing the agriculture sector and fostering rural development through targeted initiatives. Key measures include:

 

• Prime Minister Dhan-Dhaanya Krishi Yojana: Aimed at enhancing productivity in rural areas, this initiative focuses on improving farming techniques, providing better infrastructure, and supporting farmers in 100 low-productivity districts.

• Self-Sufficiency in Pulses: The government’s Mission for Aatmanirbharta in Pulses targets increased domestic production of essential pulses like Tur, Urad, and Masoor, reducing reliance on imports and ensuring food security.

• Expansion of Kisan Credit Card (KCC) Loans: The loan limit for KCC has been increased from ₹3 lakh to ₹5 lakh, providing farmers with greater financial support for their agricultural activities.

• Boosting Cotton and Makhana Production: Dedicated missions have been launched to increase cotton productivity and support the growth of Makhana production in Bihar, offering new income opportunities and improving livelihoods in rural communities.

These initiatives are designed to enhance agricultural productivity, boost farmer incomes, and promote sustainable rural development, contributing to the overall growth of the economy.\

MSMEs and Industry

The Budget 2025-26 places strong emphasis on empowering Micro, Small, and Medium Enterprises (MSMEs), which are vital to India’s economy. Key initiatives include:

 

• Revised MSME Classification: The budget revises the classification criteria, increasing the investment and turnover limits for MSMEs, making it easier for businesses to access government schemes and support.

• Enhanced Credit Guarantees: The credit guarantee limit has been enhanced for Micro and Small Enterprises (up to ₹10 crore) and Startups (up to ₹20 crore), offering these businesses better access to financing for expansion and innovation.

• Make in India Support: A significant push is given to clean-tech industries like solar PV, electric vehicle (EV) batteries, and wind turbines, aligning with the government’s goal of reducing carbon emissions and boosting the manufacturing sector’s global competitiveness.

These measures are designed to strengthen domestic industries, foster innovation, and help MSMEs compete globally, ensuring sustainable economic growth.

Infrastructure Boost

The Budget 2025-26 allocates ₹1.5 lakh crore in interest-free loans to states for capital investments in infrastructure development. Focus areas include:

 

• Greenfield Airports: The establishment of new airports, particularly in underserved regions like Bihar, will enhance connectivity and support regional economic growth.

• Maritime and Nuclear Energy Projects: Major maritime infrastructure projects, alongside investments in nuclear energy (targeting 100 GW by 2047), aim to strengthen India’s energy security and develop key transport and energy sectors.

These initiatives are crucial for improving connectivity, supporting regional development, and creating a sustainable infrastructure base that will stimulate economic growth and enhance India’s global competitiveness.

 

Social Welfare Programs

The budget underscores the government’s commitment to inclusive growth with several key social welfare initiatives:

• Saksham Anganwadi & Poshan 2.0: Increased funding for child and maternal nutrition, aimed at improving health outcomes in rural areas.

• PM SVANidhi Scheme: The expansion of this scheme offers higher loan limits to street vendors, empowering them to improve their livelihoods and business operations.

• Social Security for Gig Workers: Social security provisions for gig and platform workers are enhanced, ensuring healthcare access under PM Jan Arogya Yojana.

• Broadband Connectivity: Plans for improving broadband access in secondary government schools and public health centers will boost education and healthcare infrastructure.

These efforts highlight the government’s focus on social equity, ensuring that the benefits of growth reach every section of society.

 

The government has set a fiscal deficit target of 4.4% of GDP for the Budget 2025-26, balancing the need for growth with fiscal responsibility. Key fiscal targets include:

 

• Total Expenditure: ₹65 lakh crore, reflecting a strategic investment in critical sectors like infrastructure, social welfare, and industry.
• Tax Receipts: Projected at ₹37 lakh crore, supporting the funding of developmental programs while maintaining fiscal prudence.

This approach ensures that while India’s economic growth is stimulated through strategic investments, fiscal discipline is maintained to ensure long-term economic stability and sustainability.

 

Conclusion

The Union Budget 2025-26 sets the stage for a transformative journey toward a Viksit Bharat , balancing growth, equity, and sustainability. While the emphasis on tax relief for the middle class, support for MSMEs, and investments in infrastructure and rural development is promising, the real question remains: How will these reforms play out in practice, and what impact will they have on India’s socio-economic fabric in the coming years? As the government lays the groundwork for a more inclusive and resilient economy, it opens up a broader conversation about the role of citizens, businesses, and policymakers in shaping the future of India. Will the ambitious targets of this budget lead to tangible improvements in the lives of everyday Indians? Or will challenges in implementation hinder progress? Only time will tell, but the discussion around these critical decisions is one we must all be part of.