Key Takeaways from Union Budget 2025 : Tax Updates & More

The finance minister, Mrs Nirmala Sitharaman, announced the Union Budget 2025-26 and made some crucial reforms regarding the reduction in the income tax, customs, introduction of government schemes, business policies, etc. These reforms are considered to be the catalyst for the country’s aim to become a developed economy by 2047. These reforms will create a significant impact on almost all aspects of the economy. This article explains the key takeaways from the Budget 2025 in detail.

The main theme of Budget 2025 was ‘Sabka Vikas’, and its reforms indicate its emphasis on driving consumption, encouraging manufacturing, improving ease of doing business, holistic upliftment, etc. 

Fiscal Deficit and Economic Growth

Understanding the ongoing fiscal year performance and expectations for the next fiscal year, some of the Budget key takeaways are:

• Gross Domestic Product (GDP) growth is 6.4% and can range from 6.3% to 6.8% in FY 2025–26. 
• Currently, as of FY 2025, the fiscal deficit is expected to be 4.8% of the GDP, and it is estimated to reduce to 4.4% in FY 2026.
• The total receipts are expected to grow by nearly 8% in the FY 2025-26.

Along with these key growth aspects, the government is targeting to reduce inflation in the country.

Due to evolving global landscapes, geo-political pressure, domestic trends, etc., the government has made major expenditures in the defence sector, followed by rural development and home affairs.

Income Tax Amendments

Direct tax reforms are one of the key takeaways of Budget 2025 that has the capability to impact the lives of the middle-class population in the country. Major amendments are made to the new tax regime by changing the slabs and their tax rates. Now, the new tax regime slabs applicable for FY 2025-26 taxation are as follows:

Source: Budget 2025

Moreover, the 100% rebate under Section 87A is made applicable up to the taxable income of ₹ 12 lakhs. Therefore, income up to ₹ 12 lakhs, excluding the special rate incomes, can be claimed as a rebate. The special rate incomes include capital gains, lotteries, etc. 

For example, consider an individual with a taxable income of ₹13 lakhs, including ₹ 1 lakhs of capital gains. 

Tax Slabs	Rate in %	Tax Amount
₹ 0 – ₹ 4 lakhs	Nil	–
₹ 4 lakhs – ₹ 8 lakhs	5%	₹ 20,000
₹ 8 lakhs – ₹ 12 lakhs	10%	₹ 40,000
Total Tax Amount		₹ 60,000

This tax amount will be set off against the rebate under Section 87A. The rest gains of ₹ 1 lakhs will be taxable based on the instrument and its holding period.

Specifically for the old tax regime, investors can get a deduction for NPS Vatsalya under Section 80CCD (1B). Moreover, withdrawals from National Savings Certificates can be exempted from tax liability.

Apart from this relief, some of the crucial amendments are proposed regarding the new Tax Deducted At Source (TDS) thresholds as follows:

• Interest on securities: ₹ 10,000 
• Interest other than interest on securities: ₹ 1 lakhs for senior citizens
• Dividend: ₹ 10,000
• Insurance Commission: ₹ 20,000
• Rent: ₹ 6 lakhs (per annum)

Indirect Tax Reforms

It is one of the most attractive aspects for every individual as it may affect their purchase or sale decisions. Indirect taxes such as Goods and Service Tax and Custom Duty affect the prices for several commodities. Some of the key takeaways of Budget 2025 for custom duty are as follows:

Custom duty reduced or exempted: Cheap	Custom Duty increased: Expensive
36 life-saving medicines	Textile
Cobalt	Flat displays in large screens
Lithium-ion battery scrap	Solar Cells
Mobile phones	Motor vehicles for goods transport

Source: Budget 2025

• The indirect tax proposal can provide the required push to the ‘Make-in-India’ campaign and boost manufacturing in the Electric Vehicle (EV) space.
• Exports of handicrafts, leather and toys can surge significantly.

Ease of Doing Business in India

The corporate direct tax is kept unchanged, but some sector-specific policies are introduced to spread the ease of business in India.

• The Foreign Direct Investment (FDI) limit for the insurance sector is increased to 100%.
• Rationalisation of speedy approval for company mergers.
• State infrastructure support will enhance the logistic support for the businesses.
• Extension of tonnage tax scheme for inland vessels will encourage green transportation in the inland water.
• Extension of tax holidays for eligible startups is a significant step towards building a strong startup ecosystem in the country.

Key Government Schemes in India

Throughout the Budget 2024, a significant focus is laid on increasing consumption in the country. Some of the crucial policies regarding agriculture, rural development, Micro, Small and Medium Enterprises (MSMEs), youth, etc., are as follows:

• PM Dhan-Dhanya Krishi Yojana is introduced to enhance agricultural productivity, promote sustainable practices, etc.
• Credit, insurance, digital service, etc., by the India Post in rural development
• Credit guarantee for MSMEs, exporters and startups is doubled.
• Nuclear Mission for Viksit Bharat.
• National Centre of Excellence for AI.
• Introduction of digital public infrastructure for international business: ‘Bharat Trade Net’.

Conclusion

The Budget 2025 has instilled confidence among the citizens, specifically the taxpayers, for a better future. The reforms related to income tax, business compliance, government schemes, customs duty, etc., can play a pivotal role in driving the growth for the next financial year. Understanding these key takeaways from the Budget 2025 can help individuals plan their upcoming financial year.Log in to PowerUp Money or download its financial management app to stay updated with such different financial concepts and amp up your investment game!