3 main points from the budget
1. Major Tax Relief for Middle-Class and Salaried Individuals
Budget 2025 introduces significant income tax relief, ensuring no tax on income up to ₹12 lakh per annum (₹1 lakh per month) in the New Tax Regime. Salaried individuals earning up to ₹12.75 lakh annually will also pay zero tax due to a standard deduction of ₹75,000. These changes aim to boost household savings, increase disposable income, and drive economic consumption.
2. Strengthening the Four Growth Engines: Agriculture, MSMEs, Investment, and Exports
The government recognizes Agriculture, MSMEs, Investment, and Exports as key drivers of economic development. Initiatives include the Prime Minister Dhan-Dhaanya Krishi Yojana for improving agricultural productivity, a ₹10 crore credit guarantee cover for MSMEs, and a ₹1 lakh crore Urban Challenge Fund to develop cities as economic hubs. A National Manufacturing Mission will also strengthen India’s industrial and export capabilities.
3. Investment in Innovation, Infrastructure, and Digital Economy
The budget prioritizes investment in technology, skilling, and infrastructure. Notable allocations include ₹500 crore for an AI Centre of Excellence in Education, ₹20,000 crore for private-sector-driven R&D, and 50,000 Atal Tinkering Labs in government schools. Other key measures include broadband connectivity in rural schools and hospitals, a ₹1.5 lakh crore interest-free loan scheme for state capex, and enhanced support for gig workers and startups.
10 number-based facts from the Union Budget 2025-26:
100% FDI – Foreign Direct Investment (FDI) limit in insurance raised from 74% to 100% to attract global investment.
₹12 Lakh – No income tax for annual income up to ₹12 lakh under the new tax regime, benefiting the middle class.
₹5 Lakh – Loan limit under Kisan Credit Card (KCC) increased from ₹3 lakh to ₹5 lakh under a modified interest subvention scheme.
₹10 Crore – MSME credit guarantee cover enhanced from ₹5 crore to ₹10 crore to support small businesses.
₹1 Lakh Crore – Urban Challenge Fund introduced to develop cities as growth hubs.
₹50,000 – Atal Tinkering Labs to be set up in government schools over the next 5 years to promote innovation.
₹20,000 Crore – Allocated for private-sector-driven R&D and innovation initiatives, including AI and emerging technologies.
₹30,000 – UPI-linked credit cards to be introduced under PM SVANIDHI scheme to provide easy credit access for small vendors.
120 New Destinations – UDAN scheme expansion to enhance regional air connectivity across India.
₹15,000 Crore – SWAMIH Fund to complete 1 lakh stalled housing units, boosting the real estate sector.
7 negative points of budget of 2025
Failing to Reduce the Tax Burden on the Middle Class
Budget 2025 must provide tax relief to the middle class, which faces high direct and indirect taxes. The last major revision was in 2014, and inflation has since eroded disposable incomes. Increasing exemptions and deductions would boost consumption, benefiting economic growth and improving financial stability for salaried taxpayers.
Superficial Tweaks to the New Tax Regime Won’t Work
Minor adjustments to the New Tax Regime have failed to attract taxpayers, with 28% still opting for the Old Tax Regime. These taxpayers contribute significantly to revenues. Without bold incentives in Budget 2025, the transition will stall, leaving high-value taxpayers reluctant to switch due to lost deductions and exemptions.
Not Aligning EPFO 3.0 with Tax Support for Members
EPFO 3.0 aims to boost retirement savings but risks lowering take-home salaries. Currently, EPF contributions fall under Section 80C. Without separate tax benefits in the New Tax Regime, higher contributions may financially strain employees. Budget 2025 must introduce targeted relief to make the transition smoother and widely accepted.
Further Capital Gains Tax Changes Would Be a Mistake
Frequent capital gains tax changes create investor uncertainty. In 2024, indexation benefits on real estate were removed, angering taxpayers. Any further increases or restrictions would deter investments. Budget 2025 should prioritize stability, avoiding unnecessary modifications that complicate compliance and reduce investor confidence in India’s capital markets.
Ignoring a Big Capex Push Could Be a Blunder
With private investment slowing and unemployment rising, government-led capital expenditure (capex) is crucial for economic growth. In FY25, capex allocation was ₹11.11 lakh crore, but concerns persist. Budget 2025 must continue infrastructure investments to sustain momentum, generate jobs, and stimulate demand, preventing further economic stagnation.
Failing to Attract Long-Term Foreign Capital Could Be a Setback
Declining FDI and FII inflows threaten economic stability. Geopolitical risks, China’s resurgence, and U.S. interest rate shifts have reduced investor confidence. Budget 2025 must introduce tax incentives, regulatory reforms, and sector-specific policies to attract foreign investment, ensuring India remains a competitive destination for global capital and innovation.
Lack of Incentives for Startups and Emerging Tech Could Slow Progress
India risks falling behind in AI, deep tech, and biotech without strong policy support. Budget 2025 should introduce tax incentives, R&D funding, and regulatory simplifications to foster innovation. Higher GST thresholds, easier compliance, and better input tax credit access can improve cash flow, enabling startups to scale rapidly.
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