Union Budget 2025: Major Tax Reliefs and Economic Boost Measures Announced

KalimNews With Inputs from PIB, February 2, 2025 : The Union Budget 2025, presented on February 1, brings significant tax relief for salaried individuals, bolsters agriculture, and strengthens key economic sectors. In a landmark move, individuals earning up to ₹1 lakh per month will pay no income tax, significantly boosting middle-class household savings and consumption. Under the new tax regime, salaried professionals with an annual income of up to ₹12.75 lakh will be exempt from income tax, easing financial burdens on the workforce.

Reposing faith on the middle class in nation-building, the Union Budget 2025-26 proposes new direct tax slabs and rates under the new income tax regime so that no income tax is needed to be paid for total income up to ₹12 lakh per annum, i.e., an average income of ₹1 lakh per month, other than special rate income such as Capital Gain. Salaried individuals earning up to ₹12.75 lakh per annum will pay NIL tax due to a standard deduction of ₹75,000. Towards the new tax structure and other direct tax proposals, the Government is set to lose revenue of about ₹1 lakh crore.

Under the guidance of Prime Minister Shri Narendra Modi, the Government has taken steps to understand the needs voiced by the people. The direct tax proposals include personal income tax reform with a special focus on the middle class, TDS/TCS rationalization, encouragement to voluntary compliance along with a reduction of compliance burden, ease of doing business, and incentivizing employment and investment.

The Budget proposes a revised tax rate structure under the new tax regime as follows:

Total Income per annum	Rate of Tax
₹0 – 4 Lakh	NIL
₹4 – 8 Lakh	5%
₹8 – 12 Lakh	10%
₹12 – 16 Lakh	15%
₹16 – 20 Lakh	20%
₹20 – 24 Lakh	25%
Above ₹24 Lakh	30%

To rationalize TDS/TCS, the Budget doubles the limit for tax deduction on interest earned by senior citizens from the present ₹50,000 to ₹1 lakh. Further, the TDS threshold on rent has been increased to ₹6 lakh from ₹2.4 lakh per annum. Other measures include increasing the threshold to collect TCS to ₹10 lakh and continuing with higher TDS deductions only in non-PAN cases. After the decriminalization of delay in payment of TDS, delay in TCS payments has now been decriminalized.

Encouraging voluntary compliance, the Budget extends the time-limit to file updated returns for any assessment year, from the current limit of two years to four years. Over 90 lakh taxpayers paid additional tax to update their income. Small charitable trusts/institutions have been given the benefit by increasing their period of registration from five to ten years, reducing compliance burden. Further, taxpayers can now claim the annual value of two self-occupied properties as NIL, without any condition. Last budget’s Vivad Se Vishwas Scheme has received a great response, with nearly 33,000 taxpayers having availed the scheme to settle their disputes. Giving benefits to senior and very senior citizens, withdrawals made from National Savings Scheme Accounts on or after August 29, 2024, have been exempted. NPS Vatsalya accounts will also get similar benefits.

Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman stated that Democracy, Demography, and Demand are key pillars of the Viksit Bharat journey. She emphasized that the middle class strengthens India’s growth and that the Government has periodically hiked the ‘Nil tax’ slab in recognition of their contribution. She further added that the proposed new tax structure will substantially boost consumption, savings, and investment by putting more money in the hands of the middle class.

Recognizing four key engines of development—agriculture, MSMEs, investment, and exports—the government has introduced targeted schemes. The ‘Prime Minister Dhan-Dhaanya Krishi Yojana’ aims to uplift 100 low-productivity agricultural districts, benefiting 1.7 crore farmers. A new ‘Mission for Aatmanirbharta in Pulses,’ focusing on Tur, Urad, and Masoor, will enhance self-reliance in pulse production. Additionally, farmers can now avail of loans up to ₹5 lakh through Kisan Credit Cards (KCC) under a modified interest subvention scheme.

The fiscal deficit for FY-25 is projected at 4.8%, with a target to reduce it to 4.4% in FY-26. Supporting MSMEs, the government has doubled the credit guarantee cover from ₹5 crore to ₹10 crore. A National Manufacturing Mission will be launched, covering small, medium, and large industries to further the 'Make in India' initiative.

Education and technology sectors receive a significant boost, with plans to establish 50,000 Atal Tinkering Labs in government schools over the next five years. A Centre of Excellence in Artificial Intelligence for education will be set up with an outlay of ₹500 crore. Additionally, gig workers will gain better support through identity cards, registration on the e-Shram portal, and healthcare coverage under PM Jan Arogya Yojana.

The government has allocated ₹1 lakh crore under the Urban Challenge Fund to promote ‘Cities as Growth Hubs.’ The energy sector sees advancements with the introduction of a Nuclear Energy Mission for research and development of Small Modular Reactors, with a funding of ₹20,000 crore. In aviation, the Modified UDAN Scheme will enhance regional connectivity to 120 new destinations.

A ₹15,000 crore SWAMIH Fund has been established to expedite the completion of one lakh stressed housing units, providing relief to homebuyers. Further, ₹20,000 crore has been earmarked to promote private-sector-driven research, development, and innovation initiatives. The Gyan Bharatam Mission will survey and conserve over one crore manuscripts to preserve India's cultural heritage.

In a push for economic liberalization, the FDI limit for the insurance sector has been raised from 74% to 100%. The introduction of the Jan Vishwas Bill 2.0 aims to decriminalize over 100 provisions across various laws, fostering a more business-friendly environment.

The Union Budget 2025 underscores the government’s commitment to tax rationalization, economic expansion, and infrastructural advancements while prioritizing the needs of various sectors, ensuring a balanced and sustainable growth trajectory for the country.