Union Budget 2025’s Major Highlights

In the Union Budget 2025, Finance Minister Nirmala Sitharaman announced a significant relief for the middle class by exempting individuals earning up to ₹12 lakh from paying income tax. This change is part of the new tax regime, which aims to simplify the tax system and increase disposable income for taxpayers.

For salaried individuals, the exemption extends to ₹12.75 lakh, considering a standard deduction of ₹75,000.

The revised tax slabs under the new regime are as follows:

This revision is expected to reduce the financial burden on the middle class, promote consumption, and boost economic growth.

Indirect Tax Reforms and FDI Limit Increase in Insurance Sector

Indirect Tax Reforms

The Union Budget 2025 introduced several significant reforms in the indirect tax regime to support domestic manufacturing, ease the tax burden, and promote exports.

1. Rationalization of Customs Tariff Structure: The government has simplified the customs tariff structure by removing seven tariff rates, leaving only eight remaining.
2. Support for Critical Sectors: Exemptions and concessions on customs duties for essential sectors such as healthcare, electronics, and green technology.
3. Promotion of Domestic Manufacturing: Enhanced support for the ‘Make in India’ initiative through duty exemptions on raw materials and components used in manufacturing.
4. Export Facilitation: Duty-free inputs for handicraft and leather sectors to boost exports.
5. Healthcare Relief: Exemptions on 36 life-saving drugs and medicines from Basic Customs Duty (BCD), along with concessional rates for other critical medicines.

FDI Limit Increase in Insurance Sector

In a historic move, the Finance Minister announced to increase the foreign direct investment (FDI) limit in the insurance sector from 74% to 100%. This increased limit is available to companies who invest the entire premium collected in India. The key benefits of this reform include:

• Attracting Global Investments: The increased FDI limit is expected to attract substantial foreign investments, fostering innovation and competition in the insurance sector.
• Improving Insurance Penetration: With more capital and advanced technologies, insurance companies can expand their reach and improve insurance penetration across India.
• Boosting Consumer Choice: The move is likely to result in a wider range of diverse and affordable insurance options for consumers.

These reforms are part of the government’s broader strategy to enhance economic growth, support domestic industries, and ensure financial inclusion.

Fiscal Consolidation

The Union Budget 2025 outlines a clear roadmap for fiscal consolidation, aiming to balance economic growth with fiscal prudence. Here are the key updates:

1. Fiscal Deficit Target: The fiscal deficit for FY26 is targeted at 4.4% of GDP, down from a revised 4.8% in FY25. This reduction is part of a broader strategy to ensure sustainable fiscal health.
2. Debt-to-GDP Ratio: The government aims to reduce the central government’s debt-to-GDP ratio to 47.5-52% by FY31, from an estimated 57.1% in FY25. For FY26, the debt-to-GDP ratio is projected at 56.1%, assuming nominal GDP growth of 10.1%.
3. Medium-Term Fiscal Policy: The budget introduces a medium-term fiscal policy framework that aligns deficit reduction with a declining debt burden. This approach provides flexibility based on different economic growth scenarios, enhancing fiscal transparency and allowing for countercyclical spending.
4. Revenue Projections: The budget forecasts an 11% growth in gross tax receipts to ₹42.7 trillion in FY26. Personal income tax is projected to rise by 14.4% to ₹14.38 trillion, and corporate tax is expected to increase by 10.4% to ₹10.82 trillion.

These measures are designed to improve India’s fiscal dynamics, strengthen its case for a sovereign credit rating upgrade, and ensure long-term economic stability.

In the Union Budget 2025, Finance Minister Nirmala Sitharaman announced several measures to make cancer treatment more affordable and accessible:

Customs Duty Exemptions

The Union Budget 2025 has introduced several measures to make cancer treatment more affordable and accessible. Thirty-six life-saving drugs, including those for cancer, are now fully exempt from Basic Customs Duty (BCD), significantly reducing their cost.

Additionally, six more life-saving medicines, including those for rare genetic disorders and specific cancers, will have a reduced customs duty of 5%. Medicines provided for free under Patient Assistance Programs (PAPs) by pharmaceutical companies are also exempt from BCD, benefiting patients with conditions like breast cancer, severe asthma, and Crohn’s disease.

Furthermore, the government plans to establish 200 daycare cancer centers in district hospitals by 2025-26, aiming to lower out-of-pocket expenses for cancer patients and improve access to treatment.

These initiatives are designed to ease the financial burden on cancer patients and enhance their access to essential medications and care.

Boost to EV Battery Manufacturing and Recycling

The Union Budget has introduced several measures to enhance the production and recycling of electric vehicle (EV) batteries, aiming to support the growing demand for EVs and establish India as a key player in the global EV market. Here are the key updates:

1. Customs Duty Exemptions: The government has exempted 35 additional capital goods from Basic Customs Duty (BCD) to reduce the cost of manufacturing EV batteries. This includes crucial raw materials like lithium-ion battery scrap, cobalt powder, waste cobalt, lead, zinc, and other critical minerals.
2. National Manufacturing Mission: A National Manufacturing Mission for clean technology, including EV batteries, motors, and controllers, has been established to support domestic manufacturing and innovation.
3. Battery Recycling Initiatives: The budget emphasizes the importance of battery recycling to ensure sustainable and environmentally friendly disposal of used batteries. This includes incentives for companies investing in battery recycling technologies and infrastructure.
4. Job Creation: These initiatives are expected to boost local manufacturing, leading to increased job opportunities within the EV industry.
5. Global Competitiveness: By reducing manufacturing costs and promoting innovation, these measures aim to position India as a strong contender in the international EV market.

These steps are part of the government’s broader strategy to promote sustainable mobility and reduce the carbon footprint of the transportation sector.

UDAN Scheme and Airport Development

The Union Budget 2025 has introduced significant updates to the UDAN (Ude Desh ka Aam Naagrik) scheme, aimed at enhancing regional connectivity and expanding airport infrastructure across India. Here are the key highlights:

1. Extension of UDAN Scheme: The government has extended the UDAN scheme by 10 years to improve air connectivity in remote areas. This extension aims to connect 120 new destinations and benefit 4 crore additional passengers over the next decade.
2. New Airport Developments: The budget includes plans to develop four new greenfield airports in Bihar and a brownfield airport at Bihta. Additionally, there is an expansion plan for Patna airport to meet future demands.
3. Support for Smaller Airports: The modified UDAN scheme will support the development of smaller airports in hilly, aspirational, and Northeast regional districts. This initiative aims to enhance connectivity and accessibility in underserved regions.
4. Enhanced Air Travel Access: The UDAN scheme will connect 88 small cities, expanding air travel access and affordability. This move aligns with the government’s vision to make air travel more accessible and enhance connectivity to underserved and unserved airports across the country.

These updates are part of the government’s broader strategy to boost economic growth, improve regional connectivity, and make air travel more accessible and affordable for millions of Indians.