Union Budget 2025-26: Schemes, Benefits and Announcements of the Budget

The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, lays out India's economic strategy for the upcoming fiscal year. This Budget focuses on tax reforms, sector-specific allocations, and state-wise initiatives, aiming to drive inclusive growth and economic stability.

What Is a Union Budget?

A Union Budget is a government's financial plan for a specific period, typically a year. It outlines anticipated revenues and proposed expenditures, serving as a blueprint for economic policies and public spending. The Indian Union Budget 2025-26 aims to allocate resources efficiently across various sectors to promote sustainable development and fiscal responsibility.

Overview of Union Budget 2025

The Union Budget 2025-26 introduces several key initiatives:

• Tax Reforms: Significant changes in income tax slabs to provide relief to the middle class.
• Infrastructure Investment: Increased capital expenditure to boost infrastructure development across the country.
• Agricultural Support: A focus on enhanced schemes to support farmers and improve agricultural productivity.
• Healthcare Initiatives: Higher allocations to strengthen the healthcare system, ensuring broader access and improved facilities.

These measures are designed to stimulate economic growth, create jobs, and enhance the overall quality of life for citizens.

New Direct Tax Changes in Union Budget 2025

The Indian government's Budget for 2025-2026 proposes substantial reforms in direct taxation to simplify the tax structure and provide relief to taxpayers.

Revised income tax slabs under the New Tax Regime are as follows:

Note: Finance Minister Nirmala Sitharaman announced that under the New Tax Regime, individuals with an annual income of up to INR 12 lakh will have effectively zero income tax liability due to the revised rebate structure. However, special rate income  such as capital gains will not be eligible for this rebate.

The Budget 2025 tax benefits for individuals are expected to enhance disposable income, encouraging higher consumption and savings.

Customs Duties Reductions and Exemptions

• Electronics: The government has reduced customs duties on 28 key components used in mobile phone battery manufacturing, aiming to support domestic production and make locally produced goods more competitive.
• Healthcare: The Budget fully exempts 36 life-saving drugs and medicines from Basic Customs Duty (BCD), making critical healthcare treatments more accessible.
• Renewable Energy: To encourage the adoption of green energy solutions, the government has exempted customs duties on materials required for manufacturing lithium-ion batteries, such as cobalt powder and lithium-ion battery waste.

Union Budget 2025: What Gets Cheaper and Costlier?

The Union Budget 2025-26 impacts the prices of various goods and services.

Cheaper Items:

• Mobile Phones: Reduced customs duties on components aim to lower manufacturing costs.
• Electric Vehicles: Tax incentives are introduced to promote eco-friendly transportation.
• Medicines: Customs duty exemptions on critical drugs and medicines are expected to make advanced treatments more affordable and accessible.

Costlier Items:

• Imported Luxury Goods: Increased customs duties are implemented to promote domestic alternatives.
• Interactive Flat Panel Displays: Higher custom duties are expected to make these costlier.
• Knitted Fabrics: Custom duties on these have been increased to boost domestic production.

Priority and Sector-Wise Union Budget 2025 Highlights

The four engines of growth under the Union Budget 2025-26 include:

1. Agriculture: The Budget focuses on improving farm productivity, irrigation, and financial support for farmers with initiatives such as Prime Minister Dhan-Dhaanya Krishi Yojana. Increased credit availability and targeted programs will help small and marginal farmers earn better incomes and adopt modern farming techniques, ensuring stronger rural growth.
2. MSMEs: Recognising the significant contribution of small businesses to employment and exports, the Budget introduces measures to facilitate easier access to credit. The introduction of Credit Cards for Micro Enterprises and a Fund of Funds for Startups are designed to provide financial assistance. Special support initiatives for women and first-time entrepreneurs aim to foster business growth, innovation, and job creation.
3. Investment: The government plans substantial investments in infrastructure, including roads, railways, digital infrastructure, and education. Initiatives such as the Jal Jeevan Mission and support for states' infrastructure projects are expected to improve facilities, enhance connectivity, and generate employment.
4. Exports: The government is supporting local industries to compete globally by improving trade facilities and helping businesses connect with international markets. Encouraging manufacturing and exports will strengthen India’s economy and create more business opportunities.

State-Wise Improvements

The Budget prioritises balanced regional development, with a focus on key states including:

• Bihar: Significant investments are directed toward infrastructure and agriculture to boost economic development.
• Uttar Pradesh: Major allocations are made for industrial corridors and expressways to enhance connectivity.
• Maharashtra: Substantial funding is provided for urban development and public transportation projects.

Conclusion

As the country implements these reforms, individuals and businesses are presented with opportunities to thrive in a more structured and supportive economic environment. SMFG India Credit is poised to support the workforce with tailored personal loans of up to INR 30 lakhs, featuring competitive interest rates starting at 13%* per annum. Apply online today or contact us for more details.