Union Budget 2025: 20 key features

Finance minister Nirmala Sitharaman on Saturday announced a significant change in income tax policy during the Union Budget 2025-26 presentation, stating that individuals earning up to Rs 12 lakh annually will not be liable to pay any income tax. This announcement has been met with widespread approval from the middle class, who view it as a substantial relief amid rising living costs and economic pressures.

Income tax

"There will be no income tax payable upto income of Rs 12 lakh (i.e. average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime. For the salaried class, no income tax is applicable till annual income of Rs 12.75 lakh, due to standard deduction benefit available to salaried class of Rs 75,000," said Sitharaman.

The proposal aligns with the government's ongoing efforts to stimulate economic growth while addressing the concerns of the middle class, which has been vocal about the need for tax relief in recent years.

The immediate reaction from various sectors indicates a positive reception, suggesting that this measure could bolster consumer confidence and spending in the economy.

Though the income tax announcement hogged the headlines, here are the other key features of the Budget:

1. The limit for tax deduction on interest for senior citizens is being doubled from the present ₹50,000 to ₹1 lakh.
2. Annual limit of Rs 2.40 lakh for TDS on rent is being increased to Rs 6 lakh. This will reduce the number of transactions liable to TDS, thus benefiting small tax payers receiving small payments.
3. The threshold to collect tax at source (TCS) on remitances under RBI's Liberalized Remitance Scheme (LRS) is proposed to be increased from Rs 7 lakh to Rs 10 lakh.
4. It is proposed to extend the time-limit to file updated returns for any assessment year, from the current limit of 2 years, to 4 years.
5. New Income Tax Bill to be introduced in the Budget session next week. The New Income Tax Bill will be clearer and will have around 50% lesser text compared to the present law, in terms of both chapters and words. It will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation.
6. To provide relief to patients, particularly those suffering from cancer, rare diseases and other severe chronic diseases, the Centre has proposed to add 36 lifesaving drugs and medicines to the list of medicines fully exempted from Basic Customs Duty (BCD). Govt also proposed to add 6 lifesaving medicines to the list attracting concessional customs duty of 5%.
7. Govt will arrange for gig worker's identity cards and registration on the e-Shram portal. Gig workers will be provided healthcare under PM Jan Arogya Yojana. This measure is likely to assist nearly 1 crore gig workers.
8. India Post will be transformed into a large public logistics organization.
9. A new Fund of Funds for Startups, with a contribution of Rs 10,000 crore will be set up.
10. 50,000 Atal Tinkering Labs will be set up in government schools in next 5 years.
11. Broadband connectivity (Bharat Net) will be provided to all government secondary schools and primary health centres in rural areas
12. Bharatiya Bhasha Pustak Scheme will introduced to provide digital-form Indian language books for school and higher education.
13. A Centre of Excellence in Artificial Intelligence for education will be set up with a total outlay of Rs 500 crore.
14. In the next year, 10,000 additional seats will be added in medical colleges and hospitals, towards the goal of adding 75,000 seats in the next 5 years.
15. A Nuclear Energy Mission for research & development of Small Modular Reactors (SMR) with an outlay of Rs 20,000 crore will be set up.
16. A modified UDAN scheme will be launched to enhance regional connectivity to 120 new destinations and carry 4 crore passengers in the next 10 years.
17. A digital public infrastructure, ‘Bharat Trade Net’ (BTN) for international trade will be set-up as a unified platform for trade documentation and financing solutions.
18. The FDI limit for the insurance sector will be raised from 74 to 100 per cent.
19. The govt will introduce ‘Customized Credit Cards’ with a ₹5 lakh limit for Micro Enterprises registered on Udyam portal. In the first year, 10 lakh such cards will be issued.
20. Extension of the Jal Jeevan Mission till 2028 with an enhanced total outlay for quality of infrastructure and maintenance of rural piped water supply schemes through "Jan Bhagidhari".