Union Budget 2025-26: Summary & Analysis

 

1. Taxation & Middle-Class Benefits

• No Income Tax on Monthly Income up to ₹1 Lakh

• Boosts middle-class savings and purchasing power.
• Encourages higher consumer spending, benefiting the economy.

• Salaried individuals earning up to ₹12.75 lakh per annum pay NIL tax

• Higher disposable income leads to increased investment and savings.
• Encourages formal employment.

• Updated Income Tax Returns Time Limit Extended from 2 to 4 Years

• Encourages voluntary compliance.
• Helps taxpayers correct past mistakes without penalties.

• TDS on Rent Threshold Increased from ₹2.4 Lakh to ₹6 Lakh

• Reduces tax burden on small landlords.
• Encourages rental market growth.

 

2. Growth Drivers: The Four Engines of Development

• Agriculture

• Prime Minister Dhan-Dhaanya Krishi Yojana launched for 100 low-productivity districts.
• Mission for Aatmanirbharta in Pulses with a focus on Tur, Urad, and Masoor.
• Kisan Credit Card (KCC) loan limit increased from ₹3 lakh to ₹5 lakh.
• Impact: Increased productivity, better financial access for farmers, and enhanced food security.

• MSMEs

• Credit guarantee cover enhanced from ₹5 Cr to ₹10 Cr.
• National Manufacturing Mission launched to boost Make in India.
• ₹2 Cr term loans for first-time entrepreneurs from SC/ST and women.
• Impact: Higher employment generation, better financial support, and stronger MSME sector.

• Investment

• 50,000 Atal Tinkering Labs in Government Schools
• Enhances innovation and technology adoption among students.
• AI Center of Excellence for Education with ₹500 Cr Outlay
• Prepares students for future jobs in AI and automation.
• ₹1 Lakh Cr Urban Challenge Fund
• Develops cities as economic growth hubs.
• Impact: Boost in education, smart city infrastructure, and employment generation.

• Exports

• Export Promotion Mission launched to help MSMEs access global markets.
• BharatTradeNet (BTN) to streamline trade documentation and financing.
• BCD reductions to promote domestic electronics manufacturing.
• Impact: Increased competitiveness of Indian exports, better global trade access.

 

3. Financial Sector & Regulatory Reforms

• FDI Limit in Insurance Increased from 74% to 100%

• Encourages foreign investment in insurance.
• Strengthens financial sector stability.

• Jan Vishwas Bill 2.0

• Decriminalizes 100+ provisions in various laws.
• Reduces compliance burden for businesses.
• Encourages ease of doing business.

• Simplification of Financial Regulations

• Introduction of a high-level committee to review unnecessary licenses and certifications.
• Investment Friendliness Index for states to boost competition.
• Impact: Streamlined financial sector, ease of investments, and business-friendly policies.

 

4. Infrastructure & Urban Development

• Modified UDAN Scheme for 120 New Regional Airports

• Increases air connectivity for smaller cities.
• Boosts regional tourism and business growth.

• ₹15,000 Cr SWAMIH Fund for Stressed Housing Units

• Helps complete pending housing projects.
• Reduces burden on homebuyers.

• Jal Jeevan Mission Extended till 2028

• Focus on sustainable rural water supply.
• Ensures clean drinking water for all households.

 

5. Technology & Innovation

• ₹20,000 Cr for Private Sector-Driven Research & Innovation

• Encourages industry-led R&D.
• Strengthens India’s position in emerging technologies.

• Gyan Bharatam Mission for Conservation of Manuscripts

• Preserves India’s rich historical knowledge.
• Creates digital repositories for future generations.

• National Geospatial Mission

• Improves urban planning and land management.

 

6. Sectoral Reforms & Budget Deficit Control

• Fiscal Deficit Target:

• FY25: 4.8% of GDP → FY26: Targeted at 4.4% of GDP.
• Aims for fiscal consolidation while maintaining growth momentum.

• Taxation Rationalization for Business Growth

• TCS and TDS rationalization to ease compliance.
• Higher tax deductions for senior citizens.

 

7. Import Duty & Custom Tariff Changes

• BCD Exemptions for Critical Drugs

• 36 life-saving drugs and medicines exempted from customs duty.
• Encourages access to affordable healthcare.

• Reduction of Duty on Frozen Fish Paste and Fish Hydrolysate

• Helps the seafood processing industry.
• Boosts exports and domestic supply.

• BCD on Interactive Flat Panel Displays (IFPD) Increased to 20%

• Protects domestic manufacturing from cheap imports.

• Shipbuilding & Battery Manufacturing Incentives

• BCD exemptions for EV and mobile battery components.
• Encourages domestic production and self-reliance.

 

 

Conclusion: Budget’s Overall Impact

• More Money in the Hands of Middle-Class Consumers

• Higher savings and investments → Economic growth boost.

• Empowered MSMEs & Entrepreneurs

• Higher credit availability → More job creation.

• Increased Investment in R&D and Technology

• Strengthens India’s innovation ecosystem.

• Focus on Infrastructure & Exports

• Enhances global competitiveness.

• Balanced Fiscal Policy

• Supports growth while keeping the deficit in check.

Overall, the Budget 2025-26 is designed to drive inclusive growth, enhance economic competitiveness, and ensure financial stability, positioning India for long-term prosperity.

 

 

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