It has been over six months since the NDA-led government introduced its first Union Budget after winning its third consecutive term. However, the announcements did not align with investor sentiment, leading to a 0.12% market decline. The drop was driven by increased capital gains tax and higher security transaction taxes on derivatives. Since the budget, the market has witnessed countless sessions in the red, driven by factors such as FII outflows, global crises, the US elections, and more.
Like all citizens, investors eagerly awaited the new Union Budget with high expectations from the Finance Minister. Now that the key announcements have been made, here are the quick highlights.
Highlights from Budget 2025
Income Tax
The first relief announced by the FM aims at reducing the tax burden on the middle-income group. According to the proposal, there will be no tax for self-employed individuals up to ₹ 12 lakhs, and for salaried individuals, the threshold limit is ₹12.75 lakhs due to a standard deduction of ₹75,000. Not only that, there is also a proposal to rationalise tax deduction at source (TDS) and the tax collected at source (TCS).
Other relief includes the following:
- The government has raised the tax-deductible limit for senior citizens to ₹1 lakh.
- There will be no TCS on remittances made towards education.
- The TDS limit on rent will now be raised from ₹2.4 lakh per annum to ₹ 6 lakhs.
- Taxpayers now have up to four years instead of two to file their returns.
However, the new income tax bill, which is scheduled to be rolled out next week, will clarify the current tax slabs and available rebates.
Gig Economy
In India, freelancing work has gained popularity after COVID-19. Freelancers are not permanent employees of any company but instead work on a contract basis that lasts until the completion of the project. The government has announced plans to support this sector by including it under the PM Jan Arogya Yojana. To benefit from this scheme, freelancers must register on the e-Shram portal, and notifications for the same are expected to be released soon.
Benefit for Farmers
To promote the agricultural and allied sectors, the government has announced an increase in the borrowing limit to ₹5 lakhs on Kisan Credit Cards (KCC). This amendment will be made under the Modified Interest Subvention Scheme.
Short-term credit facilities under the KCC are available to fishermen, farmers, and dairy farmers.
To boost employment in rural areas, an allocation of ₹86,000 crores has been made under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
Infrastructure Development :
The government has announced a ₹11.11 lakh crores financial infusion for infrastructure development, focusing primarily on railways, logistics, and urban infrastructure. Funds will also be allocated to achieve targets under PM Awas Yojana Urban 2.0. Additionally, the government plans to implement Transit-Oriented Development in 14 major cities.
Energy-Related Announcements:
The government is eyeing to provide solar energy to 10 million households under the PM Surya Ghar Muft Bijli Yojana, offering a maximum of 300 units of free electricity per month. For this, an allocation of ₹20,000 crore has been announced.
Healthcare and Pharmaceuticals:
The new budget will focus on upskilling healthcare professionals to ensure they are future-ready and understand medical innovations.
Furthermore, the government has exempted customs duties on various life-saving drugs, making them more affordable for the middle-class group.
Women’s Welfare
The government has allocated around ₹3 lakh crores for schemes designed for women and girls. This will promote gender equality and enable women to participate more fully in different sectors of the economy.
To promote tourism, the government has allocated ₹2,541.06 crore. With this capital, the government will collaborate with various state governments to upgrade the infrastructure and connectivity to the top 50 tourist destinations.
Moreover, through the UDAN initiative’s Regional Connectivity Scheme (RCS), the government will improve connectivity to 120 new remote tourist destinations.
MSME
To promote the MSME sector, the government has increased the credit guarantee cover to ₹10 crore from the previous ₹5 crore. For businesses registered under the Udyam Portal, a customized credit card with a limit of ₹5 lakh will be provided. This initiative will benefit around 10 lakh MSMEs.
Additionally, an allocation of ₹91,000 crores has been made for funds of funds to support entrepreneurs and startups.
Fiscal Deficit
Even after announcing tax concessions, the government remains dedicated to maintaining fiscal discipline. The fiscal deficit is set to decline to 4.4% of GDP from the previous year’s 4.8%. To fund this, the government intends to borrow ₹14.82 lakh crores.
CAPEX Target
The government, in Budget 2025, has hiked the CAPEX (capital expenditure) target for the next fiscal year by 10.08%. This amounts to a record ₹11.21 lakh crore. With this, the government aims to boost demand and consumption levels and achieve its goal of becoming the third-largest economy by 2030.
Conclusion
Budget 2025 has been drafted to provide financial security and improve living standards by addressing the pain points of common people. It will be crucial to see how the market reacts to this budget in Monday’s opening session.
Stay tuned with us for detailed budget analysis!
