The core features of Union Budget 2025-26, which encompass tax relief, healthcare, infrastructure, MSMEs support, and green energy initiatives in detail. Beyond that, income is not taxable up to ₹12 lakh; there are TDS and TCS reforms, new medical seats for creation, urban area development funds, and so forth. Keep updated with India’s economic roadmap!
Tax Reforms
No Income Tax for income ₹12 lakh
Under the new tax regime, citizens with a gross annual income of Rs 12 lakhs will not pay any income tax. Every year this will give taxpayers in the middle class some relief and so lift the disposable income of those people that in turn will be favorable for consumer spending.
The value of two self-occupied properties will now be zero for tax purposes
Income Tax rules provided for the nil valuation of only one self-occupied property. Now taxpayers can avail themselves of this benefit for two properties, thus lowering tax liability on additional home ownership and allowing families to manage their multiple properties more easily.
Rent TDS threshold raised from ₹2.4 lakh to ₹6 lakh
The increased TDS on rental income will usher in comfort for landlords and tenants alike. This amendment shall ease the compliance burden for small landlords and spare tenants from needless tax deductions.
Removal of TCS on education loans up to ₹10 lakh
Removal of TCS on education loans taken from specified financial institutions will make higher education a tad more affordable. It will benefit students intending to study both in India and overseas by lowering the cost of financing their education.
Changed the Time Limit for filing Updated Returns from 2 years to 4 years
Taxpayers will now have four years to file an updated return instead of two years. This will allow individuals and businesses the flexibility of correcting past errors and thereby becoming compliant with taxation laws.
New Income Tax Bill likely to be presented
The government is to present an entirely new Income Tax Bill that shall simplify tax laws and lessen the burden of compliance. The proposal aims to bring ease to compliance, making tax filing transparent and smooth for individuals and businesses.
TDS/TCS rationalization-Boon for the middle class
The government is bringing down the number of TDS and TCS rates.
While keeping the thresholds for tax deductions under review for the ease of tax deduction. The changes are aimed at establishing a less convoluted tax structure and reducing the needless confusion and administrative burden of taxpayers.
Continuation of faceless assessment and Taxpayer Charter
Faceless assessment, which is the procedure allowing the reduction of physical interface and interaction between taxpayers and tax officers, will continue. This assessment is there, with 99% of tax returns in practice being processed on self-assessment; therefore, it is the assurance of transparent and efficient tax administration.
Infrastructure & Economy
Targets for fiscal deficit are at 4.8% for FY25 and 4.4% for FY26.
Under this backdrop, the target of a reduced fiscal deficit appears to have balanced spending cutbacks on one side while ensuring the economy continues to be placed on per current growth trend.
Launch of ₹1 lakh crore Urban Challenge Fund
Promoting city growth hubs and upgrading urban infrastructure is the aim of this fund. The fund will extend financial support to states and municipalities for projects fostering better urban living standards, public transport, and smart city projects.
Modified UDAN scheme to connect 120 new destinations
While more regional air connectivity is guaranteed under the extended UDAN scheme, travel becomes easier and more local economies are enlivened. The new air route opportunities will spur tourism and business in small towns and cities.
Agriculture & Rural Development
The limit of the Kisan Credit Card is being raised to ₹5 lakh.
Kisan Credit has become a means through which increased credit will enable farmers to raise funds for agricultural needs. This will support small and marginal farmers in the purchase of input and productivity enhancement.
6-Year Mission for Self-Reliance in Pulses
In the next six years, India is going to become self-sufficient in pulses. This mission will focus on at-scale production, fewer imports, and stable prices for consumers.
Makhana Board to Come into Being in Bihar
The new Makhana Board will work for the welfare of the farmers of Bihar by propagating the cultivation and value addition of Makhana. This will enhance income for local farmers and generate opportunities in the food processing industry.
MSMEs & Startups
Credit guarantee cover for MSMEs raised to ₹10 crores
Small businesses will have better facilities for getting credit and will be able to scale their operations and invest in modern technologies. This measure will create a multiplier effect for job creation and strengthen the MSME sector.
Deeptech Fund of Funds introduced.
Special funds shall be created to nurture those deep-tech startups developed under AI robotics and other advanced technologies. This step would promote innovations and enhance India’s competitiveness in the global technological arena.
FDI in insurance moved up to 100%
The government gave 100% FDI (foreign direct investment) in the insurance sector to global investors who were to invest for growth and stabilize the sector.
Healthcare & Education
Add 10,000 more medical seats in 2025-26.
Next year, the government is all set to augment 10,000 MBBS seats against the shortage of medical professionals. In all, a total of 75,000 seats will be added in 5 years for better exposure to medical education and health care.
The new cancer centers are coming with 200
200 new cancer centers will be constructed to increase the capacity of cancer treatment centers nationwide. They will make diagnoses earlier and improve treatment and access to life-saving care.
50,000 Atal Tinkering Labs to be set up in government schools.
The government aims to set up labs for innovation in schools to inspire students to think creatively, solve problems, and think scientifically. These labs will give children skills in using modern technology for future careers in science and technology.
Broadband connectivity for all secondary schools.
To bridge the digital divide, the upgraded broadband internet facility is to be given to all secondary schools in the country. This will boost digital learning, elevate the quality of education, and make sure equal opportunity is provided to students across the nation.
Women & Youth Empowerment
New scheme for SC/ST women entrepreneurs
New financial assistance will provide a five-year term loan to SC/ST women entrepreneurs. The purpose of this scheme is to foster entrepreneurship, increase financial inclusion, and give women-led businesses empowerment.
5 National Centres of Excellence for Youth Skilling
The five National Centers of Excellence for Youth Skilling that will be set up to plug skill gaps and enhance employability and deliver sector-specific training with speed to the youth pipeline, aiming high in-demand jobs.
Nutrition support through Saksham Anganwadi & Poshan 2.0
After renewing its promise for child and maternal nutrition the government extended the Saksham Anganwadi & Poshan 2.0 program by another time. Treating 8 crore children and 1crore mothers for healthier babies is the purpose of this program.
Tourism & Culture
Mudra Loan to Homestay Operators
The Ministry will grant Mudra financing to persons owning a homestay to promote local tourism and entrepreneurship. This would encourage very small tourism businesses, particularly in rural and heritage places.
To be developed: Top 50 Tourist Destinations.
In the union government as well as the centre-states front, the development and revitalization of India’s top 50 tourist places is going on. This scheme is aimed at the development of base infrastructure, bringing tourists and assisting the tourism sector.
Development of Medical Tourism
India is poised to develop the arena of medical tourism further by boosting healthcare facilities extended to international patients, making it one hub across the world for affordable yet highly reputed medical treatment.
Income Tax Slabs Comparison: Old vs. New Regime
| Income Range (₹) | Old Regime Tax Rate | New Regime Tax Rate |
| 0 – 2,50,000 | Nil | Nil |
| 2,50,00 – 5,00,000 | 5% | Nil |
| 5,00,000 – 7,50,000 | 10% | Nil |
| 7,50,000 – 10,00,000 | 15% | 10% |
| 10,00,000 – 12,50,000 | 20% | 10% |
| 12,50,000 – 15,00,000 | 25% | 15% |
| 15,00,001 and above | 30% | 20% |
Notes:
Increase of Basic Exemption Limit: Under this whole new scenario in New Normal, basic exemption limit per individual and senior citizen has been increased to ₹5 lakh respectively. So taxable income till ₹5 lakh.
Systematic Slab Structure: The tax slabs are now made simpler under the other regime with lesser rates of taxation for income. Further, they want to reduce the taxable income to encourage greater disposable income, hence consumption.
Optional Regime: A person could choose an old or new regime of taxation based on the individual position affecting the deductions they want to claim.
Factors for Consideration by Senior Citizens:
Benefits to the Old Regime: With the old tax regime, senior citizens (aged 60 to below 80) had a higher basic exemption limit of ₹3 lakhs, and super senior citizens (aged above 80) had an exemption limit of ₹5 lakhs.
Deductions and Exemptions: The old regime allowed various deductions under sections like 80C, 80D, and others, which in the new regime are not available. Senior citizens may want to weigh their eligibility under these deductions when opting for the new regime.
FAQs
Who is going to benefit the most from the new tax reforms?
The most to gain from new tax exemptions and deductions will be those in the middle class, homeowners who can claim a salary and everyone on its streets.
In what way do the new education policies affect student life?
An increase in medical seats, broadband in schools, and the removal of TCS on education loans will make quality education accessible to all.
What is the significance of the ₹1 lakh crore Urban Challenge Fund?
To ensure that cities are modern, infrastructure is good, and urban development projects are sustainable.
New MSME credit guarantee: How will this help small business entrepreneurs?
They will be able to start their business, buy new technology, and create jobs by having access to more credit.
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