Union Finance Minister Nirmala Sitharaman presented the Union Budget of the year 2025 on February 1, 2023, at the Lok Sabha. This marks the eighth presentation of the budget by the Minster and the second complete budget presented in the third term of the Narendra Modi government. Modi 3.0. Taking into account these circumstances, industry leaders and the middle class are looking forward to tax cuts, infrastructure development, innovations, and a boost in the overall environment for doing business.

The Union Budget of 2025 is expected to reshape large sections of the economy, here is an overview of the expected economic outcome of the budget.

Income Tax Reforms: Major Slab Changes to Benefit Middle Class

One of the major highlight in the budget is the changes to the income tax thresholds, as was anticipated. If the salient features of the budget are considered, the middle class will require major changes in the thresholds.

Income below ₹12 Lakh Non Taxable: For the first time, income below ₹12 lakh will not attract income tax under the new tax policy. This is very beneficial for the middle income group.

Revised Tax Slabs and Rates: The mentioned below represent the new tax structure as per the new tax regime:

Nil upto ₹4 lakh

5% on ₹4 – 5 lakh

10% on ₹8 – 12 lakh

15% on ₹12 – 16 lakh

20% on ₹16 – 20 lakh

25% on ₹20 – 24 lakh

30% above ₹24 lakh

Also, salaried taxpayers will now receive a standard deduction of ₹75,000 which will raise the exemption income tax limit to ₹12.75 lakh.

These reductions will not only allow individuals to spend more but also encourage further saving, consumption, and investment within the economy.

Other Tax Related Announcements

Self-Occupied Properties Tax Relief: Taxpayers are now allowed to list the annual value of two properties they occupy as zero, this will further benefit middle class purchasers of houses.

New Bill: The new more simplified Income Tax Bill will be introduced sometime next week which was announced by the Finance Minister. This new bill will assist in trying to minimize litigation and make changes to the structure of tax which can be easily understood and complied with.

Click here to calculate your income tax as per Assessment year 2026-27.

Fiscal Deficit 2025-26 and Economic Outlook

Fiscal Deficit for FY25: The fiscal deficit for FY25 is set at 4.8% of GDP, with a target of reducing it to 4.4% by FY26. This indicates the government’s efforts to maintain fiscal discipline while balancing growth and public expenditure.

Economic Growth: According to the Finance Minister, among major economies globally, India is the fastest switching on track and regards the next five years as a great chance to achieve ‘Sabka Vikas’ (development for all). The plan is to boost balanced development in every part of the country.

Infrastructure and Capex Plans

₹1.5 Lakh Crore for States: The government earmarked ₹1.5 lakh crore to lend states at zero interest for 50 years with the aim of financing capital expenditure (capex) and infrastructure development.

Public-Private Partnerships (PPP): Finance Minister declared the government’s focus on infrastructure development by announcing a pipeline of projects with a three-year horizon to be executed under PPP.

Expansion of IITs: To promote education and skill development among the youth, the government plans to increase infrastructure in IITs set up after 2015 by adding 6500 seats in five IITs. In addition, a Centre of Excellence for AI in Education will be created with a budget of ₹500 crores.

Healthcare and Education Programs

Increasing Investment in the Health Sector: In order to promote access to these drugs, the finance minister said that 36 essential drugs and medicines would be exempt from customs duties. The government has also instituted a scheme for women from SC and ST communities at ₹5 lakhs.

Expanding Medical Colleges: In his budget speech, the President said that to respond to the need for health professionals, a further 10,000 medical college seats will be offered from next year.

Saksham Anganwadi and Poshan 2.0: These programs are aimed at targeting and nutritionally supporting 8 crore children, 1 crore mothers, and 20 lakh adolescent girls. Moreover, the scheme will also include lactating mothers and adolescent girls with the aim of improving the nutritional standards of these vulnerable populations.

Sector-Specific Announcements

Export Promotion: The government wants to set up an Export Promotion Mission to increase export credit, help MSME’s and address trade non-tariff barriers in other markets. The government is launching “BharatTradeNet” (BTN) as a single window EDI system for trade and trade financing.

Footwear and Leather Industrial Sector: A new scheme for the indigenization of shoes and leather products is planned to create 22 lakh jobs, reach a turnover of ₹4 lakh crores, and increase exports to more than ₹1.1 lakh crores.

Toy Manufacturing Hub: The government started a new scheme to help India become a major player in toy manufacturing globally by focusing on a sustainable toy manufacturing with a ‘Made in India’ tag.

Makhana Board in Bihar: To boost the value addition and processing of Makhana (fox nut) in the state, the government is planning on promoting a Makhana Board in Bihar.

Food Technology Institute in Bihar: A national food technology institute is being established in Bihar with the purpose of fostering food entrepreneurs, improving the regional food processing industry, and increasing income for farmers.

Support For Women and Rural Development

Women Empowerment Initiatives: Steps have been undertaken to aid women such as the enhancement of an existing scheme to ₹5 lakh targeted towards SC and ST Women. Additionally, a new scheme for 5 year term loans of ₹5 lakh for women from these sections has also been introduced.

Kisan Credit Card (KCC) Limit Raised: In order to promote farmers’ access to credit, the government increased the limit of Kisan Credit Cards by two lakh in an effort to make it more affordable.

Dhan Dhanya Krishi Yojna: This scheme aims at stimulating the rural economy by providing assistance to 1.7 crore farmers in 100 low output districts with the help of the states. The goal is to achieve balanced growth in the rural sector and curtail migration to urban centers.

Support for Cooperative Sector and MSMEs

Plans Regarding NCDC: NCDC will receive funding from the government aimed at strengthening the cooperative sector in the country.

Growth of MSME’s: The economy is also investing more money in small and medium sized enterprises. It is going to improve the investment and turnover ceilings that these businesses have in order for them to expand and create new jobs.

Logistics and Infrastructure for Rural Areas

Post Office Modernization Strategy: As Nirmala Sitharaman has mentioned, India Post has an ambitious strategy of changing its focus into a large logistics company. It will be facilitated by the India Post payments bank and the current 240,000 wallers aiming for the rural logistics and development boosting.

Broadband to Rural Secondary Schools and And Rural Health Centres: There are plans to cover all government secondary schools and primary health centers in rural areas with broadband internet to improve access to education and health services.

Conclusion: A Comprehensive Budget for All

Budget 2025 is a bold and forward-looking plan that addresses the needs of various sectors and social groups. From tax relief for the middle class to investments in infrastructure, healthcare, and education, the Budget lays a strong foundation for India’s growth in the coming years. The focus on sectors such as exports, MSMEs, rural development, and women’s empowerment aims to boost economic productivity and social well-being across the country.