The Narendra Modi government 3.0 today unboxed a middle class bonanza in the Union Budget 2025 by exempting income up to Rs 12 lakh from Income Tax (IT).
Union finance minister Nirmala Sitharaman, who presented the Union Budget 2025 in Parliament, said the idea is to empower India’s middle class and enhance their spending power.
The tax forego by this step translates to a little over Rs one trillion, which is paltry considering the total annual tax kitty of the federal government.
According to the proposals, other than special incomes like capital gains, there will be no tax liability up to Rs 12 lakh under the new tax regime.
The government has also allowed taxpayers to claim the annual value of two self-occupied properties as NIL.
A new IT Bill, which will be introduced next week, is aimed at simplifying filing of returns and reducing litigation.
Sitharaman announced to increase the annual threshold for deduction of tax at source (TDS) on rent to Rs 6 lakh from the existing limit of Rs 2.4 lakh.
The Budget aims to put forward ‘transformative’ reforms in 6 areas viz. taxation, financial sector, power sector, urban development, mining and regulatory framework.
A committee to review and recommend new reforms aimed at enhancing the ease of doing business will be formed.
The government’s gross and net borrowing for FY26 (2025-26) is expected to be Rs 14.82 trillion and Rs 11.54 trillion respectively.
The central government will enhance the limit for the interest subvention scheme for Kisan Credit Card from Rs 3 lakh to Rs 5 lakh.
Street vendors to get UPI-linked cards with a limit of ₹20,000.
She announced gig workers will be provided healthcare under PM Jan Arogya Yojana. This initiative will assist up to 10 million workers.
Furthermore, the centre will provide gig workers with identity cards and registration on the e-Shram portal.
FM Sitharaman announced the establishment of 3 centres of excellence for Artificial Intelligence (AI) with a planned outlay of Rs 500 crore.
The government will develop top 50 tourist sites across India in partnership with states.
Medical tourism will be promoted in the country, along with easier visa norms.
Moreover, the FDI limit in the insurance sector raised to 100 percent from 74 percent.