Budget 2025 Views and Analysis Highlights: ‘Big boost for middle class’, FE Editors decode Union Budget 2025-26

Union Budget is a step towards fulfilling the Prime Minister’s resolve of Viksit Bharat 2047

-A record over Rs 6.81 lakh crore allocated – an increase of 9.53% from the current Financial Year

-Rs 1.80 lakh crore allocated under the Capital Budget of Armed Forces; Modernisation a key focus area

-Rs 1.12 lakh crore earmarked for procurement from domestic industries

-14% increase in allocation for Defence Pension; Rs 8,317 crore allocated for ECHS

-12% hike for Defence R&D Budget

Following are the revised slabs and rates under new tax regime announced in the FY26 Budget

Income up to Rs 4 lakh (per annum) —– Nil

-Between Rs 4 and 8 lakh —————- 5 per cent (tax)

-Between Rs 8 and 12 lakh ————— 10 per cent

-Between Rs 12 and 16 lakh ————– 15 per cent

-Between Rs16 and 20 lakh ————— 20 per cent

-Between Rs 20 and 24 lakh ————– 25 per cent

-Above Rs 24 lakh ————————- 30 per cent

* Nil tax slab will apply for annual income up to Rs 12 lakh (Rs 12.75 lakh for salaried tax payers with standard deduction of Rs 75,000) under new tax regime.

“In her record eighth consecutive Union Budget, Finance Minister Nirmala Sitharaman has finally done what most have been waiting for years – provide relief to the salaried class. Faced with mounting urban slowdown woes, economic growth slowing to a four-year low and global uncertainties—fueled by U.S. tariff threats and geopolitical tensions – Sitharaman had a back to the wall. She didn’t disappoint.

The Budget laid out a roadmap for economic resilience, focused on tax relief, infrastructure expansion, and sectoral reforms. With significant income tax cuts, the biggest being the no income tax upto Rs 12 lakh under the new tax regime, higher exemptions, and fresh incentives for startups and MSMEs, the government has aimed to boost both middle-class incomes and drive long-term sustainable growth.” Viveat Pinto

TDS (withholding tax) rates reduced, and thresholds raised. This will help ease compliance for taxpayers, explains KG Narendranath.

Fiscal deficit at 4.8% of GDP (revised estimate) for FY25 and at 4.4% for FY26. Six year fiscal road map outlined. This signals continued commitment to fiscal consolidation, and indicates that any budget giveaways in the form of tax cuts may not of large magnitude, explains KG Narendranath.

A lot of initiatives to promote Make in India especially in electronics manufacturing. The Budget proposed to increase customs duty on flat panel displays to 20% from 10%. The same is expected to benefit players like Dixon and will promote local manufacturing.

The Budget also announces proving broadband connectivity to all government secondary schools in rural areas under the BharatNet mission. The same is seen as a positive step to bridge digital divide. However, BharatNet progress has been slow and also the government needs to focus on quality of services as well.

Further, PM GatiShakti data will be made available to private players in PPP projects on the need basis. It will help speed up the planning and execution of those projects by providing information on already existing physical and social infrastructure in India, says Jatin Grover.

A boost to middle class with income tax exemptions under the new regime. The same will prompt a faster switch to new tax regime and the old regime would automatically reduce its charm.

A lot of initiatives to promote Make in India especially in electronics manufacturing. The Budget proposed to increase customs duty on flat panel displays to 20% from 10%. The same is expected to benefit players like Dixon and will promote local manufacturing, says Jatin Grover.

Raising the FDI limit in the insurance sector to 100% for companies who invest the entire premium in India will deepen the bond and equity markets since insurance firms invest for the long term.

Increasing the limit of interest income for senior citizens from 50,000 to 1 lakh will significantly improve their finances, explains Joydeep Ghosh.

Export Promotion Mission to be set up that will have targets for different sectors and ministries. It will be driven by Ministries of Commerce, MSME, and Finance. The mission will facilitate easy access to export credit, cross-border factoring support, and support to MSMEs to tackle non-tariff measures in overseas markets.

Specific measures announced for promotion of exports of leather, handicraft, marine products and maintenance, repair and overhaul services of railways and aircraft.

(Explains Mukesh Jagota)

Fund of Funds Scheme gets a top up in the form of another fund of Rs 10,000 crore. Instead of topping up the existing fund a new fund has been announced. FFS provides capital to Securities and Exchange Board of India (SEBI)-registered AIFs which in turn invest in StartUps.

AIFs supported under FFS are required to invest at least two times of the amount committed under FFS in StartUps. As on 31st October 2024, Rs 20,572.14 crore have been invested by FFS supported AIFs in StartUps.

Credit guarantee cover for start-ups doubled to Rs 20 crore.

A Deep Tech Fund of Funds will also be explored to catalyze the next generation startups. Deep tech startups are those that work with newer technologies in frontline areas like space , biotechnology and others.

(Explains Mukesh Jagota)

“The Budget showed a subtle shift from the investment-led growth strategy, long pursued by the Narendra Modi government to an appreciation of the need to put more monies in the hands of the middle class, which has been reeling under an income crisis. It talks about structural reforms, and prioritised the right areas like MSMEs, agriculture and exports, but the pace and extent of these reforms will hold the key, and determine whether and how soon the economy could be brought back to the fast lane of growth. Public capex is showing signs of plateauing, and unless private investments really rise, the growth impulses of the economy could remain subdued in the medium term. External factors, like persisting geopolitical conflicts, Trump’s tariff threats, and a slower pace of rate cuts by the central banks, also add to the worries. The budget hasn’t compromised on the fiscal consolidation path. What India could still look forward to in the short to medium term is a relatively low growth rate of around 6%, thanks to its strong macro fundamentals, and robust and stable financial system.” KG Narendranath

“Rationalization of tariffs. Remove seven tariff rates over an above the seven removed in 2023-24. After this, there will be only eight tariff rates. Appropriate reduction in cess charge,” explains Viveat Pinto.

“Collecting personal information of 1 cr gig workers in India, providing them with an ID card on the eShram portal and thereby enabling coverage through the Jan Arogya Scheme will officially recognise them as part of the employment ecosystem and provide them with much needed social security cover. This will also add more people into the consumption net,” he says.

“The middle class – no income tax on income of Rs12 lakh. The new structure will boost consumption as more money will be in the hand of consumers. The move will boost sagging urban demand, which has hurt FMCG and retail sectors,” says Viveat Pinto.

FDI limit for insurance sector to be raised from 74% to 100%.

No income tax upto Rs 12 lakh income under new income tax regime.

-Compliance burden for small charitable trusts & institutions to be reduced, by increasing their registration period from 5 years to 10 years

-Taxpayers to be allowed to claim annual value of two self-occupied properties as nil without any condition

-Time limit to file updated IT returns for any assessment year, to be increased from 2-4 years.

Shares of agriculture companies surged up to 13 per cent on Saturday after Finance Minister Nirmala Sitharaman announced PM Dhan-Dhaanya Krishi Yojana, covering 100 districts with low yields, modern crop intensity and below-average credit parameters.

The scrip of Kaveri Seed Co soared 13.49 per cent to Rs 1,020.70 apiece, Mangalam Seeds climbed 7.09 per cent to Rs 222, Nath Bio-Genes jumped 5.77 per cent to Rs 178.60, Dhanuka Agritech increased 2.61 per cent to Rs 1,479.35 and UPL appreciated 0.94 per cent to Rs 609 on the BSE.

Additionally, Paradeep Phosphates shares increased 2.75 per cent to Rs 115.90, Rashtriya Chemicals & Fertilisers appreciated 0.95 per cent to Rs 164.75, PI Industries climbed 0.85 per cent to Rs 3,512.05, Bayer Crop Science rose 0.67 per cent to Rs 5,148.25 and Mangalore Chemicals & Fertilizers went up 0.45 per cent to Rs 168.45 apiece on the bourse.

Coromandel International stock went up 0.11 per cent to Rs 1,812 apiece.

However, Chambal Fertilisers & Chemicals scrip fell 0.59 per cent to Rs 501.05 apiece, and Tata Chemicals slipped 0.30 per cent to Rs 983.85 on the BSE.

The 30-share BSE Sensex climbed 385.19 or 0.50 per cent to 77,885.76 in the mid-session trade.

-Time-limit of two years to be fixed, extendable by a year, for finalizing provisional assessment under the Customs Act

-Incentivizing Voluntary Compliance: New provision to be introduced which will enable importers or exporters, after clearance of goods, to voluntarily declare material facts and pay duty with interest but without penalty.

“Collecting personal information of 1 cr gig workers in India, providing them with an ID card on the eShram portal and thereby enabling coverage through the Jan Arogya Scheme will officially recognise them as part of the employment ecosystem and provide them with much needed social security cover. This will also add more people into the consumption net.”

Indirect Tax Measures to promote Exports

-Wet Blue leather to be fully exempted from Basic Customs Duty (BCD)

-BCD on Frozen Fish Paste (Surimi) to be reduced from 30% to 5% for manufacture and export of its analogue products

KG Nagendranath explains, “The plan to revamp Bilateral Investment Treaties may help promote FDI inflows if the norms

are mode more attractive, and risk perceptions are minimised.

High-level panel for review of non-financial sector regulations with a view to promoting ease of doing business. The panel is given one year to come out with its recommendations. The pace of these reforms need to be faster

Fiscal deficit at 4.8% of GDP (revised estimate) for FY25 and at 4.4% for FY26. Six year fiscal road map outlined, details awaited. This signals continued commitment to fiscal consolidation, and indicates that any budget giveaways in the form of tax cuts may not of large magnitude.”

The government will set up an Urban Challenge Fund of Rs 1 lakh crore to finance up to 25 per cent of bankable projects and allocated Rs 10,000 crore for 2025-26. The fund will be used to implement the proposals for cities as growth hubs, and creative redevelopment.

Sitharaman also announced measures for electricity distribution and improving the financial health of DISCOMS (distribution companies).

Additional borrowing of 0.5 per cent of state GDP to be allowed to strengthen electricity distribution and transmission companies, the finance minister said, adding that with a corpus of Rs 25,000 crore, a Maritime Development fund would be set up for distributing support and promoting competition.

– FM Sitharaman.

The government will develop top 50 tourist sites in partnership with states and also extend mudra loans to homestays.

In efforts to boost tourism in the country, Sitharaman said medical tourism will be promoted in partnership with the private sector and the government will also give special focus to destinations related to life and times of Lord Buddha.

Presenting the Budget for 2025-26, the minister also said financial support will be provided for Western Kosi Canal, benefiting 50,000 hectare in Mithilanchal region in Bihar.

10,000 fellowships to be provided under the PM Research Fellowship scheme in next five years, for technological research in IITs and IISc.

“Another export promotion mission announced. Exports have been growing at a slow rate in recent months, or even contracting in recent months, partly due to global geopolitical issues. A comprehensive strategy is required for exports to grow faster than the global average, especially since new barriers are looming. Tax content in exports need to be neutralised completely, and costs of compliance need to be reduced. Customs duties need to brought down for raw materials and intermediate goods to facilitate value added exports,” explains KG Narendranath.

SWAMI fund-2 of Rs 15,000 crore to expedite completion of 1 lakh dwelling units. A boost to housing and construction sectors,” explains KG Nagendranath.

“New income tax bill to be tabled next week. Expected to offer relief to middle class”

“Steadfast commitment for ease of doing business. Light touch approach to regulation. Good for Corporate India“

-Union FM Sitharaman

Govt to facilitate setting up of daycare cancer centre in all district hospitals in next 3 years, says finance minister Nirmala Sitharaman.

“Union Budget aims to empower India‘s rising middle class, says FM Sitharaman. The budget is aimed at enhancing the spending power of the middle class.”

India ranks second largest globally in fish production and aquaculture.

▪️Seafood exports are valued at 60,000 Crore Rupees.

▪️To unlock the untapped potential of the marine sector, the government will bring in an enabling framework for sustainable harnessing of fisheries from the Indian exclusive economic zone and high seas with a special focus on the Andaman and Nicobar and Lakshwadi Islands.

-Union FM Sitharaman

FM Sitharaman announces setting up 5 national centres for skilling with global expertise.