Union Budget 2025: A Review

by Saanvi Thapar, Rohan Kumar and Tanishi Singhal

Memes are the 4th pillar of democracy. This was proven when the New Tax Regime was announced, after viral memes on the past taxation rates. The Union Budget this time seems a hit with the public buzzing over the announcements. 

Before we hop onto the reforms, let us begin with a dose of facts. The Union Budget of India is the annual budget of the Republic of India set by the Ministry of Finance for the following financial year, mandated in Article 112 of the Constitution of India. 

The Finance Minister presents it on the first day of February. This is done before the new financial year starts in April, when it comes into effect. It is presented by means of the Finance bill and the Appropriation bill has to be passed by Lok Sabha. The responsibility of making the Union Budget falls on the shoulders of the budget division of the Department of Economic Affairs (DEA) in the finance ministry. 

The first union budget of independent India was presented by R. K. Shanmukham Chetty on 26 November 1947. This year’s budget was presented by India’s Finance Minister Nirmala Sitharaman in the Parliament. She has presented a total of 8 budgets and is the first full-time female finance minister.  

Currently, the Revised Estimate 2024-25 fiscal deficit is at 4.8 percent of GDP, with Budget Estimates for 2025-26 set at 4.4 percent of GDP. Government receipts (excluding borrowings) for 2025-26 are projected at INR 34.96 trillion, with total expenditure at INR 50.65 trillion.

Population overview

The announcements held several benefits for the poor. 

The Jal Jeevan Mission, which aims to provide tap water connections, has been extended until 2028 with increased funding. A dedicated social security scheme was announced under the PM Jan Arogya Yojana, which will provide healthcare services to nearly 1 crore gig workers. The government also revamped the PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) scheme, increasing affordable working capital loans and introducing UPI-linked credit cards with a ₹30,000 limit for street vendors. 

The middle class were rewarded this time. The Finance Minister this time decided to give the middle class a breath of fresh air with the New Tax Regime. The changes include raising the rebate limit from Rs 7 lakh to Rs 12 lakh.

Income Tax Slab (Rs.)	Tax Rate
Up to 3,00,000	Nil
3,00,001 - 6,00,000	5% (Tax Rebate u/s 87A)
6,00,001 - 9,00,000	10% (Tax Rebate u/s 87A up to Rs 7 lakh)
9,00,001 - 12,00,000	15%
12,00,001 - 15,00,000	20%
Above 15,00,000	30%

Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) were also simplified, hoping to make tax compliance easier. The TCS threshold under the Liberalized Remittance Scheme (LRS) was increased from ₹7 lakh to ₹10 lakh, reducing the tax burden on foreign remittances. There will also be no TCS on education remittances if the loan is from a recognized financial institution.  

However, there is no free lunch. This was illustrated when Basic Customs Duty (BCD) was fully extended on wet blue leather. A 20 per cent or ₹115/kg (whichever is higher) duty on nine types of knitted fabric was imposed to curb cheap imports. The BCD on interactive flat panel displays was also increased from 10% to 20%,

Good news dropped for the entrepreneurs too as start-up tax benefits have been extended for another 5 years. On the contrary, the tax rate for corporations is set to rise from 21% to 28%, as a part of progressive taxation. A significant tax change is the introduction of a new minimum 25% tax on individuals with wealth exceeding $100 million. This targets billionaires and high-net-worth individuals who benefit from lower taxes on unrealized wealth

Industry Analysis 

Fast Moving Consumer Goods (FMCGs)

Increased disposable income is expected to drive demand for FMCG products. Focus has been put on rural infrastructure development aims to enhance rural consumption.

Agriculture

₹1.71 trillion was allocated to the agriculture sector, a 22% increase from previous years. Prime Minister Dhan-Dhanya Krishi Yojana targets 100 low-productivity districts to boost output. There has been emphasis on self-sufficiency in pulses (urad, toor, masoor) and high-yielding seed development. Kisan Credit Card loan limits have been raised from ₹3 lakh to ₹5 lakh, benefiting 77 million farmers.

AI and Electronics

₹500 crore have been allocated for an AI Centre of Excellence for AI education and skill development. Microsoft plans to train 10 million Indians in AI and invest $3 billion in AI and cloud infrastructure. There has been an expansion of SIDBI Fund of Funds for Startups (FFS) with an additional ₹10,000 crore.

Railways

₹3 lakh crore have been committed for modernization, track expansion, and 400 high-speed trains. However, investments are lower than industry expectations, with no major new high-speed rail projects. Freight capacity expansion remains underfunded, affecting logistics and exports.

Oil and Refineries

There has been no compensation for state-run fuel retailers despite subsidized cooking gas sales. Petroleum subsidy has been slashed to ₹12,000 crore; there is no major tax relief for oil refiners, leading to concerns over profit margins.

Healthcare

Unfortunately there has been no significant budgetary increase in this sector despite demand for hospital infrastructure and public health programs. The focus remains on Ayushman Bharat, but there is a lack of support for private healthcare investments.

Infrastructure

Capital expenditure saw an increase of less than 1%, much lower than previous years. There were no major announcements for roads, highways, or urban infrastructure. Limited private sector participation and high global interest rates could slow job creation.

Education and research sector

The Bharatiya Bhasha Pustak Scheme will focus on digital books in Indian languages, with a special emphasis on Telugu-language books. The Gyan Bharatam Mission will work on digitizing and conserving over 1 crore ancient manuscripts to preserve India's rich literary heritage. To advance science and technology, the Research & Innovation Initiative has been allocated ₹20,000 crore, while a ₹10,000 crore Deep Tech Fund of Funds will support cutting-edge technology startups.

These initiatives reflect the government’s focus on economic growth, infrastructure development, energy security, and technological advancement, ensuring sustainable progress and improved quality of life across India.