Union Budget 2025 highlights: Nirmala Sitharaman bets on income tax breaks to spur growth

In a video address after the presentation of the Union Budget 2025 by finance minister Nirmala Sitharaman, Prime Minister Narendra Modi said the budget has a 360-degree focus on manufacturing. PM Modi added that this budget will be a big boost for tourism in the country. The Budget 2025 proposes to develop top 50 tourist destination sites in the country in partnership with states through a “challenge mode”.

Union Budget 2025 LIVE: PM Modi extended greetings to finance minister Nirmala Sitharaman for presenting ‘people’s budget'.

Budget 2025 LIVE: Below are some key proposals focussing on ‘garib, youth, annadata and nari’ in Union Budget:

-Bharatiya Bhasha Pustak Scheme: provide digitalform Indian language books for school and higher education.

-5 National Centres of Excellence for skilling to be set up with global expertise and partnerships.

-Atal Tinkering Labs: 50 Thousand Labs to be set up in government schools in next 5 years.

-Centre of Excellence in Artificial Intelligence for education with a total outlay of ₹500 crore.

-Broadband connectivity to be provided to all government secondary schools and primary health centres in rural areas.

-Expansion of medical education: 10,000 additional seats with the goal of adding 75,000 seats in the next 5 years.

-PM SVANidhi: To be revamped with enhanced loans from banks, UPI linked credit cards and capacity building support.

-Welfare of Online Platform Workers: Registration on the e-Shram portal & healthcare under PM Jan Arogya Yojana.

Union Budget 2025 LIVE: After the presentation of Union Budget 2025, in which Nirmala Sitharaman announced major tax relief for people with income up to ₹12 lakh, Congress MP Shashi Tharoor asked, “What happens if we don't have a salary.”

"I think frankly the applause you heard from the BGP benches was for the middle-class tax cut. We look at the details and that may be a good thing. So if you have a salary you may be paying less tax. But the important question is what happens if we don't have a salary? Where is the income going to come from? For you to benefit from income tax relief, you actually need jobs. Unemployment was not mentioned by the Finance Minister... Ironic that the party that wants one nation, one election is actually using each election each state each year to give them more freebies. They may as well have multiple elections so they can get more applause from their allies," Tharoor told new agency ANI.

Union finance minister Nirmala Sitharaman in her Budget 2025 speech on Saturday proposed to rationalise tax deduction at source (TDS) by reducing the number of rates and thresholds above which TDS is deducted.

In her 8th consecutive budget speech, Nirmala Sitharaman said that the threshold amounts for tax deduction will be increased for better clarity and uniformity. Check revised TDS thresholds here

On income tax rebate in Union Budget 2025, Shiv Sena (UBT) MP Priyanka Chaturvedi said, “It's a victory of the middle class”, adding that it is “mainly because of them (BJP in Lok Sabha elections) being limited to 240 seats.”

"In the last 10 years, the middle class had this demand - today they have been heard and hence I welcome that (no income tax on income of up to ₹12 lakhs). Second thing, Bihar must be thinking if it can have an election every year...," Priyanka Chaturvedi said.

Home minister Amit Shah said in a post on X, "The middle class is always in PM Modi’s heart. Zero Income Tax till ₹12 Lakh Income. The proposed tax exemption will go a long way in enhancing the financial well-being of the middle class..."

Budget 2025 LIVE: In a landmark announcement, finance minister Nirmala Sitharaman said that there will be no income tax payable for those with an income up to ₹12 lakh.

While the revised tax rate structure still mentions nil tax on income of ₹0-4 lakh 10 per cent tax on income of ₹8-12 lakh and 15 per cent tax on income of ₹12-16 lakh, Nirmala Sitharaman said, “To tax payers up to ` 12 lakh of normal income (other than special rate income such as capital gains) tax rebate is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them.”

Find revised income tax rate structure EXPLAINED here

Budget 2025 LIVE: In revised new income tax regime, finance minister Nirmala Sitharaman said there will be no income tax payable up to income of ₹12 lakh (i.e. average income of ₹1 lakh per month other than special rate income such as capital gains) under the new regime.

This limit will be ₹12.75 lakh for salaried tax payers, due to standard deduction of ₹75,000.

Slabs and rates are being changed across the board to benefit all taxpayers, finance minister Nirmala Sitharaman said.

The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment.

While those with income up to ₹12 lakh will still be attracting tax in the new revised tax rate under the new regime, finance minister Nirmala Sitharaman said income tax rebate “is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them.”

“A tax payer in the new regime with an income of ₹12 lakh will get a benefit of ₹80,000 in tax (which is 100% of tax payable as per existing rates). A person having income of ₹18 lakh will get a benefit of ₹70,000 in tax (30% of tax payable as per existing rates). A person with an income of ` 25 lakh gets a benefit of ₹1,10,000 (25% of his tax payable as per existing rates),” Nirmala Sitharaman said.

As many as 36 drugs for cancer, rare diseases have been exempted from Basic Customs Duty. The government proposed to exempt Basic Custom Duty on 37 more medicines.

Centre also proposed to fully exempt cobalt product, LED, zinc, lithium-ion battery scrap and 12 critical minerals from Basic Customs Duty.

Check full list of items that got cheaper and costlier after Union Budget 2025.

Examples for calculation of tax benefit are given in the table

above.

On income tax rebate in Union Budget 2025, finance minister Nirmala Sitharaman said, “Resident individual with total income up to ₹7,00,000 do not pay any tax due to rebate under the new tax regime.”

She added, “It is proposed to increase the rebate for the resident individual under the new regime so that they do not pay tax if their total income is up to ` ₹12,00,000.”

"Marginal relief as provided earlier under the new tax regime is also applicable for income marginally higher than ₹12,00,000.

Budget 2025 LIVE: Nirmala Sitharaman says no income tax up to ₹12 lakh

Sitharaman's tax proposals:

• Personal income tax reforms with special focus on middle class
• Rationalisation of TDS and TCS
• Reducing compliance burden
• Ease of doing business
• Employment and investment

Union Budget 2025 LIVE: On direct tax proposals, FM Nirmala Sitharaman said, “I am happy to inform, for new income tax, we will carry forward the spirit of ‘nyay’, the new bill will be clear and direct in text… it will be simple to understand for taxpayers, leading to reduced litigation.”

Union Budget 2025 LIVE: Nirmala Sitharaman announced that nine items will be in duty free sector, adding that 36 life saving drugs have been made duty free.

Union Budget 2025 LIVE: Nirmala Sitharaman said the fiscal deficit is projected at 4.4 per cent of the GDP.

“I propose to introduce the new income tax bill next week,” said Nirmala Sitharaman.

Union Budget 2025 LIVE: ₹20,000 crore to be given for promoting innovation in partnership with private sector, says finance minister Nirmala Sitharaman.

Union Budget 2025 LIVE: Nirmala Sitharaman announced, “Modified ‘Udaan’ scheme will carry four crore additional passengers in the next 10 years… the scheme will also support helipads, and smaller airports in hilly, aspirational and northeast regional districts.”

Greenfield airports will be facilitated in Bihar to meet the future needs of the state, announced FM Sitharaman, after which Opposition began sloganeering in Parliament.

Union Budget 2025 LIVE: "Nirmala Sitharaman said: Udaan regional connectivity scheme has enabled 1.5 crore middle class to meet their aspirations for speedier travel… inspired by the success, a modified Udaan scheme will be launched to enhance regional connectivity to 120 new destinations."

Budget 2025 LIVE: Ten thousand additional seats to be added in medical colleges next year and 75,000 seats to be added in next five years, said FM Nirmala Sitharaman announced while presenting the Union Budget 2025.

On expansion of capacity in IITs, finance minister Nirmala Sitharaman said 23 IITs have passed student capacity of 1.35 lakh in past ten years.

She further said, “I had announced three excellence centres in AI for agriculture in 2023. Now a centre of excellence for education will be set up with an outlay of 500 crores…”