Budget 2025: What Gets Cheaper, What Gets Expensive?
Simplified Overview of the Union Budget 2025-26
Finance Minister Nirmala Sitharaman presented the Union Budget for 2025-26 on February 1. This is her eighth budget and the second full one under the Modi 3.0 government. The budget aims to boost economic growth, support households, improve industries, and empower India’s growing middle class. It also focuses on key areas like agriculture, manufacturing, employment, small businesses (MSMEs), rural development, and innovation. A new income tax bill will also be introduced next week, aimed at being simpler and more transparent. This budget comes at a time when India’s GDP growth rate is projected at 6.4%, the lowest in four years.
Income Tax Relief
One of the biggest highlights of the budget is the tax exemption for individuals earning up to ₹12 lakh annually under the new tax system. For salaried employees, the effective tax-free income is ₹12.75 lakh after including a standard deduction of ₹75,000. This move aims to provide relief to the middle class and increase their spending power. However, the government is estimated to lose ₹1 lakh crore in revenue due to these changes.
Customs Duty Changes: What’s Cheaper?
The budget introduced changes to customs duties to lower prices in certain sectors:
- Healthcare: Life-saving medicines for cancer and chronic diseases are fully exempt from customs duties.
- Electronics: Import duties on materials for EV and mobile phone batteries, like cobalt powder and lithium-ion scrap, have been reduced.
- Shipbuilding: Raw materials for shipbuilding are now tax-free for the next 10 years.
- Other Goods: Over 35 items for EV battery production and 28 goods for mobile phone manufacturing are now tax-exempt.
Customs Duty Changes: What’s Costlier?
Some items will become more expensive due to increased taxes:
- Interactive Flat-Panel Displays: Tax increased from 10% to 20%.
- Knitted Fabrics: Used in clothing, these fabrics will now cost more.
- Telecom and Plastic Products: Higher duties will lead to increased prices for these items.
Other Important Announcements
- Provisional customs assessments will now be cleared within two years for quicker processing.
- Filing of income tax returns (ITR) can now be done for up to four years instead of two.
- Tax Collected at Source (TCS) for remittances abroad increased from ₹7 lakh to ₹10 lakh.
- TDS on rental income raised from ₹2.4 lakh to ₹6 lakh.
- Kisan Credit Card loan limit raised from ₹2 lakh to ₹5 lakh for farmers.
Economic Projections
- The Economic Survey estimates India’s growth for 2025-26 to be between 6.3% and 6.8%.
- Food prices are expected to decrease in the final quarter of FY25.
- The fiscal deficit target is set at 4.4% for 2025-26.
Support for Businesses and Industries
The government plans to drive long-term industrial growth by:
- Increasing funding for research and development (R&D).
- Providing more benefits to small businesses (MSMEs).
- Introducing full 100% Foreign Direct Investment (FDI) in the insurance sector with new guidelines.
This budget is designed to balance economic growth with tax relief for citizens while supporting critical industries and agriculture. It reflects a strong focus on empowering the middle class, creating jobs, and boosting India’s economy.