Union Budget 2025

The Union Budget 2025 has sparked considerable interest across India, with a slew of new schemes and benefits designed to impact various sectors positively. As the government outlines its financial roadmap for the upcoming fiscal year, the budget 2025 brings several crucial updates that aim to simplify tax regulations, boost housing sector growth, and provide much-needed support for businesses and individuals alike. This comprehensive review delves into the income tax budget, home loan in budget 2025, and the new budget housing schemes. With these changes, taxpayers and home buyers will gain insights into how the budget impacts their financial planning and investment strategies.

Overview of Budget 2025

The 2025 budget marks a significant shift in India’s financial policies. It focuses on increasing economic growth, improving social welfare, and fostering infrastructure development. The government has introduced several key proposals that will affect personal finance, including updates to income tax slabs, new schemes for home loans, and various incentives for different sectors. Understanding these changes is crucial for making informed financial decisions and optimising the benefits available under the new regime.

What is a budget?

The Union Budget is the annual financial statement presented by the government, outlining its revenue and expenditure plans for the coming fiscal year. It is a comprehensive document that includes tax proposals, economic policies, and allocations for various government schemes. The budget aims to address economic challenges, promote growth, and ensure equitable distribution of resources. For Budget 2025, the focus is on enhancing financial inclusivity, stimulating economic growth, and addressing key issues in the housing and financial sectors.

New direct tax changes in Budget 2025

The budget 2025 introduces several direct tax proposals aimed at simplifying tax structures and providing relief to taxpayers. These changes include revisions to income tax slabs, increased deductions, and the introduction of new TDS rates. For more detailed information on tax concepts and planning, refer to guide on tax concepts.

Increased limit of standard deduction and family pension deduction under new regime 2025-26

The budget 2025 has raised the limit for standard deductions from ₹50,000 to ₹75,000 and, family pension deductions significantly, under the new tax regime. This change is designed to provide additional financial relief to taxpayers. For more insights into standard deductions, visit our standard deduction guide.

Change in income tax slabs under new tax regime 2025-26

The revised income tax slabs for the new tax regime are as follows:

Income Range	Tax Rate
Up to ₹4 lakh	Nil
₹4 lakh - ₹8 lakh	5%
₹8 lakh - ₹12 lakh	10%
₹12 lakh - ₹26 lakh	15%
₹16 lakh - ₹20 lakh	20%
₹20 lakh - ₹24 lakh	25%
Above ₹24 lakh	30%

These changes aim to reduce the tax burden on individuals. For detailed income tax slab information, check our income tax slab guide and use our income tax calculator for precise calculations.

Abolishment of angel tax in budget 2025

One of the significant highlights of budget 2025 is the abolishment of angel tax. This tax, which was levied on investments in startups, has been a contentious issue for entrepreneurs. The removal of this tax is expected to encourage more investments in the startup ecosystem and stimulate innovation.

Reducing corporate taxes on foreign companies

The budget 2025 proposes a reduction in corporate taxes for foreign companies operating in India. This move aims to attract more foreign investments and boost economic growth. The new tax rate will be 35%, down from the previous 40%, making India a more attractive destination for global investors and attracting more FDIs.

Increased deduction on employer's contribution to pension scheme

Under the new budget, there is an increased deduction on the employer's contribution to the pension scheme. It now stands at 14% of the employee’s salary, compared to previous 10%,

Particulars	Old Regime (Pre-Budget)	Old Regime (Post-Budget)
Employer’s contribution to NPS	Up to 10% of salary	No change
Employee’s contribution to NPS	Rs. 50,000	No change

This change aims to encourage savings for retirement and provides additional financial security for employees. For tips on reducing tax on pension income, visit our pension tax reduction guide.

Introducing new indirect tax proposals:

The Budget 2024 also introduces several indirect tax proposals. These include changes to customs duties, GST rates, and exemptions for critical goods. These reforms are designed to simplify the tax structure and enhance compliance.

Customs duties reductions and exemptions for critical goods

The new budget has reduced customs duties on essential and critical goods. This includes reductions in duties for medical equipment, technology products, and raw materials. These changes aim to lower costs and enhance availability of critical goods.

Category	Details
Gold and Silver	Reduce Customs Duty on gold and silver to 5%.
Mobiles and Accessories	Reduce Customs Duty on mobile phones, mobile PCBA, and mobile chargers
Respite for Cancer Patients	Fully exempt three more medicines from Customs duties.Changes in Customs Duty on X-ray tubes and flat panel detectors under the phased manufacturing programme.
Solar Panels, Critical Minerals	Fully exempt Customs duties on 25 critical minerals. Reduce Customs Duty on two critical minerals.Minerals include lithium, copper, cobalt, and rare earth elements
Electronics	Remove Customs Duty on oxygen-free copper for manufacturing resistors, subject to conditions.Exemption likely for certain parts used in connectors
Telecommunication	Increase Customs Duty from 10% to 15% on PCBA of specified telecom equipment.
Other Metals	Remove Customs Duty on ferronickel and blister copper., andContinue nil Customs Duty on ferrous scrap and nickel cathode. Concessional Customs Duty of 2.5% on copper scrap., Reduce Customs Duty on stainless steel scrap from 5% to 2.5%. Exempt Customs Duty on waste and scrap of precious metals like gold, silver, and platinum.

 

Updated major GST reforms and amendments

Significant GST reforms have been introduced in the Budget 2025, including:

Description	GST Rate	Examples
Goods and services exempted from GST	0%	Fresh fruits and vegetables, non-AC hotel stays, etc.
Textiles	0.25%	Fabrics, etc.
Gold	3%	Jewellery, Bars, Coins, etc.
Essential items and services	5%	Packaged and processed foods, milk, curd, newspapers, books, transport services, etc.
Most processed goods and services	12%	Clothing, footwear, soaps, detergents, etc.
Most general goods and services	18%	Electronics, home appliances, furniture, household items, etc.
Luxury goods and services	28%	Luxury cars, gambling & betting, pan masala, carbonated drinks, etc.

 

Budget 2025: What gets cheaper and costlier in budget 2025

What’s Becoming Cheaper
Category/Item	Customs Duty Change	Impact
Mobile Phone Batteries and Components	28 items in battery production exempted from customs duty	Reduced cost for mobile phones and accessories
LED/LCD TVs	Duty reduction on open cells and components	Lower production costs for TVs
EV Batteries and Components	Lower duties on lithium-ion scrap, cobalt, and key materials	Reduced cost for electric vehicles
Life-saving Drugs	36 critical medicines, including cancer drugs, exempted from BCD	Lower cost of essential medicines
Medical Equipment	Various medical tools and devices exempted from BCD	Lower cost of medical equipment
Wet Blue Leather	Exempt from BCD	Reduced cost for leather goods
Shipbuilding Raw Materials	Exempt from BCD for an additional 10 years	Lower cost for shipbuilding
Frozen Fish Paste (Surimi)	BCD reduced from 30% to 5%	Lower cost for seafood exports
Knitted Fabrics (Technical Textiles)	Reduced duties on certain textile machinery	Lower cost of domestic production of textiles
What’s Becoming Costlier
Category/Item	Customs Duty Change	Impact
Interactive Flat Panel Displays	Increased customs duty from 10% to 20%	Higher cost for interactive screens
Knitted Fabrics	Duty increase from “10% or 20%" to “20% or 115 per kg”	Higher cost for textile products

For more information on GST and affordable housing, check GST on affordable housing guide.

Budget highlights

1. Expenditure: The government plans to spend Rs. 47,65,768 crore in 2024-25, marking a 6% increase from the revised 2023-24 estimate. Interest payments make up 25% of this total expenditure and 40% of revenue receipts.
2. Receipts: Receipts, excluding borrowings, are projected at Rs. 30,80,274 crore in 2024-25, reflecting a 12% rise from the revised estimate for 2023-24. Tax revenue, a significant portion of these receipts, is also expected to grow by 12%.
3. GDP: The government forecasts a nominal GDP growth rate of 10.5% in 2024-25, combining real growth and inflation.
4. Deficits: The revenue deficit for 2024-25 is aimed at 2% of GDP, down from the 2.8% revised estimate for 2023-24. The fiscal deficit target for 2024-25 is set at 5.1% of GDP, lower than the 5.8% revised estimate for 2023-24.
5. New schemes: The Department of Economic Affairs has been allocated Rs. 70,449 crore for new schemes, intended for capital expenditure. This amount constitutes 7.5% of the total capital outlay, though details of the schemes are not yet available.

Priority & Sector-Wise Budget 2025 Highlights:

Agriculture and Rural Development

• Dhan Dhanya Krishi Yojana to focus on 100 districts in Phase 1, benefiting 1.7 crore farmers
• Increased allocation for agriculture, irrigation, and rural development

Education and Skills

• New IITs, IIMs, and AIIMS proposed, along with the launch of the Skill India programme
• Five National Centers of Excellence for Skilling to enhance vocational training
• Infrastructure expansion for post-2014 IITs

Energy and Infrastructure

• Target of 100 GW nuclear energy by 2047
• 20000 crore Nuclear Energy Mission for small modular reactors
• Modified Udaan Scheme to connect 120 new destinations
• Maritime Development Fund with 25000 crore corpus

Healthcare and Wellness

• 200 District-Level Day-Care Cancer Centers by 2025-26
• 10000 additional medical seats in FY26
• Sashakt Anganwadi & Poshan 2.0 programs for nutrition support

Taxation and Finance

• No income tax up to 12 lakh
• New TDS & TCS relaxations on rent, foreign remittances, and sale of goods
• Increased FDI limit in insurance sector from 49% to 100%

Other Key Sectors

• 1 lakh crore Urban Challenge Fund for urban development
• Deeptech Fund-of-Funds to support startups in technology
• National Geospatial Mission to develop foundational geospatial data and infrastructure

Government Schemes Proposed in Budget 2025

The Budget 2025 has introduced several new government schemes aimed at boosting economic growth, supporting small businesses, and enhancing social welfare. One of the flagship initiatives is the Digital Empowerment Scheme, which focuses on increasing digital literacy and providing access to technology in rural and semi-urban areas. This scheme is expected to bridge the digital divide and promote e-governance.

Another significant proposal is the SME Boost Program, designed to offer financial assistance and tax incentives to small and medium enterprises. This initiative aims to foster entrepreneurship and innovation in the country. The third scheme, Green Growth Initiative, targets environmental sustainability by promoting renewable energy projects and sustainable agricultural practices.

Additionally, the government has proposed a Health and Wellness Scheme, which focuses on expanding healthcare infrastructure and subsidizing medical costs for low-income families. Finally, the Skill India 2.0 Program is set to revamp vocational training and skill development programs to create a more competitive workforce.

These schemes collectively represent a comprehensive effort to drive inclusive growth and ensure that the benefits of economic development reach every segment of society.

Revenue and Expenditures of the Union Budget 2025

Here's a breakdown of the revenue and expenditures of the Union Budget 2025 in tabular form:

Revenue Estimates for 2025-26

Revenue Source	Estimated Amount (in ₹ crore)
Tax Revenue	23,03,172 ¹
‣ Corporation Tax	7,19,551
‣ Income Tax	6,83,089
‣ Customs	2,45,893
‣ Excise	4,33,692
Non-Tax Revenue	3,93,449 ²
Total Revenue	26,96,621

 

Expenditure Estimates for 2025-26

Expenditure Head	Estimated Amount (in ₹ crore)
Revenue Expenditure	39,44,000 ³
Interest Payments	10,24,401
Pensions	2,31,484
Transfers to States	10,42,324
Capital Expenditure	11,19,696 ³
Total Expenditure	50,63,696

 

Conclusion

The Union Budget 2025 presents a range of changes and new schemes that are set to impact various sectors. With updates to income tax slabs, enhanced home loan benefits, mortgage loan impact and new budget housing schemes, taxpayers and homebuyers will find numerous opportunities to optimise their financial planning. Staying informed about these changes is crucial for making the most of the benefits provided.