On February 1, 2025, Finance Minister Nirmala Sitharaman presented India’s Union Budget for 2025-26, targeting a fiscal deficit reduction to 4.4% of GDP, down from 4.8% in the previous year. The budget focuses on employment-led growth through investments in agriculture, MSMEs, and exports.
Key stakeholders include middle-class taxpayers benefiting from increased tax rebates and the government aiming for stable economic growth amidst a projected GDP growth of 6.3-6.8% for FY26. The budget also allocates significant funds for defence and social welfare schemes, reflecting a balanced approach to fiscal consolidation and economic development.
As India continues to navigate its economic landscape, the annual Union Budget serves as a crucial indicator of the government’s financial priorities and policies. In this article, we will compare the key announcements from the Union Budgets of 2024-25 and 2025, highlighting their implications for taxpayers and the economy.
Comparison Table of Budget Announcements
| Feature/Aspect | Budget 2025 | Budget 2024 |
|---|---|---|
| Tax Rebate | Increased tax rebate under Section 87A | No significant changes to tax rebates |
| Income Tax Slabs | Introduction of new income tax slabs | Existing slabs retained without major changes |
| Fiscal Deficit Target | Fiscal deficit target set at 5.5% | Fiscal deficit target set at 6.4% |
| Capital Expenditure (Capex) | Focus on increasing capital expenditure for infrastructure | Emphasis on maintaining capital expenditure levels |
| Social Welfare Schemes | Enhanced funding for social welfare programs | Continued support for existing welfare schemes |
| Corporate Tax | No changes to corporate tax rates | Previous corporate tax rates maintained |
New Income Tax Slabs for FY 2025-26
The new income tax slabs introduced in the Union Budget 2025-26 are designed to provide significant relief to taxpayers, particularly those in the middle class:
Income Tax Slabs
| Annual Income Range | Tax Rate (%) |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Note: For salaried individuals earning up to ₹12 lakh annually (or ₹12.75 lakh with the standard deduction of ₹75,000), no income tax is payable due to a combination of slab rate reductions and rebates.
Tax Calculation Examples
The budget outlines how these changes will benefit taxpayers:
- A taxpayer with an income of ₹12 lakh will receive a total tax benefit of ₹80,000.
- An individual earning ₹18 lakh will benefit by ₹70,000.
- Those with an income of ₹25 lakh will see a benefit of around ₹1,10,000.
Comparison with Old Tax Regime
The old tax regime remains unchanged and offers various exemptions and deductions that can be claimed by taxpayers:
Income Tax Slabs for FY 2024-25 (AY 2025-26)
| Annual Income Range | Tax Rate (%) |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
The old regime allows numerous deductions under sections like 80C, which can significantly reduce taxable income.
Key Differences Explained
Tax Rebate and Slabs
In the Budget 2025, the government increased the tax rebate under Section 87A for individuals with lower incomes. This change aims to provide financial relief to a larger segment of the population. The introduction of new income tax slabs may adjust how much individuals pay based on their earnings compared to the previous year’s structure.
Fiscal Deficit Target
The fiscal deficit target is a critical measure of a government’s financial health. The Budget 2025 set an ambitious target of reducing the fiscal deficit to 5.5%, signaling a commitment to fiscal discipline. In comparison, the Budget 2024-25 established a higher fiscal deficit target of 6.4%.
Capital Expenditure (Capex) and Social Welfare
In Budget 2025, there is a strong emphasis on increasing capital expenditure for infrastructure projects aimed at stimulating economic growth by creating jobs and enhancing public services. Additionally, this budget allocated enhanced funding for social welfare programs reflecting a commitment to support vulnerable populations in society.
Corporate Tax
Both budgets maintained the same corporate tax rates with no changes announced in either year. This consistency provides stability for businesses operating in India.
Conclusion
As India embarks on its economic journey through the Union Budget 2025-26, the government has outlined a clear path towards fiscal prudence while fostering growth. The budget’s focus on infrastructure development and employment generation is poised to create opportunities for citizens—particularly in rural areas and among small businesses. However, challenges remain in sustaining growth amid global economic uncertainties and domestic demands.
The Logical Indian’s Perspective
The Union Budget 2025-26 reflects a commitment to fostering an inclusive economy while maintaining fiscal discipline. As we strive for a harmonious society, it is crucial that these financial policies translate into tangible benefits for all citizens—especially the underprivileged. Encouraging dialogue among communities can enhance understanding and cooperation in achieving shared goals. How do you think this budget will impact your community? Share your thoughts and engage with us!
