Union Budget 2025 came in the light to push economic growth, a way for inclusive development, boost private sector investments, and uplift middle-class spending power and household consumption. The focus of the budget is on all four main pillars of the country: Poor, Youth, Farmers, and Women. In this blog, we’ll find what big announcements are made in this Union Budget 2025 and which schemes are launched in this budget.
Union Budget 2025: Six Focus Areas
Union Budget 2025 has covered different arenas from agriculture, MSMEs, investment, exports, and tax reforms for holistic development. Also, big changes to personal income tax slabs were announced to support the middle-class population and boost consumer spending.
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1. Union Budget 2025: Agriculture Support
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Dhan-Dhaanya Krishi Yojana
Prime Minister Dhan-Dhaanya Krishi Yojana was announced in this Union Budget and it will cover 100 districts having low productivity. In partnership with states, this scheme will help enhance agricultural productivity and provide easy access to credit which will support 1.7 crore farmers.
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Rural Prosperity and Resilience
With the support of states, a comprehensive multi-sectoral “Rural Prosperity and Resilience” program was announced to promote employment. This will also help with technical and financial assistance. In the first phase, 100 developing agri-districts will be covered.
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Oil and Pulses
To boost edible oil and pulses production, the “National Mission for Edible Oilseed” and the 6-year “Mission for Aatmanirbharta in Pulses” with a special focus on Tur, Urad, and Masoor were launched in the Union Budget 2025.
NAFED (National Agricultural Cooperative Marketing Federation of India) and NCCF (National Cooperative Consumers’ Federation of India Limited) will procure these mentioned pulses for the next 4 years from farmers.
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Vegetables and Fruits
With the combined efforts of states, a comprehensive program for vegetables and fruits will be launched to promote production and competitive pricing for farmers.
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Bihar – Makhna Board
Makhana Board will be established in Bihar to support the production, processing, and marketing of fox nuts. This Board will train and support Makhana farmers and ensure that they get the benefits of applicable Government schemes.
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National Mission on High-Yielding Seeds
This mission will be inaugurated to improve the research and development of high-yielding seeds. This improves the availability of around 100 types of seeds for commercial purposes.
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Fish Harnessing
With a focus on Andaman & Nicobar and Lakshadweep Islands, the framework of sustainable harnessing of fisheries will be set up.
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5-Year Mission for Cotton Productivity
To improve the productivity of cotton farming, technological support will be provided to the farmers. This will also boost the textile sector and help in ensuring a continuous supply of quality cotton.
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Kisan Credit Cards (KCC)
The KCC scheme provides short-term loans to 7.7 crore farmers, dairy farmers, and fishermen. The loan limit of the Modified Interest Subvention Scheme under KCC has increased from ₹3 lakhs to ₹5 lakhs in the Union Budget.
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Urea Production
Along with the reopening of urea plants in the Eastern region, a new urea plant with an early capacity of 12.7 lakh MT will be set up in Assam.
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India Post for Rural Areas
1.5 lakh rural post offices and 2.4 lakh Dak Sevaks will be set up along with the creation of a large public logistics system to support new entrepreneurs and MSMEs.
2. Union Budget 2025: MSMEs in Focus
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Higher Classification for MSMEs
MSMEs contribute 36% of India’s manufacturing sector and 45% of India’s exports. In light of these, the investment limits for all MSMEs will be increased by 2.5 times and turnover limits will also increase by 2 times.
The detailed current and proposed classification of MSMEs in the Union Budget 2025:
Classification | Current Investment Limit (₹ Cr) | Revised Investment Limit (₹ Cr) | Current Turnover Limit (₹ Cr) | Revised Turnover Limit (₹ Cr) |
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Micro | 1 | 2.5 | 5 | 10 |
Small | 10 | 25 | 50 | 100 |
Medium | 50 | 125 | 250 | 500 |
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Credit Guarantee Cover
The credit guarantee cover for micro and small enterprises has been increased from ₹5 crores to ₹10 crores. For startups, this is increased from ₹10 crores to ₹20 crores and for well-run exporters MSMEs, the term loans of up to ₹20 crores will be provided.
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Customized Credit Cards for Micro Enterprises
Credit card with a limit of ₹5 lakhs for micro-enterprises which are registered on Udyam Portal.
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AIFs for Start-ups
With the success of the previous AIFs for startups, a new FoF will be set up with a fresh contribution of an extra ₹10,000 crores.
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New Scheme for New Entrepreneurs
To support the 5 lakh women, SC, and STs first-time entrepreneurs, a new scheme will be launched to provide term loans of up to ₹ 2 crores in the next 5 years.
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Scheme for Footwear and Leather
A focus product scheme for footwear and leather production will be implemented and it is expected to generate a turnover of ₹4 lakh crores.
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National Action Plan for Toys
This scheme will be implemented to boost toy manufacturing in India with the development of clusters and the “Make in India” arena.
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Food Processing
The National Institute of Food Technology, Entrepreneurship, and Management will be set up in Bihar.
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National Manufacturing Mission
For small, medium, and large enterprises and strengthening the “Make in India” initiative, the National Manufacturing Mission will be launched.
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Mission for Clear Manufacturing
Building an ecosystem for solar PV cells, EV batteries, and wind turbine manufacturing will take center stage in this mission.
3. Union Budget 2025: Investment Initiatives
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Investing in People
Saksham Anganwadi and Poshan 2.0, Atal Tinkering Labs, Broadband Connectivity to Government Secondary Schools, and Bharatiya Bhasha Pustak Scheme were announced in the Union Budget 2025.
Additionally, National Centres of Excellence for Skilling, Capacity expansion of IITs, Centre of Excellence in AI for Education, Day Care Cancer Centres in all District Hospitals, PM SVANidhi scheme, and Social Security Scheme for the Welfare of Online Platform Workers and Gig workers were launched.
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Infrastructure Support
The infrastructure-related ministries will come up with a 3-year pipeline of projects in a PPP (Public Private Partnership) mode. With the support of the IIPDF (India Infrastructure Project Development Fund) scheme, the states can prepare the proposals. States will also be provided an allocation of ₹1.5 lakh crores as 50-year interest-free loans.
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Asset Monetization Plan
After the success of the first plan, the second Asset Monetization Plan for 2025-30 to generate the capital of ₹10 lakh crore in new projects.
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Jal Jeevan Mission
This mission has been extended to 2028 for 100% tap water coverage in rural areas. Also, separate MoUs will be signed with states for infrastructure strengthening.
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Urban and Power Sector
₹1 lakh crore Urban Challenge Fund will be set up for urban sector reforms. In the power sector, electricity distribution reforms will be incentivized to improve the financial stability of electricity companies.
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Nuclear Energy Mission
For 2027, a target to develop at least 100GW of nuclear energy is kept. Also, a Nuclear Energy Mission for research & development of Small Modular Reactors (SMR) was announced with an allocation of ₹20,000 crores.
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Shipbuilding
Revamp of the Shipbuilding Financial Assistance Policy and facilitation of Shipbuilding Clusters will be done for cost coverage and increase the range and category of ships.
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Maritime Development Fund
For long-term financing needs, the Maritime Development Fund with an allocation of ₹25,000 crores will begin.
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UDAN – Aviation
The modified UDAN scheme will be launched to increase the connectivity to 120 new destinations which will also support smaller airports in hilly and North East regions.
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Greenfield Airport in Bihar
Along with the capacity expansion of the Patna airport and a brownfield airport at Bihta, greenfield airports will be set up in Bihar.
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Western Koshi Canal Project
In the Mithilanchal region of Bihar, financial support will be given to the Western Koshi Canal ERM Project.
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Mining Sector Reforms
The mining sector reforms for creating best practices and recovery of critical minerals.
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SWAMIH Fund 2
Another SWAMIH (Special Window for Affordable and Mid-Income Housing) Fund will be established with a Union Budget outlay of ₹15,000 crores.
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PM Gati Shakti Portal
Data and maps from the PM Gati Shakti portal will be given to assist the private sector in project planning.
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Tourism Support
In India, the top 50 tourist destination sites will be developed, and also medical tourism will be promoted with a private sector focus.
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Investment in Innovation
For R&D and innovation in the private sector, ₹20,000 crores were allocated. Deep Tech Fund of Funds, PM Research Fellowship, Gene Bank for Crops Germplasm, National Geospatial Mission, and Gyan Bharatam Mission are the schemes to boost investment in innovation.
4. Union Budget 2025: Exports Policies
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Export Promotion Mission
Export Promotion Mission will be established to foster easy access to export credit, cross-border factoring support, and support to MSMEs to tackle non-tariff measures in overseas markets.
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BharatTradeNet
A digital public infrastructure will be established as a unified platform for trade documentation and financing solutions for seamless international trade.
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Global Supply Chain Integration
Support to domestic manufacturing and electronic equipment capacities for supply chain integration and supporting Industry 4.0.
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Global Capability Centres
To promote GCC in tier-2 cities, a national framework will be established to guide the states.
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Warehousing Facility for Air Cargo
There will be a focus on enhancing the infrastructure and warehousing for air cargo, including horticulture produce.
5. Union Budget 2025: Tax and Financial Sector Reforms
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New Income Tax Bill
Continuing with the past efforts of faceless assessment, faster returns, and the Vivad se Vishwas scheme, a simpler new income tax bill will be introduced in a few days.
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Insurance Sector FDI Limit
To boost investment in the insurance sector, the FDI capping limit will increase from 74% to 100%. This applies to companies that invest the entire collected premium only in India.
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India Post Payment Bank
To expand the India Post Payment Bank services in rural areas.
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Credit Facility for NaBFID
To create an infrastructure for corporate bonds, NaBFID (National Bank for Financing Infrastructure and Development) will establish a “Partial Credit Enhancement Facility.”
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Grameen Credit Score
To fulfill the credit requirements of SHG members and rural areas, the “Grameen Credit Score” framework will be developed by public sector banks.
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Pension Regulation
For the regulatory framework and development of pension-linked products, a forum will be set up.
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KYC Simplification Process
To simplify the KYC process, a revamped Central KYC Registry will be launched in 2025.
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Companies Merger Approval
Procedures for fast approval for companies’ mergers will be simplified and the fast-track merger process will be extended.
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Bilateral Investment Treaties
In 2024, India signed Bilateral Investment Treaties (BIT) with 2 countries. To strengthen this, a revamped BIT model will be launched.
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Other Regulatory Reforms
In the arena of “Ease of Doing Business,” a high-level committee for regulatory reforms and the Investment Friendliness Index of States will be set up.
Additionally, the Financial Stability and Development Council to evaluate current financial regulations and Jan Vishwas Bill 2.0 decriminalizing more than 100 legal provisions are proposed.
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6. Union Budget 2025: Fiscal Prudence
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Fiscal Deficit
In FY 2024-25, the revised estimate (RE) of fiscal deficit is 4.8% of GDP, and for FY 2025-26, the budget estimate (BE) is set at 4.4% of GDP. To cover the fiscal deficit, the net market borrowings from securities are estimated at ₹11.54 lakh crores.
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Total Receipts
In FY 2024-25, the RE of total receipts (other than borrowings) is ₹31.47 lakh crores, out of which net tax receipts are ₹25.57 lakh crores. For FY 2025-26, the BE of total receipts (other than borrowings) is estimated at ₹34.96 lakh crores. The net tax receipts are estimated at ₹28.37 lakh crores.
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Total Expenditure
In FY 2024-25, the RE of total expenditure is ₹47.16 lakh crores, out of which capex is ₹10.18 lakh crores. For FY 2025-26, the BE of total expenditure is estimated at ₹50.65 lakh crores, including the capex of ₹11.21 lakh crores.
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Personal Income Tax Regime Changes
The Nil tax slabs have been raised from ₹2.5 lakhs in 2014, ₹5 lakhs in 2019, and ₹7 lakhs in 2023. Now in the Union Budget 2025, the no-tax liability benefit (or tax rebate) has been raised to ₹12 lakhs under the new regime. Considering the standard deduction of ₹75,000, this limit will be ₹12.75 lakhs for salaried taxpayers.
Here are the new tax regime rates with the current and proposed income slabs:
Current Income Slab | Proposed Income Slab | New Regime Tax Rate |
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Up to ₹3 lakh | Up to ₹4 lakh | Nil |
₹3 lakh to ₹7 lakh | ₹4 lakh to ₹8 lakh | 5% |
₹7 lakh to ₹10 lakh | ₹8 lakh to ₹12 lakh | 10% |
₹10 lakh to ₹12 lakh | ₹12 lakh to ₹16 lakh | 15% |
₹12 lakh to ₹15 lakh | ₹16 lakh to ₹20 lakh | 20% |
– | ₹20 lakh to ₹24 lakh | 25% |
Above ₹15 lakh | Above ₹24 lakh | 30% |
Other Taxation Related Reforms:
- The time limit to file the updated return has been extended from 24 months to 48 months.
- Tax rates on capital gains on the transfer of capital assets between residents and non-residents are proposed to be in parity.
- Profit or gains from the redemption of ULIPs which are not exempted under Section 10(10D) will now be taxed as capital gains.
- The tax benefits for the National Pension Scheme (NPS) under sub-section (1B) of Section 80CCD will be extended to NPS Vatsalya contributions.
- The withdrawals made from the National Savings Scheme (NSS) on or after August 29, 2024 will be tax exempted.
Higher Threshold Rules on TDS/ TCS
There are certain instruments and income on which TDS and TCS applicable threshold limits have been increased after the Union Budget 2025:
Particulars (Section) | Current TDS/TCS Threshold | Proposed TDS/TCS Threshold |
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Interest on Securities (193) | Nil | ₹10,000 |
Interest other than Interest on securities (194A) | ₹50,000 for senior citizens and ₹40,000 for others | ₹1 lakh for senior citizens and ₹50,000 for others |
Dividend for an individual shareholder (194) | ₹5,000 | ₹10,000 |
Income in respect of units of a mutual fund or specified company or undertaking (194K) | ₹5,000 | ₹10,000 |
Rent (194-I) | ₹2.4 lakhs in a financial year | ₹50,000 in a month (₹6 lakhs in a FY) |
Winnings from a lottery, crossword puzzles, and horse race (194B) | ₹10,000 in a financial year | ₹10,000 in a single transaction |
Income by way of commission, prize, etc. on lottery tickets (194G) | ₹15,000 | ₹20,000 |
Commission or brokerage (194H) | ₹15,000 | ₹20,000 |
Insurance Commission (194D) | ₹15,000 | ₹20,000 |
Fee for professional or technical services (194J) | ₹30,000 | ₹50,000 |
Income by way of enhanced compensation (194LA) | ₹2.5 lakhs | ₹5 lakhs |
Remittance under LRS and overseas tour program package (206C(1G)) | ₹7 lakhs | ₹10 lakhs |
Union Budget 2025-26: Allocation to Ministries
The total Union Budget 2025-26 expenditure was estimated to be ₹50.65 lakh crores, which was 5.08% higher than last year’s budget estimate. Here are the details of the allocations to different ministries with the defense sector taking the first position.
Allocations (in ₹ Lakh Cr) | Budgeted 2025-26 | Budgeted 2024-25 | Revised 2024-25 | % Change (BE 2024-25 to BE 2025-26) |
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Defense | 6.81 | 6.22 | 6.41 | 9.53% |
Road Transport and Highways | 2.87 | 2.78 | 2.81 | 3.36% |
Railways | 2.55 | 2.55 | 2.55 | 0.02% |
Home Affairs | 2.33 | 2.20 | 2.20 | 6.18% |
Consumer Affairs, Food and Public Distribution | 2.16 | 2.23 | 2.13 | -3.38% |
Rural Development | 1.90 | 1.80 | 1.76 | 5.64% |
Chemicals and Fertilisers | 1.62 | 1.69 | 1.87 | -3.88% |
Agriculture and Farmers’ Welfare | 1.38 | 1.32 | 1.41 | 3.99% |
Education | 1.29 | 1.21 | 1.14 | 6.65% |
Communications | 1.08 | 1.37 | 1.50 | -21.26% |
Health and Family Welfare | 1.00 | 0.91 | 0.90 | 9.78% |
Jal Shakti | 1.00 | 0.99 | 0.52 | 0.80% |
Housing and Urban Affairs | 0.97 | 0.83 | 0.64 | 17.20% |
Other Ministries | 23.69 | 22.11 | 21.33 | 7.17% |
Total Expenditure | 50.65 | 48.21 | 47.16 | 5.08% |
Conclusion
The Union Budget 2025 aims to boost the economy with tax relief, more infrastructure spending, private funding, and support for exports to provide much-needed stability. Consumers will benefit from higher disposable income, along with lower prices for EVs and jewelry.
MSMEs will get support through new packages, easier business processes, and a simpler tax system. Investors can expect growth in consumption stocks, a rise in SIP investments, and the possibility of interest rate cuts by the RBI.
In this growing economy, it’s a good time to start investing. Open Demat account with SMC Global Securities and start building your wealth.
References:
https://www.indiabudget.gov.in/doc/budget_speech.pdf
https://prsindia.org/files/budget/budget_parliament/2025/Union_Budget_Analysis_2025-26.pdf
Author: All Content is verified by SMC Global Securities.
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