Interim Budget 2025 HighlightsKey Tax Proposals and Reforms for FY 2025-26

Revised Income Tax Slabs

The income tax slabs for FY 2025-26 have been revised to provide relief to taxpayers.

• No tax for income up to ₹5 lakh under the new regime.

• 10% tax for income between ₹5 lakh and ₹7.5 lakh.

• 15% tax for income between ₹7.5 lakh and ₹10 lakh.

Standard Deduction Increase

The standard deduction for salaried individuals has been increased to provide additional relief.

• Standard deduction increased from ₹50,000 to ₹60,000.

• Applicable to all salaried employees.

• Reduces taxable income, leading to tax savings.

Section 80C Limit Enhancement

The limit for deductions under Section 80C has been increased to encourage savings.

• Deduction limit increased from ₹1.5 lakh to ₹2 lakh.

• Includes investments like PPF, ELSS, and NSC.

• Promotes long-term financial planning.

Worked Example: Tax Savings

Illustration of tax savings with the new proposals.

• Income: ₹10 lakh, Standard Deduction: ₹60,000.

• Deductions under Section 80C: ₹2 lakh.

• Taxable Income: ₹7.4 lakh, Tax Payable: ₹46,000.

Corporate Tax Rate Reduction

The corporate tax rate has been reduced to boost economic growth.

• Corporate tax rate reduced to 22% for domestic companies.

• Applicable to companies not availing any exemptions.

• Encourages investment and expansion.

Incentives for Startups

New incentives introduced to support startup growth.

• Tax holiday extended to 5 years for eligible startups.

• Investment limit for angel tax exemption increased to ₹50 crore.

• Simplified compliance procedures for startups.

Real Estate Sector Boost

Measures to stimulate the real estate sector and housing projects.

• Extension of tax holiday under Section 80-IBA for affordable housing.

• Capital gains exemption on investment in two residential properties.

• Reduction in GST rates for under-construction properties.

GST Reforms for MSMEs

Reforms in GST compliance to ease the burden on MSMEs.

• Quarterly GST return filing for businesses with turnover up to ₹5 crore.

• Interest subvention scheme for MSMEs on incremental loans.

• Increased procurement from MSMEs by government enterprises.

Increased Allocation for MGNREGA

Enhanced budget allocation for rural employment through MGNREGA.

• ₹70,000 crore allocated for FY 2025-26.

• Focus on creating sustainable rural infrastructure.

• Additional funds to be provided if required.

Pradhan Mantri Awas Yojana

Continued support for affordable housing for the economically weaker sections.

• Increased budget allocation for urban and rural housing.

• Subsidies for home loans under the Credit Linked Subsidy Scheme.

• Target to build 1 crore houses by 2026.

Direct Benefit Transfers

Expansion of direct benefit transfers to ensure transparency and efficiency.

• Inclusion of more welfare schemes under DBT.

• Reduction in leakages and corruption.

• Faster delivery of benefits to beneficiaries.

Educational Scholarships

Increased funding for scholarships for students from backward classes.

• ₹5,000 crore allocated for scholarships.

• Focus on technical and higher education.

• Special emphasis on girl students.

Ujjwala Yojana Expansion

Continued focus on providing clean cooking fuel to rural women.

• Target to provide 10 crore LPG connections by 2026.

• Subsidized LPG cylinders for BPL families.

• Reduction in health hazards from traditional cooking methods.

Support for Women Entrepreneurs

Initiatives to promote women entrepreneurship and financial independence.

• Special loan schemes for women-owned businesses.

• Increased procurement from women-led MSMEs by government agencies.

• Mentorship and training programs for women entrepreneurs.

Maternity Benefits Enhancement

Strengthening maternity benefits to support working mothers.

• Extension of maternity leave to 28 weeks.

• Increased financial assistance under the Pradhan Mantri Matru Vandana Yojana.

• Support for crèche facilities at workplaces.

Education and Skill Development

Programs to enhance education and skill development for women.

• Scholarships for girls in STEM fields.

• Vocational training programs for women in rural areas.

• Partnerships with NGOs for skill development initiatives.

Recapitalization of Public Sector Banks

Continued efforts to strengthen public sector banks through recapitalization.

• ₹3 lakh crore allocated for bank recapitalization.

• Focus on improving bank balance sheets.

• Enhanced lending capacity for economic growth.

Insolvency and Bankruptcy Code Enhancements

Strengthening the IBC framework for faster resolution of NPAs.

• Introduction of pre-packaged insolvency resolution for MSMEs.

• Reduction in time taken for resolution processes.

• Increased recovery rates for creditors.

Digital Banking Initiatives

Promoting digital banking to enhance financial inclusion.

• Expansion of digital payment infrastructure.

• Incentives for digital transactions.

• Focus on cybersecurity and fraud prevention.

Amalgamation of Banks

Further consolidation of banks to achieve economies of scale.

• Amalgamation of smaller banks into larger entities.

• Improved operational efficiency and customer service.

• Wider geographical reach and product offerings.

Expansion of Mega Pension Yojana

Broadened coverage of the Mega Pension Yojana for unorganized sector workers.

• Target to cover 15 crore workers by 2026.

• Government contribution matching worker contributions.

• Monthly pension of ₹3,500 post-retirement.

National Pension System (NPS) Reforms

Enhancements in NPS to encourage retirement savings.

• Increased government contribution from 14% to 16%.

• Tax benefits on NPS contributions under Section 80CCD(1B).

• Flexibility in investment choices and withdrawal options.

Pension Schemes for Senior Citizens

Introduction of new pension schemes for senior citizens.

• Higher interest rates on senior citizen savings schemes.

• Additional tax deductions for senior citizens under Section 80TTB.

• Focus on financial security and healthcare support.

Worked Example: Pension Contributions

Illustration of benefits from increased pension contributions.

• Monthly contribution: ₹100, Government match: ₹100.

• Total monthly contribution: ₹200, Annual: ₹2,400.

• Projected pension: ₹3,500 per month post-retirement.

Minimum Support Price (MSP) Increase

Increase in MSP to ensure fair prices for farmers.

• MSP set at 60% above cost for all 23 crops.

• Focus on sustainable agricultural practices.

• Support for organic and natural farming methods.

Pradhan Mantri Kisan Samman Nidhi (PM-Kisan)

Expansion of PM-Kisan to provide direct income support to farmers.

• ₹8,000 annual support to 14 crore farmers.

• Quarterly installments directly transferred to bank accounts.

• Focus on small and marginal farmers.

Agricultural Infrastructure Development

Investment in infrastructure to boost agricultural productivity.

• ₹1 lakh crore allocated for agri-infrastructure fund.

• Development of cold storage and supply chain facilities.

• Support for farm mechanization and technology adoption.

Crop Insurance Scheme Enhancements

Improvements in crop insurance schemes for risk mitigation.

• Increased coverage under the Pradhan Mantri Fasal Bima Yojana.

• Simplified claim settlement process.

• Focus on climate-resilient farming practices.