Union Budget 2025 Highlights & CA Insights
CA Vishal Agarwal
CA Vishal Agarwal is a highly skilled and dedicated Chartered Accountant with extensive expertise in Goods and Services Tax (GST). With years of experience in the field, he has established himself as a trusted advisor to businesses and individuals across multiple locations in Bihar. His deep understanding of GST regulations, compliance, and advisory services has helped numerous clients navigate the complexities of taxation with ease and confidence.
Introduction:
India reached a significant milestone in its economic history on February 1, 2025, when Finance Minister Nirmala Sitharaman unveiled the Union Budget 2025–26. This budget, focusing on inclusivity, fiscal efficiency, and strategic investments in critical sectors, is positioned as a blueprint to move India closer to “Viksit Bharat” (Developed India).
The Union Budget 2025–2026 centres on four main growth engines: exports, investments, MSMEs, and agriculture. The main objectives are to improve family attitudes, attain balanced regional development, and increase the purchasing power of India’s growing middle class.
Focused areas:
- Garib (Poor): Targeted welfare measures.
- Youth: Employment and skill development initiatives.
- Annadata (Farmers): Agricultural reforms and support.
- Nari (Women): Empowerment and financial inclusion programs.
Budget Estimates 2025–26
- The expected total expenditure is Rs 50.65 lakh crore, and the total earnings, excluding borrowings, are Rs 34.96 lakh crore.
- An estimated Rs 28.37 lakh crore will be received in net tax revenues.
- The fiscal deficit is estimated at 4.4% of GDP.
- Estimated market borrowings amount to ₹14.82 lakh crore.
- Rs 11.21 lakh crore (3.1% of GDP) in capital expenditures is allocated for FY2025–2026.
Overview of the Union Budget:
- Reforming the Tax Code to Help the Middle Class:
The substantial tax relief for the middle class is among the most anticipated features of the Union Budget 2025–26. The annual increase in the non-taxable income level from ₹7 lakh to ₹12 lakh has significantly benefited salaried people.
Slab (₹) | Old Regime(Below 60 years) | New Regime(FY 2025–26) |
Up to ₹ 2,50,000 | 0% | — |
₹ 2,50,001 – ₹ 5,00,000 | 5% | — |
₹ 5,00,001 – ₹ 10,00,000 | 20% | — |
Above ₹ 10,00,000 | 30% | — |
Up to ₹ 4,00,000 | — | 0% |
₹ 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% |
2. Fiscal Consolidation and Deficit Management:
Despite tax relief efforts, the government remains committed to economic prudence. The fiscal deficit target has been reduced to 4.4% of GDP for 2025-2026. The long-term plan aims to decrease the Central Government’s debt as a percentage of GDP over the next six years.
The data includes:
a. Total Expenditure: ₹50.65 lakh crore
b. Net Tax Receipts: ₹28.37 lakh crore
c. Market Borrowings: ₹14.82 lakh crore
3. Strategic Initiatives and Sectoral Highlights:
a. Agriculture: Reinforcing the Economic Foundation: India’s economy relies significantly on agriculture, and the Union Budget 2025-2026 includes initiatives to boost agricultural output and safeguard farmers’ interests. These policies are expected to benefit over 17 million farmers, increase rural income, and solidify India’s position as a global agricultural leader.
b. Prime Minister Dhan-Dhaanya Krishi Yojana: Aiming to improve productivity and encourage sustainable farming methods across 100 districts.
c. The six-year Aatmanirbharta mission in pulses will focus on Tur, Urad, and Masoor, with the goal of achieving self-sufficiency in pulse production.
d. Mission for Cotton Productivity: A five-year plan to promote extra-long staple cotton types while increasing cotton output and sustainability.
e. Enhanced Credit through KCC: The Kisan Credit Card program now offers a credit maximum of ₹5 lakh instead of ₹3 lakh.
A) MSMEs: Drivers of Economic Development: It is anticipated that these actions will contribute to 45% of India’s exports and create jobs for 7.5 crore people.
Updates to the MSME Classification: Higher turnover and investment thresholds to support expansion and scalability.
1. Micro Enterprises: Investment limit raised from ₹1 crore to ₹2.5 crore.
2. Small Businesses: Turnover between ₹10 crore and ₹25 crore.
3. Medium Enterprises: Turnover between ₹50 crore and ₹125 crore.
Support for Credit:
1. For Micro and Small Businesses, the Credit Guarantee Coverage has been raised from ₹5 crore to ₹10 crore.
2. Customized credit cards with a ₹5 lakh limit have been introduced for microenterprises.
Support for First-Time businesses: Over the next five years, a new program will provide 5 lakh women, SC, and ST businesses with term loans up to ₹2 crore.
B) Investments: Supporting Economic Growth: The third pillar of the budget is made up of investments in innovation and infrastructure. These projects are expected to develop a sustainable energy future, boost economic growth, and improve infrastructure.
1. Ministries will implement a three-year pipeline of public-private partnerships (PPP) projects.
2. ₹1 lakh crore has been set up for infrastructure and urban renewal through the Urban Challenge Fund.
3. By 2047, Viksit Bharat’s Nuclear Energy Mission hopes to have 100 GW of nuclear energy capacity.
4. SWAMIH Fund 2: ₹15,000 crore set aside to help middle-class homeowners by constructing one lakh housing units.
C) Innovation, Technology, and R&D:
1. ₹20,000 crore for R&D initiatives driven by the private sector.
2. The number of PM Research Fellowship spots has increased to 10,000.
3. Ten lakh germplasm lines are planned for the second gene bank.
4. The establishment of National Geospatial, Gyan Bharatam, and AI Centres of Excellence.
CA Insights: What do these changes mean?
- Significant relief, but a decline in government revenue: CAs point out that while the ₹1 trillion tax cut is intended to increase consumption, it may limit revenue growth. Borrowing will be a major part of the deficit reduction.
- Simplified compliance and a decrease in litigation: It is anticipated that the Direct Tax Code, the enlarged ITR-U window, and the streamlined TDS regulations will lessen filing burdens and conflicts; this is seen as a long-term benefit by CA firms.
- Conflicting capital expenditure signals: Although capital spending remains high, it lacks significant new impetus. Prioritizing tax cuts above fundamental infrastructure investment, according to some CAs, may stifle long-term economic recovery.
- Focusing on agriculture and rural areas can spread wealth, boosting demand in small towns and villages by empowering farmers and rural households. This presents an opportunity to expand the consumer base in these underserved areas.
Conclusion:
With its strong emphasis on simplification and rural empowerment, the Union Budget 2025 strikes a balance between taxpayer relief and fiscal prudence. It eases compliance for both individuals and corporations and offers significant tax cuts, but it remains cautious when it comes to radical reforms or new capital expenditures. According to chartered accountants, the budget is pro-compliance, structurally stable, and focused on moderate growth.
For any clarifications or queries, please feel free to reach out to us at admin@fintracadvisors.com
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