India Budget 2025: Key Tax Announcements and Economic Impact

The Indian government has introduced major tax reforms in the Union Budget 2025, aimed at boosting the economy and providing relief to the middle class.

1. Income Tax Exemption Increased

• The income tax exemption limit has been raised from ₹7 lakh to ₹12 lakh per year.
• This means individuals earning up to ₹12 lakh annually will not have to pay income tax.
• No Income payable on income of up to Rs 12,00,000 in the new tax regime 
  Here is how the new (proposed) tax regime will now look like:
  Zero to Rs 4,00,000- No Tax
  Rs 4,00,000 to Rs 8,00,000—5%
  Rs 8,00,0001 to Rs 12,00,000—10%
  Rs 12,00,001 to Rs16 lakh–15%
  Rs 16,00,001 to Rs 20 lakh–20%
  Rs 20,00,001 to Rs 24 lakh– 25%
  Above 24 lakh—30%
• The government aims to increase disposable income, encouraging consumer spending in sectors like real estate, automobiles, and FMCG.

2. Economic Growth and Investments

• A new high-yield crop program will benefit 1.7 crore farmers to enhance agricultural output.
• The government plans to formalize gig economy workers, providing them with better healthcare and social benefits.
• Major investments are planned in startups, infrastructure, tourism, and energy, including a 100 GW Nuclear Energy Mission by 2047.

3. Market & Growth Expectations

• Analysts predict the tax cuts could increase demand in key sectors, leading to overall economic growth.
• However, some experts believe capital investment in infrastructure may have a longer-term impact compared to tax relief.

4. Fiscal Deficit & GDP Projections

• The government aims to reduce the fiscal deficit to 4.4% of GDP.
• Economic growth is projected between 6.3% and 6.8%, but youth unemployment remains a challenge.

This budget aims to balance economic stimulus with fiscal responsibility, focusing on tax relief, infrastructure growth, and job creation.