What major changes were made in the Union Budget of India for the financial year 2025-26?

India’s Union Budget for 2025–26, presented on 1 February 2025, put personal income tax relief at the centre of its announcements. It also set out changes to public investment, agriculture, small businesses, healthcare and customs duties.

Personal income tax changes

Under the new tax regime, the government raised the income level at which a taxpayer pays no income tax to ₹12 lakh, through an enhanced rebate. For salaried taxpayers, the ₹75,000 standard deduction means income up to ₹12.75 lakh can be tax-free. The rebate does not generally cover income taxed at special rates, such as some capital gains.

The new regime’s slabs were revised: income up to ₹4 lakh is taxed at 0%; ₹4–8 lakh at 5%; ₹8–12 lakh at 10%; ₹12–16 lakh at 15%; ₹16–20 lakh at 20%; ₹20–24 lakh at 25%; and income above ₹24 lakh at 30%. The old tax regime was not changed.

The Budget also proposed extending the time limit for filing updated returns from two years to four years, along with changes to TDS and TCS thresholds. A new, simpler Income-tax Bill was also announced.

Investment, agriculture and small businesses

• Public investment: Capital expenditure was budgeted at ₹11.21 lakh crore for 2025–26. The fiscal deficit target was set at 4.4% of GDP, down from the revised 4.8% estimate for 2024–25.
• Agriculture: The new PM Dhan-Dhaanya Krishi Yojana will cover 100 districts with low productivity and is expected to benefit 1.7 crore farmers. A six-year mission will focus on increasing production of pulses, particularly tur, urad and masoor.
• MSMEs: Investment and turnover limits for classifying micro, small and medium enterprises were increased, allowing more firms to qualify for support. The Budget also raised credit guarantee limits for MSMEs and startups.
• Manufacturing and exports: A National Manufacturing Mission and an Export Promotion Mission were announced to support businesses, including smaller manufacturers.

Health, education and other measures

The Budget announced plans for 10,000 additional medical education seats in the following year, with a longer-term target of adding 75,000 seats over five years. Day-care cancer centres are to be set up in district hospitals in phases, with 200 planned for 2025–26. Gig workers were promised identity cards and access to healthcare coverage through a government scheme.

Customs duty relief included exemptions for 36 life-saving medicines and duty reductions on selected inputs, including some used in battery production. The Budget also proposed changes to customs tariffs and support for critical-mineral processing.

These were among the headline proposals; the full budget included further measures and spending allocations across departments.