Budget 2025: Major Tax Reforms and Agricultural Focus
The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, has been hailed as a transformative step towards achieving a self-reliant and inclusive India. With a strong emphasis on tax reforms and agricultural development, this budget aims to stimulate economic growth, enhance the spending power of the middle class, and uplift rural prosperity. This article delves into the key highlights of the budget, focusing on the major tax reforms and the agricultural initiatives that are set to shape India’s future.
Introduction: A Vision for Viksit Bharat
The Union Budget 2025-26 is built on the vision of “Sabka Vikas” (Development for All), aiming to create a balanced and inclusive growth trajectory for the nation. The budget focuses on four key engines of growth: Agriculture, MSMEs, Investment, and Exports. It also introduces significant tax reforms to simplify the tax structure, reduce compliance burdens, and boost disposable income for the middle class. Additionally, the budget places a strong emphasis on agricultural development, aiming to address underemployment in rural areas and improve farmer incomes.
Major Tax Reforms in Budget 2025
1. Simplified Income Tax Slabs
One of the most significant announcements in Budget 2025 is the revision of income tax slabs under the new tax regime. The government has introduced a more taxpayer-friendly structure to encourage voluntary compliance and reduce the tax burden on the middle class. The new tax slabs are as follows:
- ₹0-4 lakh: Nil
- ₹4-8 lakh: 5%
- ₹8-12 lakh: 10%
- ₹12-16 lakh: 15%
- ₹16-20 lakh: 20%
- ₹20-24 lakh: 25%
- Above ₹24 lakh: 30%
This revision ensures that individuals earning up to ₹12 lakh annually will pay no income tax, providing significant relief to the middle class.
2. Tax Relief for Senior Citizens
The budget has doubled the tax deduction limit for senior citizens from ₹50,000 to ₹1 lakh under Section 80D. This move is aimed at reducing the financial burden on elderly taxpayers and encouraging savings among this demographic.
3. Rationalization of TDS and TCS Provisions
To simplify compliance and reduce the burden on taxpayers, the government has rationalized Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions. Key changes include:
- Increasing the annual TDS limit on rent from ₹2.4 lakh to ₹6 lakh.
- Removing TCS on remittances for education purposes up to ₹10 lakh.
- Decriminalizing TDS and TCS provisions to promote ease of doing business.
4. Updated Return Filing System
The budget has extended the time limit for filing updated returns from two years to four years. This change allows taxpayers more flexibility to rectify errors and claim refunds, promoting transparency and voluntary compliance.
5. Focus on Ease of Doing Business
The government has introduced several measures to simplify tax compliance for businesses. These include:
- Expanding the scope of safe harbor rules to reduce litigation in international taxation.
- Introducing a scheme for determining arm’s length prices for international transactions over a block period of three years.
- Rationalizing customs duty rates for industrial goods to reduce the cost of production.
Agricultural Focus in Budget 2025
1. Prime Minister Dhan-Dhaanya Krishi Yojana
The budget has launched the “Prime Minister Dhan-Dhaanya Krishi Yojana,” a comprehensive scheme aimed at increasing agricultural productivity in 100 low-productivity districts. The initiative focuses on crop diversification, improved irrigation facilities, and post-harvest storage solutions. Over 1.7 crore farmers are expected to benefit from this scheme.
2. Mission for Aatmanirbharta in Pulses
To reduce India’s dependence on imports, the government has launched a six-year “Mission for Aatmanirbharta in Pulses.” This mission focuses on increasing the production of tur, urad, and masoor pulses. Central agencies like NAFED and NCCF will procure these pulses directly from farmers, ensuring remunerative prices.
3. Enhanced Credit Facilities for Farmers
The budget has increased the loan limit under the Kisan Credit Card (KCC) scheme from ₹3 lakh to ₹5 lakh. This move is expected to provide greater financial flexibility to farmers, enabling them to invest in better seeds, fertilizers, and equipment.
4. National Mission on High-Yielding Seeds
To boost agricultural productivity, the government has announced a National Mission on High-Yielding Seeds. This initiative aims to develop and distribute high-quality seeds for major crops, ensuring better yields and higher incomes for farmers.
5. Focus on Rural Prosperity
The budget has introduced a comprehensive multi-sectoral program for rural prosperity, focusing on skilling, investment, and technology adoption. The goal is to create ample employment opportunities in rural areas, reducing the need for migration to urban centers.
Other Key Highlights of Budget 2025
1. Boost to MSMEs
The budget has enhanced the credit guarantee cover for MSMEs from ₹5 crore to ₹10 crore, providing easier access to credit. Additionally, a new scheme has been launched to support 5 lakh women, Scheduled Castes, and Scheduled Tribes first-time entrepreneurs with term loans up to ₹2 crore.
2. Focus on Innovation and AI
The government has allocated ₹500 crore for the establishment of a Centre of Excellence in Artificial Intelligence (AI) for education. This initiative aims to prepare the youth for future technological advancements and foster innovation in key sectors.
3. Urban Development
The budget has introduced an Urban Challenge Fund of ₹1 lakh crore to promote sustainable urban development. This fund will focus on improving municipal services, urban land planning, and infrastructure development.
4. Healthcare Initiatives
The budget has allocated ₹20,000 crore for the establishment of Day Care Cancer Centers in all district hospitals. Additionally, 36 life-saving drugs have been exempted from customs duty, making healthcare more affordable.
Conclusion: A Budget for the Future
The Union Budget 2025-26 is a bold and forward-looking document that addresses the pressing needs of the Indian economy. By introducing significant tax reforms and focusing on agricultural development, the budget aims to create a more inclusive and prosperous India. The emphasis on simplifying tax compliance, boosting rural prosperity, and fostering innovation reflects the government’s commitment to achieving the vision of Viksit Bharat. As these initiatives are implemented, they are expected to drive economic growth, improve living standards, and position India as a global leader in the years to come.
