The Union Budget for 2025-2026 was presented by the Finance Minister on Saturday. After many years, it is a budget that will provide a lot of relief to the middle class. This budget will directly add money in your pocket compared to the previous years, that too without any star marked caveats of exemptions etc.
It is honestly, above and beyond what even the most hopeful would have thought and asked for! You can get Mr. Sanjay Mehta's views on the budget on the latest Money Matters Episode here - टैक्स में राहत ,लोगों के हाथ में पैसा, Investment का है सुनहरा मौका ? || Budget 2025 | Income Tax. Let's get into the details -
1. New Income Tax Slabs – Tax Just Got Friendlier
ZERO income tax up to 12 Lakhs of Income. Effective tax-free income of Rs 12.75 Lakhs (including deduction of Rs 75,000). Reduced rates for everyone!
If you were earning Rs 12 Lakhs before, you save Rs 80,000 per year or approx Rs 6,500 per month. For those of you earning above Rs 24 Lakhs, based on the new slab rates, you save Rs 1,10,000 per year or approx Rs 9,000 per month. If you and your spouse are both in this income bracket, combined you will save approx Rs 18,000 per month!
That surely calls for a party, right? Yes, but at the risk of being called party-poopers - don't just spend all the new-found extra money, make sure you utilize at least 50% of this to increase your SIPs.
If you invest an additional Rs 5,000 per month which grows at 12% per year, it amounts to ~ Rs 11.6 Lakhs after 10 years, now that's a real gift from the GOI!


2. Benefits for Senior Citizens
TDS exemption on interest income doubled from ₹50,000 to ₹1 lakh.
Higher exemption on rental income: TDS threshold increased from ₹2.4 lakh to ₹6 lakh annually.
Extended tax filing period: Updated returns can now be filed within 4 years instead of 2 years.
3. The Macro Picture
The Income Tax Cuts are expected to drive consumption across multiple sectors from FMCG products to consumer durables, including both brown and white goods, as well as automobiles.
Revised Fiscal Deficit Estimates - The government targets a fiscal deficit of 4.4% of GDP for 2025-26, making sure the tax cuts don't come at the cost of financial prudence.
On the monetary front - Markets are closely watching the bi-monthly policy meeting on February 7, where a 25-bps rate cut is anticipated. A rate reduction would lower borrowing costs, spur credit growth, and provide further tailwinds to capital markets.

4. Other Key Announcements
NSS Withdrawals Tax-Free - From August 29th, 2024, withdrawals from the National Savings Scheme (NSS) will be tax-free! Both your deposits and the interest earned will be exempt, as long as you had claimed a deduction on them earlier.
Discontinuation of Sovereign Gold Bonds - The SGBs introduced in 2015 to keep the current account deficit under control is likely to be discontinued.
FM Opens Insurance Sector with 100% FDI - The FDI limit for the insurance sector will be increased from 74% to 100%, with the condition that the entire premium is invested in India, and existing foreign investment regulations will be reviewed and simplified.
Promoting Entrepreneurship - Tax benefits for startups extended until April 1, 2030.
Infrastructure funding through a ₹10 lakh crore Asset Monetization Plan and ₹1.5 lakh crore support for states.
Daycare Cancer Centers in district hospitals.
36 lifesaving drugs will be exempt from Basic Customs Duty (BCD), 6 will have a 5% reduced duty, and addition of 37 new medicines, along with 13 new patient assistance programmes.
Expansion of IIT & medical seats: 6,500 more IIT seats and 10,000 new medical seats (target of 75,000 in 5 years).
TLDR - You pay less tax, increase your SIPs! :)
You can get all key details of the new Budget here - India Budget | Ministry of Finance | Government of India
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