New Delhi: In a major relief to the middle class and in an apparent attempt to woo voters ahead of the Delhi Assembly polls, the Government on Saturday proposed zero tax for income up to Rs 12 lakh, a move that will give more purchasing power to the common man and boost the economy, which is in the grip of a temporary slowdown.
“I am now happy to announce that there will be no income tax payable up to income of Rs 12 lakh (i.e. average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime. This limit will be Rs 12.75 lakh for salaried tax payers, due to the Standard Deduction of Rs 75,000,” Finance Minister Nirmala Sitharaman said while presenting the Union Budget for 2025-26.
Commenting on the Budget, Prime Minister Narendra Modi said “Typically, the focus of the budget is on how to fill the Government's treasury. But this budget focused on how to fill the pockets of the citizens, increase their savings, and make them partners in the country's development.”
Apart from big bang reforms in the personal income tax, the Budget gave a big push to local manufacturing and the creation of more jobs as the Finance Minister announced a slew of measures including enhanced credit guarantee cover for micro and small enterprises, and making India a global hub for toys.
The credit guarantee cover for Micro and Small Enterprises has been proposed to be increased from Rs 5 crore to Rs 10 crore. For start-ups, the credit guarantee cover would be doubled to Rs 20 crore besides bringing down the guarantee fee down to 1% for loans in 27 focus sectors.
Providing impetus to private investment, Sitharaman said that each infrastructure-related ministry will come up with a 3-year pipeline of projects that can be implemented in PPP mode.
In a post-Budget media briefing, Sitharaman said that 1 crore more people won't pay tax post the Budget announcement. She emphasised, "Through this Budget, we have given what we expect to achieve for Viksit Bharat. Through this, you can understand how we plan to take this economy forward toward a Viksit Bharat."
Leader of Opposition in Lok Sabha Rahul Gandhi, however, termed the Union Budget as “A band-aid for bullet wounds”.
“Amid global uncertainty, solving our economic crisis demanded a paradigm shift. But this government is bankrupt of ideas," Gandhi wrote on 'X'.
A band-aid for bullet wounds!
Amid global uncertainty, solving our economic crisis demanded a paradigm shift.
In a big relief to patients, particularly those suffering from cancer, rare diseases and other severe chronic diseases, the Budget proposes to add 36 life-saving drugs and medicines to the list of medicines fully exempted from Basic Customs Duty.
Terming it as a 'bold' Budget to boost consumption, particularly for the vibrant middle-class families, the industry said the Government has lived up to wider expectations by giving significant relief to individual taxpayers, while maintaining the fiscal deficit of 4.4 per cent of GDP'.
In its reaction to the Budget, the apex industry association ASSOCHAM said 'The finance minister has placed her confidence in the middle class for leading the consumption-led growth'. At the same time, there is a clear focus on unleashing the potential of the MSMEs, Startups and exports.”
Continuing its focus on infrastructure building, the Budget has estimated a capital expenditure of Rs 11.21 lakh crore (or 3.1 per cent of GDP) in 2025-26.
Despite new schemes to support farmers, small businesses and the middle class, the government's finances are seen improving. The fiscal deficit or gap between total revenue and expenditure of the central government is estimated to be 4.4% of GDP in FY26 as against 4.8% (Revised Estimate) in FY25.
