Union Budget 2025-26: Key Takeaways for Taxpayers & Businesses

Introduction

The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, outlines the government's vision for a Viksit Bharat (Developed India), focusing on:

Agriculture: Enhancing productivity and rural prosperity.

MSMEs: Strengthening small businesses and startups.

Investment: Boosting public-private partnerships and infrastructure.

Exports: Expanding India’s footprint in global trade.

With significant tax reforms, increased government spending, and initiatives to encourage private investment, let's delve into the highlights that matter most to individuals and businesses.

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1. Income Tax Relief: Major Boost for the Middle Class

A notable highlight of this budget is the substantial reduction in personal income tax under the new regime:

No tax for income up to ?12 lakh (?12.75 lakh for salaried individuals with standard deduction).

Revised tax slabs:

Income Slab????? New Tax Rate

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%

Higher tax deduction limits:

TDS on interest for senior citizens increased from ?50,000 to ?1 lakh.

TDS on rent threshold increased from ?2.4 lakh to ?6 lakh per annum.

What This Means for You:

●????? Increased disposable income for individuals, leading to higher savings and spending.

●????? Enhanced cash flow for salaried employees, encouraging investments in housing and financial markets.

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2. Business-Friendly Measures: MSMEs & Startups Get a Big Push

The budget introduces several incentives to support small businesses and startups:

MSME classification revised: Investment and turnover limits increased by 2.5 times, enabling more businesses to qualify for government benefits.

Credit guarantee cover doubled from ?5 crore to ?10 crore, unlocking ?1.5 lakh crore in additional lending for MSMEs.

New ?10,000 crore Fund of Funds for startups, particularly in the deep tech sector.

Credit Cards for Micro Enterprises: ?5 lakh limit for small businesses registered on the Udyam portal.

What This Means for You:

●????? Easier access to funding for MSMEs and new entrepreneurs.

●????? Increased support for tech-driven businesses and exports.

3. Indirect Tax Changes & GST Simplification

Customs duty rationalization: Import duties reduced on raw materials for electronics, textiles, EV batteries, and renewable energy to boost domestic manufacturing.

Export promotion incentives for handicrafts, footwear, and marine products to enhance India's global competitiveness.

Simplified GST rules to improve ease of doing business and reduce compliance burdens.

What This Means for You:

●????? Lower cost of production for manufacturers.

●????? Easier tax compliance for businesses.

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4. Infrastructure & Investment Growth

The budget continues its infrastructure push, focusing on:

?1.5 lakh crore allocated for interest-free loans to states to boost capital investment.

Expansion of regional air connectivity under UDAN, adding 120 new destinations to improve access to remote regions.

Public-Private Partnership (PPP) model encouraged for roads, railways, and urban development.

What This Means for You:

●????? More business opportunities for contractors and investors.

●????? Better connectivity, reducing logistics costs for businesses.

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5. Financial Sector & Banking Reforms

FDI in insurance sector increased from 74% to 100% to attract more foreign investment.

New credit enhancement facility by NaBFID for corporate bonds to improve long-term financing.

Simplified KYC process and digital banking expansion to improve financial accessibility.

What This Means for You:

●????? Easier access to business loans and investment support.

●????? A more competitive insurance sector with better policies for consumers.

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6. Fiscal & Tax Reforms: A Path to Stability

Fiscal deficit for FY 2025-26 estimated at 4.4% of GDP, aligning with the government’s commitment to fiscal discipline.

Asset Monetization Plan 2025-30: ?10 lakh crore to be reinvested into new infrastructure projects.

New Income Tax Bill to simplify tax laws, reduce litigation, and enhance taxpayer convenience.

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Final Thoughts:

The Union Budget 2025-26 is a pro-growth, pro-business, and middle-class friendly budget that aims to:

●????? Put more money in the hands of taxpayers through reduced income tax.

●????? Boost MSMEs and startups with funding and policy support.

●????? Strengthen infrastructure and connectivity for business expansion.

●????? Improve ease of doing business with streamlined tax laws and regulatory reforms.

At MK Yadav and Associates, we help businesses and individuals navigate tax laws, optimize compliance, and make the most of government policies.

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