Sat Feb 01 17:08:10 IST 2025: ## India Unveils Budget 2025-26: Tax Breaks and Increased Spending

**New Delhi, February 1, 2025** – Finance Minister Nirmala Sitharaman presented the Union Budget 2025-26 to Parliament today, outlining the government’s fiscal plans for the upcoming year. A key highlight is the new tax regime, offering zero income tax for individuals earning up to ₹12 lakh (₹12.75 lakh for salaried individuals with a basic deduction). This move aims to boost household consumption, savings, and investment.

The budget projects a fiscal deficit of 4.8% of GDP for FY25 and 4.4% for FY26. Revenue will primarily come from direct and indirect taxes (66 paise per rupee), with borrowings and other liabilities accounting for the remaining 24 paise. GST is expected to contribute the largest share of indirect tax revenue (18 paise per rupee).

Significant expenditure allocations include: 20 paise for interest payments, 22 paise for states’ share of taxes and duties, 8 paise for defence (a significant increase from last year’s interim budget allocation of ₹6.2 lakh crore to over ₹6.8 lakh crore this year), 16 paise for central sector schemes, and 8 paise for centrally-sponsored schemes. A total of ₹25.6 lakh crore is budgeted for transfers to States and Union Territories.

Capital expenditure (capex) is estimated at ₹15.48 lakh crore for FY26 (4.3% of GDP), revised down from ₹15 lakh crore to ₹13.18 lakh crore for FY25 (4.1% of GDP). Tax receipts are projected to rise to 12% of GDP in FY26, compared to the revised estimate of 11.8% in FY25. Direct tax receipts are expected to constitute 59% of total tax receipts (7.1% of GDP), with indirect taxes making up the remaining 4.9% of GDP. The budget also prioritizes infrastructure development with significant allocations to Road Transport Highways and Railways.

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