Sat Feb 01 17:52:24 UTC 2025: ## India’s 2025 Budget: Tax Cuts and Increased Spending Fuel Economic Growth

**New Delhi, February 1, 2025** – Finance Minister Nirmala Sitharaman presented India’s Union Budget 2025 today, unveiling a range of measures aimed at boosting economic growth and providing significant tax relief to the middle class. A key highlight is the elimination of income tax for individuals earning up to ₹12.75 lakh annually under the new tax regime, impacting over 1 crore taxpayers.

The budget proposes a simplified tax structure with fewer tax slabs and thresholds for TDS (Tax Deducted at Source) and TCS (Tax Collected at Source), potentially improving cash flow for taxpayers. Further relief includes allowing taxpayers to claim the annual value of two self-occupied properties as nil, removing notional rental income tax on a second property. Additional changes include tax exemptions for NPS Vatsalya contributions and tax-exempt withdrawals from the National Savings Scheme (NSS) for amounts previously eligible for deductions. The government also plans to decriminalize over 100 provisions through the Jan Vishwas Bill 2.0.

The budget outlines a fiscal deficit of 4.8% for FY25, decreasing to 4.4% for FY26. Significant capital expenditure is planned, with ₹1.5 lakh crore allocated for 50-year interest-free loans to states for infrastructure development. Further investment is earmarked for clean energy, aerospace, and defense, signaling a commitment to key sectors. Additionally, basic customs duty has been fully exempted on 36 essential life-saving drugs and medicines, and 28 goods used in mobile phone battery production, potentially lowering prices for consumers.

While some imported goods like touch-display panels and knitted fabrics will become more expensive due to custom duty changes, the overall impact on the economy is projected to be positive. Experts anticipate increased consumer spending and investment in the stock market due to the tax relief measures. The government’s total expenditure for FY26 is set at ₹50.65 lakh crore, funded primarily through tax revenue, with non-tax revenue contributing 9%.

The budget’s reception has been mixed. While some hail it as a “Brahmastra” for economic growth and a boon for the middle class, others express concerns about the lack of TCS exemptions for global travelers. The stock market reacted with initial volatility, ultimately closing flat. However, analysts generally foresee a positive impact on consumption-driven sectors and a multiplier boost to the economy from the increased capital expenditure. The government aims to introduce a new income tax bill next week to further solidify these reforms.

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