Union Budget 2025 – Simple summary

1. Key numbers at a glance (2025–26)

• • Total expenditure: about ₹50.65 lakh crore for FY 2025–26.
• • Receipts (excluding borrowings): about ₹34.96 lakh crore.
• • Capital expenditure: about ₹11.21 lakh crore (slightly above 3% of GDP), mainly for infrastructure and related sectors.
• • Fiscal deficit target: 4.4% of GDP for 2025–26, lower than 4.8% in 2024–25.

Figures are rounded for simplicity. For exact numbers, refer to “Budget at a Glance” and the Budget Highlights on the official portal.

2. New income tax regime – slabs for FY 2025–26

The new tax regime has new slabs and is the default option. The old regime with deductions still continues, but you have to choose it specifically if you want it.

New regime slabs (individuals, FY 2025–26):

Along with these slabs, there is a rebate (Section 87A) in the new regime:

• • If your total income (after standard deduction etc.) is up to ₹12 lakh, your tax under the new regime can become zero because of the rebate (subject to conditions and excluding some special incomes).
• • For salaried taxpayers, the FAQs explain that when the standard deduction of ₹75,000 is considered, the benefit effectively covers income of about ₹12.75 lakh in many cases.

Special-rate incomes such as certain capital gains are treated separately and can reduce the benefit of the rebate. Always check the detailed rules or use an updated calculator before deciding.

3. Old regime vs new regime – basic idea

The old regime continues. It has:

• • Different slabs, but allows major deductions such as 80C, 80D, HRA, home loan interest in some cases, etc.

The new regime now has:

• • Lower tax rates, but very limited deductions.
• • A rebate that makes tax effectively nil up to ₹12 lakh (subject to conditions).

In simple terms:

• • If you have few deductions, the new regime will usually be better.
• • If you have large deductions (home loan interest, high 80C/80D, etc.), you should compare both regimes carefully.

The choice between regimes is a numerical decision. An updated tax calculator or professional advice can help you compare both options correctly.

4. Other important direct-tax changes (simple view)

The Finance Act, 2025 also changes several TDS and TCS provisions. A few examples, in simplified form:

• • Higher TDS thresholds for some incomes, so very small payments may no longer attract TDS in the same way as earlier (for example, certain interest and other specified payments).
• • Lower TDS rate on some incomes, such as:
  • – Insurance commission: proposed reduction of TDS rate from 5% to 2% in view of earlier changes.
  • – Income from some securitisation trusts to residents: TDS reduced to 10% instead of higher earlier rates.
• • New TDS section for partner payments (for example, Section 194T) on remuneration, interest, commission or bonus paid to partners beyond a small threshold, at a specified rate.
• • Updated time limits and procedures for certain assessments and updated returns, to align with earlier faceless and e-assessment measures.

Exact section numbers, thresholds and dates are important here. Businesses and firms should refer to the Finance Act, 2025 and the CBDT “Highlights of Finance Act, 2025” document before changing their TDS/TCS systems.

5. Indirect tax – customs and GST direction

On the indirect tax side, many changes are focused on customs duty and structure, with an overall direction also visible for GST.

• • For industrial goods, the Budget proposes to remove seven customs tariff rates so that only eight rates are left (including zero), continuing the move to a simpler duty structure.
• • It proposes to levy not more than one cess or surcharge on an item. As a result, the Social Welfare Surcharge is exempted on 82 tariff lines where a cess already applies.
• • For many items, an “appropriate” cess is applied so that the overall duty burden stays broadly similar, except for a few items where duty reduces.
• • On GST, the Finance Bill mainly carries enabling provisions and procedural updates. Detailed GST rate decisions continue to be taken by the GST Council and notified separately.

These changes matter more for importers and specific sectors (for example, certain industrial inputs and finished goods). Businesses should check the customs notifications relevant to their product codes.

6. How readers can practically use this

• • Individuals: check the new slabs, see if your income falls within the ₹12–12.75 lakh range where the rebate is most relevant, and compare old vs new regime before choosing.
• • Salary structures: employers and employees may want to review salary break-up, deductions and the chosen tax regime for FY 2025–26.
• • Businesses and firms: review the updated TDS/TCS provisions and update accounting / payroll / ERP master data so that the new thresholds and rates are correctly applied from the due date.
• • Importers & specific sectors: check detailed customs notifications to see if your inputs or outputs fall in the tariff lines where rates or cess have changed.