Explained: Union Annual Budget 2025- 26

Inspiration Study Circle Explained: Union Annual Budget 2025- 26

The Union Budget for the financial year 2025-26, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, introduces several key measures aimed at stimulating economic growth, enhancing infrastructure, and providing relief to the middle class.

Tax Reforms:

Income Tax Relief: The budget proposes no income tax on annual incomes up to ₹12 lakh under the new tax regime, effectively increasing the tax-free income threshold. For salaried individuals, this limit extends to ₹12.75 lakh due to a standard deduction of ₹75,000. This change is expected to boost household consumption, savings, and investment.
Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) Adjustments: The TDS limit on interest for senior citizens has been doubled from ₹50,000 to ₹1 lakh, and the annual TDS limit on rent has increased from ₹2.40 lakh to ₹6 lakh.

Agriculture and Rural Development:

Prime Minister Dhan-Dhaanya Krishi Yojana: Aimed at benefiting 1.7 crore farmers, this initiative focuses on enhancing agricultural productivity in 100 low-productivity districts.
Enhanced Credit Facilities: The Kisan Credit Card (KCC) scheme will provide short-term loans of up to ₹5 lakh to 7.7 crore farmers, fishermen, and dairy farmers, facilitating easier access to credit.
Makhana Board in Bihar: A new Makhana Board will be established in Bihar to improve the production, processing, value addition, and marketing of Makhana, benefiting local farmers.

Infrastructure and Energy:

Capital Expenditure: The budget allocates ₹11.21 lakh crore for capital expenditure, focusing on infrastructure development to stimulate economic growth.
Nuclear Energy Mission: A ₹20,000 crore allocation has been made to develop Small Modular Reactors (SMRs), aiming to achieve 100 GW of nuclear power by 2047, supporting India’s transition to clean energy.

Support for Startups and MSMEs:

Fund of Funds for Startups: The government plans to launch a new fund to promote innovation in partnership with the private sector, supporting startups and MSMEs.
Customized Credit Cards for Micro Enterprises: A ‘Customized Credit Card’ with a ₹5 lakh limit will be introduced for micro enterprises registered on the Udyam portal, aiming to enhance their access to finance.

Social Welfare:

Gig Economy Workers: The budget proposes formalizing gig economy workers by issuing identity cards and maintaining a national registry, ensuring their inclusion in welfare initiatives.
Subsidies: Allocations for food, fertilizers, and rural employment subsidies remain substantial, with ₹4.57 trillion earmarked for these areas, supporting the rural economy.

Regional Focus:

Bihar’s Development: The budget includes specific initiatives for Bihar, such as the establishment of the Makhana Board and the development of greenfield airports, reflecting a targeted approach to regional development.

Overall, the Union Budget 2025-26 emphasizes tax relief for the middle class, infrastructure development, support for agriculture and MSMEs, and social welfare initiatives, aiming to foster inclusive economic growth.

About the Union Annual Budget

The Union Budget of India, also referred to as the Annual Financial Statement in Article 112 of the Constitution of India is the annual budget of the Republic of India set by the Ministry of Finance for the following financial year, with the revenues to be gathered by Department of Revenue to identify planned government spending and expected government revenue and the expenditures gathered by Department of Expenditure of the public sector, to forecast economic conditions in compliance with government policy.

The Government presents it on the first day of February so that it can be materialized before the beginning of the new financial year in April. Until 2016, it was presented on the last working day of February by the Finance Minister in Parliament. The budget division of the Department of Economic Affairs (DEA) in the Finance Ministry is the nodal body responsible for producing the budget.

It is presented by means of the Finance bill and the Appropriation bill has to be passed by Lok Sabha before it can come into effect on 1 April, the start of India’s financial year.

In modern times, the budget has been broadcast live from Sansad Bhawan on the DD National, DD News , and Sansad TV. It is hosted without interruption from 11:00 am to 1:00 pm, normally followed up with a report by a panel assessing the changes, benefits, and flaws in the budget. Additional budget documents and materials are available on the government budget website and the Union Budget Mobile app.

The Rail Budget, presented separately for 92 years, has been merged with the union budget.

Since 1947, there have been a total of 73 annual budgets, 14 interim budgets, and four special budgets, or mini-budgets.

The Interim Budget

An interim budget is not the same as a ‘Vote on Account’. While a ‘Vote on Account’ deals only with the expenditure side of the government’s budget. An interim budget is a complete set of accounts, including both expenditures and receipts. An interim budget gives the complete financial statement, very similar to a full budget. While the law does not disqualify the Union government from introducing tax changes, normally during an election year, successive governments have avoided making any major changes in income tax laws during an interim budget.

Difference between Interim Budget and Union Budget

An interim budget differs from a union budget in that it serves as a temporary financial plan for the government when elections are approaching. This budget seeks parliamentary approval for the government to cover expenses for the remaining months in its term. Unlike a Union budget, which outlines the entire year, an interim budget focuses on the transition period until the new government takes charge. While estimates are provided for the entire year, the incoming government can modify them when formulating a new budget. The interim budget also holds the power to make changes in the tax regime, but historically, major tax adjustments or new schemes are avoided due to the limited time in office. It essentially mirrors the first part of a union budget, detailing the previous year’s income and expenses, with only essential expenses documented until the elections. Moreover, regulations from the Election Commission prevent any significant policy changes that could unfairly influence voters during this critical period.

Finance ministers who have presented the budget:

Morarji Desaihas presented 10 budgets which is the highest count followed by Chidambaram‘s 9.
In 2025, Nirmala Sitharamanequaled Pranab Mukherjee’s record of 8 budgets.
D. Deshmukhhas presented 7 budgets while Manmohan Singh and T. T. Krishnamachari have presented 6 budgets each.

About our Current Union Minister of Finance and Minister of Corporate Affairs

Smt. Nirmala Sitharaman is an Indian economist, politician, and a senior leader of the Bharatiya Janata Party serving as the Minister of Finance and Minister of Corporate Affairs of the Government of India since 2019.

Smt. Sitharaman previously served as the 28th Defence Minister from 2017 to 2019, thereby becoming India’s second female defense minister and the second female finance minister after Indira Gandhi, and the first full-time female minister to hold each of those portfolios. Sitaraman presented the union budget 8 times, making her second only to Morarji Desai to present the most number of budgets.

She served as junior minister in the Modi Ministry between 2014 and 2017, holding successive positions, first for her dual appointment as the Minister of State in the Ministry of Finance and the Minister of State in the Ministry of Corporate Affairs from May to November 2014, and then as the Minister of State (Independent Charge) for the Ministry of Commerce and Industry from May 2014 to September 2017, before being elevated to senior posts within the Union Cabinet.

Smt. Sitharaman was featured in the Forbes 2022 list of the World’s 100 most powerful women and was ranked 36. In 2023, she was ranked 32nd and in 2024, she was ranked 28th in the Forbes list of the World’s 100 most powerful women. Fortune named her the most powerful woman in India. In 2025, she created history by becoming the first person to table the union budget 8 consecutive times.

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Disclaimer: the above-mentioned article is based on information from the Press Information Bureau of India, Live Mint News Platform, and Wikipedia.