Imported life saving drugs, medicines to become cheaper
*6 new schemes for farmers, KCC limit raised to Rs 5 lakh
*Top 50 tourist destinations to be developed in partnership with States
*Thrust on infra development to continue, MSMEs to get support
NEW DELHI, Feb 1: Finance Minister Nirmala Sitharaman on Saturday announced significant income tax cuts for the middle class and unveiled a blueprint for next generation reforms for Viksit Bharat as she treaded a fine line between fiscal prudence and providing a thrust to growth.
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Individuals earning up to Rs 12 lakh in a year will not have to pay any taxes after she raised the exemption threshold from Rs 7 lakh. An additional Rs 75,000 standard deduction is available for the salaried class.
Presenting her eighth straight budget, she also altered tax slabs for people earning above this threshold to help save up to Rs 1.1 lakh in taxes for those with income up to Rs 25 lakh in a year.
The raising of the rebate leads to 1 crore people not having to pay any tax, she said.
The overall tax slab regig will benefit 6.3 crore people, or more than 80 per cent of taxpayers.
“The new structure will substantially reduce taxes on the middle class and leave more money in their hands, boosting household consumption, savings and investment,” Sitharaman said presenting what was dubbed as ‘reformist’ budget for the next fiscal in Lok Sabha.
The budget for April 2025 to March 2026 fiscal (FY26) proposed to raise foreign investment limit in insurance sector to 100 per cent from current 74 per cent and continued spending spree on infrastructure while raising allocations for social sectors as well as providing for measures for poor, youth, farmers and women.
All this she did while managing to stick to the fiscal consolidation roadmap, projecting a fiscal deficit of 4.4 per cent of the GDP in FY26 as against an estimated 4.8 per cent in the current year ending March 31.
Sitharaman’s budget has proposals aimed at boosting both consumption and investment, which in turn are expected to give a flip to domestic economic activity, protecting the growth outlook amidst global uncertainties. While maintaining the thrust on infrastructure development, it also continued to provide increasing support to the MSME and the agricultural sector.
Also announced were duty cuts on intermediaries and certain life saving drugs.
To balance the revenue lost, she budgeted a modest increase in capital spending at Rs 11.21 lakh crore in the next financial year compared to a lowered Rs 10.18 lakh crore in current fiscal. Besides, an increase in dividend expected from the Reserve Bank and other Government-owned financial institutions will also help to contain the losses.
The budget comes against the backdrop of the Indian economy growing at its weakest pace since pandemic and rising geopolitical risks particularly with the new US President Donald Trump threatening to impose widespread tariffs including on India.
The 6.4 per cent GDP growth estimated for the current fiscal and 6.3 to 6.8 per cent in the next are well below the 8 per cent growth needed to meet the ambitious goal of making India a developed nation by 2047.
“Our endeavour will be to keep the fiscal deficit each year such that the Central Government debt remains on a declining path as a percentage of the GDP,” she said, projecting debt at 50 per cent of GDP by March 2031.
The Finance Minister also announced a social security cover for nearly 1 crore gig workers and a Rs 10,000 crore fund of funds for startups.
Another major announcement was setting a target of at least 100 gigawatt of electricity from nuclear energy by 2047 and amendment to nuclear liability regulations to allow private sector investment.
Sitharaman also announced reduction in duties on a raft of goods including open cells, while fully exempting critical minerals such as cobalt, scraps of lithium-ion battery, lead, zinc and a few others from import duty.
She proposed a hike in the threshold of tax collected at source on remittances under the RBI’s Liberalised Remittance Scheme from Rs 7 lakh to Rs 10 lakh, benefiting the travel and foreign exchange sectors. Students and individuals seeking medical treatment will also benefit from this.
Rationalising TDS provisions, the Finance Minister increased the thresholds for non deduction across various TDS provisions broadly ranging from Rs 5,000 to Rs 50,000. The threshold for TDS on rent has been increased from Rs 2.40 lakh to Rs 6 lakh.
That apart, omissions of higher TDS/TCS rates are now applicable for non-filers.
Imported life saving drugs and medicines used in the treatment of cancer, rare and other severe chronic diseases, along with imported motorcycles, are set to become cheaper with Sitharaman announcing cuts in customs duty in the Union Budget 2025-26.
However, certain items like interactive flat panel (touch screen) displays imported as fully built units and certain knitted fabrics will become costlier due to increase in basic customs duties.
In her speech, Sitharaman said, “To provide relief to patients, particularly those suffering from cancer, rare diseases and other severe chronic diseases, I propose to add 36 lifesaving drugs and medicines to the list of medicines fully exempted from basic customs duty (BCD).”
She further said, “I also propose to add six lifesaving medicines to the list attracting concessional customs duty of 5 per cent. Full exemption and concessional duty will also respectively apply on the bulk drugs for manufacture of the above.”
The Finance Minister also announced that “specified drugs and medicines under Patient Assistance Programmes run by pharmaceutical companies are fully exempt from BCD, provided the medicines are supplied free of cost to patients.”
“I propose to add 37 more medicines along with 13 new patient assistance programmes,” Sitharaman said.
Although the Government has cut duties on several imported items, including marbles, granite and footwear, the impact was neutralised by a hike in Agriculture Infrastructure and Development Cess (AIDC).
Similarly, motorcycles with engine capacity of 1,600 cc and above imported in completely built unit (CBU) form will also be cheaper as tariff has been slashed to 30 per cent from 50 per cent.
Likewise, bikes with engine capacity not exceeding 1,600 cc imported as CBU will also become cheaper as tariff has been cut to 40 per cent from 50 per cent.
Motorcycles with engine capacity not exceeding 1,600 cc in imported semi knocked down (SKD) form and completely knocked down (CKD) form will also become cheaper as customs duties have been cut on these items too.
There will also be reduction in prices of imported motorcycles with engine capacity of 1,600cc and above in SKD form following a cut in custom duty to 20 per cent from 25 per cent and the same imported in CKD form will now attract 10 percent duty, down from 15 per cent.
The budget also announced reduction in synthetic flavouring essences and mixtures, used in food and drink industries to 20 per cent from 100 per cent.
Similarly, articles of Jewellery, goldsmiths’ and silversmiths’ ware and ethernet switches of carrier grade will also become cheaper.
Certain imported knitted fabrics are also like to be costlier as the custom duty structure on it has been changed to 20 per cent or Rs115/kg, whichever is higher.
Interactive Flat Panel Displays which are imported as completely built units will also become costlier as the duty has been hiked to 20 per cent from 10 per cent earlier.
India on Saturday set aside Rs 6,81,210 crore as defence outlay for 2025-26 over the current fiscal’s allocation of Rs 6.22 lakh crore amid the military’s push for modernisation in the face of security challenges from China and Pakistan.
Out of the total allocation, Rs 1,80,000 crore has been earmarked to the armed forces for capital expenditure that largely includes purchasing new weapons, aircraft, warships and other military hardware.
The Defence Ministry said the total defence budget of Rs 6.81 lakh crore is an increase of 9.53 per cent over the outlay made for the current financial year.
On the capital outlay, the Defence Ministry said Rs 1,48,722.80 crore is planned to be spent on “modernisation budget” to procure new military hardware and remaining Rs 31,277 crore is for expenditure on research and development and to create infrastructural assets.
It said Rs 1,11,544 crore that is 75 percent of the modernisation budget has been earmarked for procurement through domestic sources. Twenty-five per cent of domestic share that is Rs 27,886 crore has been provisioned for procurement through domestic private industries.
The capital outlay for the armed forces in the next fiscal is 4.65 percent higher than the budgetary estimate Rs 1.72 lakh crore in 2024-25. The revised capital outlay for 2024-25 has been estimated at Rs 1,59,500 crore.
Meanwhile, the overall capital outlay has been put at Rs 1,92,387 crore out of which an amount of Rs 12,387 has been kept for defence services.
For the next fiscal, the revenue expenditure that accounts for day-to-day operating costs and salaries has been pegged at Rs Rs 4,88,822 crore that included Rs 1,60,795 crore for pensions.
The allocation for the defence budget is estimated at 1.91 per cent of the projected GDP in 2025-26.
In a significant policy shift aimed at boosting agri-productivity and rural prosperity, Sitharaman announced six new agricultural schemes while increasing the subsidised Kisan Credit Card loan limit to Rs 5 lakh from the existing Rs 3 lakh, benefiting 7.7 crore farmers, fishermen, and dairy farmers.
The announcements came even as the Government proposed a 2.75 per cent lower Budget allocation for the agriculture ministry at Rs 1.37 lakh crore for the next fiscal. However, this reduction was offset by enhanced allocations for allied sectors, with fisheries, animal husbandry and dairying seeing a 37 per cent increase to Rs 7,544 crore, and food processing receiving a 56 per cent boost to Rs 4,364 crore.
The total Budget allocation for agriculture, allied sectors, and food processing is pegged at Rs 1.45 lakh crore for 2025-26, expected to surpass the current year’s revised estimate of Rs 1.47 lakh crore once allocations for new schemes are detailed.
Sitharaman positioned agriculture as “the first engine of growth” and introduced Pradhan Mantri Dhan-Dhaanya Krishi Yojana targeting 100 low-productivity agri-districts.
The scheme, implemented with State Governments, aims to benefit 1.7 crore farmers through enhanced productivity, crop diversification, and improved post-harvest infrastructure.
In a major push for self-reliance, a six-year pulses mission received Rs 1,000 crore to boost tur, urad, and masoor production. Under this initiative, Nafed and NCCF will procure pulses for four years from registered farmers through formal agreements.
The Budget allocated Rs 500 crore each for a comprehensive horticulture programme on vegetables/fruits and a five-year cotton mission promoting extra-long staple varieties.
A dedicated Makhana Board for Bihar with Rs 100 crore outlay and a research ecosystem mission focusing on climate-resilient seeds received equal allocations.
Recognising India’s position as the second-largest global producer in fish and aquaculture, with seafood exports worth Rs 60,000 crore, the Government announced a sustainable fishing framework for the Indian Exclusive Economic Zone, particularly focusing on the Andaman & Nicobar and Lakshadweep Islands.
To enhance India’s competitiveness in the global seafood market, the Government proposed cut in basic custom duty (BCD) from 30 per cent to 5 per cent on Frozen Fish Paste (Surimi) for manufacture and export of its analogue products. It also proposed cut in BCD from 15 per cent to 5 per cent on fish hydrolysate for manufacture of fish and shrimp feeds.
The cooperation ministry saw a 58.21 per cent increase to Rs 1,186.29 crore.
Key schemes received significant boosts: Rashtriya Krishi Vikas Yojana (41.66 per cent to Rs 8,500 crore), National Mission for Natural Farming (six-fold to Rs 616.01 crore), Krishionnati Yojana (12.58 per cent to Rs 8,000 crore), and Namo Drone Didi (two-fold to Rs 676.85 crore) for FY26.
The Pradhan Mantri Matsya Sampada Yojana allocation increased by 64.33 per cent to Rs 2,465 crore, while animal husbandry and dairying programs saw a two-fold increase to Rs 1,050 crore. The PM-FME scheme for micro food processing enterprises received a 67 per cent higher allocation at Rs 2,000 crore.
Agriculture Minister Shivraj Singh Chouhan lauded the budget as “visionary,” stating it had “the fragrance of faith, the yearning for development and the yearning to build a developed India.”
He emphasised that agriculture and farmers’ welfare received top priority in the Government’s vision for a self-reliant India.
The Government also announced plans for a new urea plant in Namrup, Assam, with an annual capacity of 12.7 lakh tonnes, and enhanced support to the National Cooperative Development Corporation (NCDC) for cooperative sector lending operations.
The FM announced that taxpayers can claim annual value of two self-occupied properties as “nil” without any condition.
Sitharaman said, “Presently taxpayers can claim the annual value of self-occupied properties as nil only on the fulfilment of certain conditions. Considering the difficulties faced by taxpayers, it is proposed to allow the benefit of two such self-occupied properties without any condition.”
As per the Budget memorandum, the Government has proposed amendment to Sub-Section 2 of Section 23 of Income Tax Act, which relates to determination of annual value of house properties.
“Sub-section (2) of the said section provides that where house property is in the occupation of the owner for the purposes of his residence or owner cannot actually occupy it due to his employment, business or profession carried on at any other place, in such cases, the annual value of such house property shall be taken to be nil,” the document said.
Further, sub-section (4) provides that provisions of sub-section (2) will be applicable in respect of two house properties only, which are to be specified by the owner.
“With a view to simplifying the provisions, it is proposed to amend the sub-section (2) so as to provide that the annual value of the property consisting of a house or any part thereof shall be taken as nil, if the owner occupies it for his own residence or cannot actually occupy it due to any reason,” the Budget memorandum said.
The provision of sub-section (4), which allows this benefit only in respect of two of such houses, will continue to apply as earlier.
The amendment will take effect from April 1, 2025 and will accordingly apply for assessment year 2025-26 onwards.
Sitharaman said the top 50 tourist destinations in the country will be developed in partnership with states in a “challenge mode”, as she emphasised tourism as a driver of employment-led growth and unveiled a series of initiatives aimed at bolstering infrastructure, skill development and ease of travel.
The Ministry of Tourism has been earmarked a significant increase in its Budget allocation for the 2025-2026 fiscal, with a focus on enhancing tourism infrastructure, promoting domestic and international travel, and ensuring the safety of tourists, particularly women.
The total Budget allocation for the Ministry for 2025-2026 stands at Rs 2,541.06 crore, marking a substantial increase from the revised estimate of Rs 850.36 crores in 2024-2025.
Sitharaman said the Government will promote homestays by extending Mudra loans, and improve connectivity to tourist spots to enhance accessibility.
“The State Governments will be responsible for providing land to build essential infrastructure. To further boost tourism, hotels in the key destinations will be included in the harmonised infrastructure list, ensuring better access to financing and development support,” she said.
Outlining the broader roadmap, Sitharaman said, “We will facilitate employment-led growth by organising intensive skill development programmes for our youth, including institutes of hospitality management.”
States that demonstrate effective destination management — including maintaining tourist amenities, cleanliness, and marketing efforts — will receive performance-linked incentives, the Finance Minister said.
The Government will also introduce streamlined e-visa facilities and visa fee waivers for select tourist groups to attract international visitors, she said.
Reaffirming the focus on spiritual and heritage tourism set in the Budget last July, Sitharaman highlighted the special initiatives for sites associated with Gautama Buddha’s life.
Medical tourism, under the ‘Heal in India’ initiative, will also receive a boost through public-private partnerships (PPPs), capacity building, and relaxed visa norms.
A major portion of the Budget for the tourism ministry has been allocated to tourism infrastructure development, with Rs 1,900 crores earmarked for the Integrated Development of Tourism Circuits under the Swadesh Darshan scheme.
This initiative focuses on creating theme-based tourist circuits across the country, emphasising high-value, competitive, and sustainable tourism.
Additionally, the Pilgrimage Rejuvenation and Spiritual Heritage Augmentation Drive (PRASHAD) scheme, aimed at developing pilgrimage and heritage sites, also received substantial funding to enrich spiritual and cultural tourism experiences.
The Centre has prioritised promotion and publicity, allocating funds for both domestic and international campaigns. Efforts will be made to promote India’s diverse tourist destinations, with a special focus on the Northeast region and Jammu and Kashmir.
Internationally, the tourism ministry plans to position India as a premier tourist destination through targeted marketing campaigns in key markets such as Spain, China, and France.
The establishment of representative offices in the new markets is also part of the strategy to attract more international tourists.
To address the growing demand for skilled manpower in the tourism sector, the ministry has been allocated Rs 60 crore for training and skill development programmes.
Initiatives like the “Hunar Se Rozgar Tak” programme aim to train youth, particularly from underprivileged backgrounds, to meet the sector’s needs.
The ministry is also focusing on certifying the skills of service providers and promoting entrepreneurship in the tourism industry.
In a significant move to ensure the safety of women tourists, the ministry has introduced the Safe Tourist Destination for Women scheme, funded by the Nirbhaya Fund.
This initiative aims to create a secure and women-friendly environment at tourist destinations, allowing women to travel without fear of crime or harassment.
The scheme reflects the Government’s commitment to making tourism more inclusive and safe for all, as per the ministry.
The Budget also includes investments in public enterprises such as the India Tourism Development Corporation (ITDC) and Kumarakom Frontier Hotels Pvt Ltd, with allocations of Rs 70.42 crore and Rs 10 crore, respectively.
These investments are expected to boost tourism infrastructure and services, particularly in the key tourist destinations.
Additionally, the Northeastern region continues to be a priority, with an allocation of Rs 240 crore for 2025-2026 to support the development of tourism infrastructure and promote the region as a prime tourist destination. (PTI)
BUDGET SUMMARY
* No income tax on average monthly income of upto Rs 1 lakh
* Salaried class to pay nil income tax upto Rs 12.75 lakh per annum in new tax regime
* Union Budget recognises 4 engines of development – agriculture, MSME, investment and exports
* Benefitting 1.7 crore farmers, ‘Prime Minister Dhan-Dhaanya Krishi Yojana’ to cover 100 low agricultural productivity districts
* “Mission for Aatmanirbharta in pulses” with a special focus on Tur, Urad and Masoor to be launched
* Loans upto Rs. 5 lakhs through KCC under modified interest subvention scheme
* Significant enhancement of credit with guarantee cover to MSMEs from Rs 5 cr to Rs 10 cr
* A national manufacturing mission covering small, medium and large industries for furthering “Make in India”
* Centre of Excellence in Artificial Intelligence for education, with a total outlay of Rs 500 crore
* PM Svanidhi with enhanced loans from banks, and UPI linked credit cards with Rs 30,000 limit
* GIG workers to get identity cards, registration on e-Shram portal & healthcare under PM Jan Arogya Yojana
* Rs 1 lakh crore urban challenge fund for ‘cities as growth hubs’
* Modified Udan scheme to enhance regional connectivity to 120 new destinations
* Rs 15,000 crore SWAMIH fund to be established for expeditious completion of another 1 lakh stressed housing units
* Rs 20,000 crore allocated for private sector driven research development and innovation initiatives
* Updated income tax returns time limit increased from two to four years
* Delay in TCS payment decriminalised
* TDS on rent increased from Rs 2.4 lakh to Rs 6 lakh
* BCD exempted for 10 years on raw materials & components used for ship building
Sidelights
* Finance Minister Nirmala Sitharaman wore a silk saree with Madhubani art as she presented her eighth budget and the ruling NDA members rejoiced at every mention of Bihar, from enhancing the infrastructure at IIT-Patna to promoting tourism at destinations related to Lord Buddha, with the opposition taunting the Government over its “coalition compulsions”.
* As Sitharaman rose to present the budget, the opposition showed some aggression by rushing to the well of the Lok Sabha, demanding a statement on the deaths in a stampede at the Kumbh congregation at Prayagraj and later, was stunned into silence as the Finance Minister announced zero income tax for those with an annual income of Rs 12 lakh.
* Prime Minister Narendra Modi led the treasury-bench members in thumping the desks enthusiastically as Sitharaman announced the tax proposals and chants of “Modi, Modi” reverberated in the Lok Sabha chamber as the opposition watched in silence.
* Earlier, the opposition members, led by Samajwadi Party (SP) chief Akhilesh Yadav and Congress member Gaurav Gogoi, raised the issue of deaths in a stampede at the Maha Kumbh.
* They chanted slogans, such as “Dharam virdohi sarkar down, down” (down with the anti-religion Government), and the SP members trooped to the well of the House. After raising slogans for around two minutes, the opposition staged a token walkout of the Lok Sabha.
* The Trinamool Congress (TMC) members did not join the protest staged by the other opposition parties.
* Sitharaman was wearing a white silk saree with a golden border and Madhubani art, pairing it with a red blouse and a shawl.
* Officials said the saree was presented to the Finance Minister by Padma Shri awardee artist Dulari Devi when she had visited the Mithila Art Institute in Madhubani.
* They said Dulari Devi had requested Sitharaman to wear the saree when she presents the budget.
* The Finance Minister entered the Lok Sabha chamber at 10:52 am and was greeted by fellow Ministers and MPs.
* The Prime Minister entered the Lok Sabha chamber shortly before 11 am amid chants of “Bharat Mata Ki Jai”, which were countered by the opposition with “Jai Bhim” and “Jai Samvidhan” slogans.
* A highlight of Sitharaman’s budget speech was the mention of Bihar, where polls are due later this year and the JD(U)-BJP Government, led by Chief Minister Nitish Kumar, is keen to retain power.
* The Janata Dal (United), led by Kumar, is also a key constituent of the ruling National Democratic alliance (NDA) at the Centre, where the Bharatiya Janata Party (BJP) does not enjoy a clear majority on its own.
* The Finance Minister’s announcements to set up a Makhana Board and farmer producers organisations for the product harvested widely in Bihar, a National Institute of Food Technology, Entrepreneurship and Management, and build greenfield airports in the eastern state set off the “Bihar” chatter among the opposition members.
* Union Minister Giriraj Singh was seen encouraging the members from Bihar to cheer the announcements related to the state.
* After Sitharaman’s speech, the Prime Minister walked up to her to congratulate her. Union ministers Rajnath Singh, Amit Shah, Nitin Gadkari, Piyush Goyal and others were also seen greeting the Finance Minister on the budget. (PTI)
What’s Cheaper?
* Carrier Grade internet switches
* LED/LCD TVs
* 36 life-saving medicines exempted from basic customs duty
* Scrap of lithium-ion battery, Lead, Zinc, and 12 more critical minerals
* Frozen fish
* Frozen Fish Paste (Surimi) – Customs duty will be reduced from 30% to 5%
* Synthetic flavouring essences
* Leather belts
* Leather shoes
* Leather jackets
* Marine products
* Raw materials for manufacturing ships are exempt from basic customs duty for an additional 10 years
* Cobalt products
What’s Costlier?
* Interactive flat panel display
* Knitted fabrics
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