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Budget 2025-2026 Highlights: Rs. 500 Crore for AI Centre & ‘Zero Tax’ on Income to Rs. 12 Lakh

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Key Highlights

  • The Union Budget 2025-2026 brings major tax relief from Rs. 7 to 12 lakh.
  • Surging short-term credit from Rs. 3 to Rs. 5 lakh to support the agriculture sector.
  • The govt. also introduced a customizable credit card for micro-enterprises.

Introduction

Now, you don’t need to pay any tax if your annual income slab is under 12 lakh. 

This is something every Indian middle-class person has been expecting from this Budget 2025. 

Have you looked at the recent Budget 2025-2026 release? Whether you are a student planning your further studies or a working professional juggling your day-to-day expenses, understanding what this budget basket brings for you, helps you to strategically plan your financial goal.

With growing economic uncertainties and global geopolitical tensions, it’s challenging for the government to implement budget strategies that align with everyone’s needs. 

From middle-class earners to taxpayers, let’s explore how this budget will impact your finance planning.

Union Budget 2025-2026, Here’s A Glimpse You Should Know

Before presenting the Budget for the financial year 2025-2026, Finance Minister Nirmala Sitharaman highlighted the government’s efforts to:

  • increase economic growth
  • ensure equitable growth for all
  • empower India’s financial capacity
  • boost investments in private sectors
  • establish positive economic conditions for households

Agriculture is a Priority of this Budget 

Sitharaman highlighted “Agriculture as the 1st engine” and announced a scheme, Prime Minister Dhan-Dhaanya Krishi Yojana. 

The recent scheme was introduced to boost agricultural productivity, develop inclusive agricultural practices, promote crop diversification, improve irrigation systems, and improve harvest options. 

Additionally, she further announced the continuation of the Kisan Credit Card (KCC) scheme to aid farmers and fishermen. This budget also increased financial aid such as short-term loans for farmers from Rs. 3 lakhs to Rs. 5 lakhs.

Further, the ‘Rural Prosperity and Resilience Programme’ will be launched in the upcoming days to address key rural development challenges, including: 

  • underemployment in agriculture through proper skilling
  • incorporation of the latest technology
  • optimised investment strategies
  • strengthening rural livelihoods

MSME Sector becomes 2nd priority of budget 2025-2026

The objective of MSME is to manufacture, and process products to drive the growth and development of the country.

According to the reports, currently, more than 1 crore MSME branches operate in India which contribute 36% of the manufacturing sector of India. In the recent budget, the government increased the credit availability with proper guarantee coverage, let check about it:

  • Enterprises getting Rs. 5 to Rs. 10 crore will receive credit of Rs. 1.5 lakh crore in the upcoming 5 years.
  • For startup companies, getting Rs. 10 to Rs. 20 crore comes with a guaranteed fee of 1%.
  • For exported MSME companies, term loans of up to Rs. 20 crore are available.

Apart from this, the government also introduced special credit cards for Micro-enterprises. 

What makes this new credit card so special?

The newly introduced enterprise credit card is customisable and offers:

  • A Rs. 5 lakh credit limit for businesses registered on Udyam portal.
  • Up to Rs. 10 lakh credit in the first year for micro-enterprises.

0 tax for individuals income up to Rs. 12 lakhs

The recent Union Budget 2025-2026 brings ‘tax exemption’ for individuals whose annual income is upto Rs. 12 lakh. Let us understand this with an example:

Let’s say, your monthly income is around Rs. 30,000.

Now, calculate this for 1 year (or 12 months), which is Rs. 3,60,000.

So, your net income for a year is less than Rs. 12 lakhs. That means you are exempted from paying any tax.

Here are the new tax slabs for FY 2025-2026:

Income Range (Rs.)Tax Rate (%)
0 to 4 lakhNil tax
4 to 8 lakh5%
8 to 12 lakh10%
12 to 16 lakh15%
16 to 20 lakh20%
20 to 24 lakh25%
More than 24 lakh30%

Let’s understand how the income tax slab’s new tax regime is beneficial for individuals with different income levels. Here is an example:

Case I: Individuals With Rs. 12 lakhs income

According to the old tax slab systems, individuals earning Rs. 12 lakh needed to pay a tax of around Rs. 80,000.

However, with this new income tax slab, those individuals don’t have to pay any tax or you can say, 0 or NIL tax.

So, previously, they paid Rs. 80,000, which they can now save for their plans.

Case II: Individuals with Rs. 18 lakhs income

For Rs. 18 lakh earners, under the previous tax slab system, they had to pay approximately Rs. 2,33,000 in taxes.

However, with the new tax slab, they only have to pay, Rs. 1,63, 000. In short, they can now save Rs. 70,000. 

Case III: Now let’s explore how much Rs. 25 lakhs earner benefits from the new tax slab

Earlier, individuals earning Rs. 25 lakh had to pay income tax of around Rs. 4,40,000.

However, under the new tax regime, they only have to pay Rs. 3,30,000. Overall, they can save Rs.1,10,000 in the bank.

The sole purpose of creating such a grounded tax slab is to:

  • make an individual capable of managing their household expenses.
  • to aid the individual in saving money for their future goals.

Allocate Rs. 500 Crores to Set Up an AI Centre to Educate

In this Budget 2025, the govt. allocated approximately Rs. 500 crores to Centres of Excellence on Artificial Intelligence (AI) to set up AI centres to enhance India’s capability in utilizing artificial intelligence (AI). 

Conclusion

In a nutshell, with increasing U.S. tariffs and geopolitical tensions, the Union Budget 2025-2026 arrives at a critical point when India grapples with slow economic growth.

From focusing on tax relief to presenting robust infrastructure expansion, this budget brings smiles to all middle-class earners.

Additionally, the government also has highlighted incentives to startup companies and MSMEs to foster entrepreneurship and drive sustainable economic growth.

Read More Article: Important Topical Dates of February 2025: A Blend of National and International Observances

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