Quick take (≤60 words):
The Union Budget 2025 targets a 4.4% fiscal deficit, sets ₹11.21 lakh crore capex (3.1% of GDP), and unveils new personal tax slabs with NIL tax up to ₹12 lakh (₹12.75 lakh for salaried with standard deduction). Gross market borrowing is pegged at ₹14.82 lakh crore. Multiple sectoral pushes span agriculture, MSMEs, infrastructure, and innovation. (Press Information Bureau)
What this article covers
- One-glance investor summary
- New personal tax regime (slabs, examples, TDS/TCS tweaks)
- Macro math: deficit, receipts, capex, borrowing
- Sectoral priorities & likely market impact
- Actionable portfolio cues + FAQs
Budget 2025 at a glance (Investor cheat sheet)
- Fiscal path: FY26 fiscal deficit 4.4% of GDP; total expenditure ₹50.65 lakh crore; receipts (ex-borrowings) ₹34.96 lakh crore. (Press Information Bureau)
- Capex push: ₹11.21 lakh crore (3.1% of GDP) toward infrastructure and growth multipliers. (Press Information Bureau)
- Borrowing plan: Gross market borrowing ₹14.82 lakh crore—a key input for G-Sec yields and debt fund duration calls. (Press Information Bureau)
- Tax relief (individuals): New slabs; NIL tax up to ₹12 lakh (₹12.75 lakh salaried with ₹75,000 standard deduction). (Income Tax India)
- TDS/TCS rationalisation: Higher thresholds on interest for seniors (₹1 lakh), rent (₹6 lakh), LRS TCS (₹10 lakh); fewer rates. (Press Information Bureau)
- Reform signals: FDI in insurance to 100% (subject to investing all premium in India); credit enhancement for infra bonds; regulatory simplification. (Press Information Bureau)
New personal tax regime: slabs, examples & who benefits
Revised slabs (Section 115BAC—New Regime)
| Total Income (₹ lakh) | Tax Rate |
|---|---|
| 0–4 | 0% |
| 4–8 | 5% |
| 8–12 | 10% |
| 12–16 | 15% |
| 16–20 | 20% |
| 20–24 | 25% |
| >24 | 30% |
- Rebate/NIL tax: Individuals pay zero tax up to ₹12 lakh in the new regime. With ₹75,000 standard deduction, a salaried person earning ₹12.75 lakh pays nil. Marginal relief applies just above ₹12 lakh. (Income Tax India)
- Old regime: Standard deduction remains ₹50,000 if you opt for it. (Income Tax India)
Worked example (new regime):
Taxable income = ₹18,00,000
Tax = 0% on first 4L (₹0) + 5% on next 4L (₹20,000) + 10% on next 4L (₹40,000) + 15% on next 4L (₹60,000) + 20% on next 2L (₹40,000) = ₹1,60,000 (plus cess).
Effective rate ≈ 8.9% (ex-cess). (Illustration based on new slabs.) (Income Tax India)
TDS/TCS changes that matter to households & HNIs
- Senior citizens’ interest TDS limit doubled to ₹1 lakh.
- Rent TDS limit raised to ₹6 lakh/year.
- LRS TCS threshold lifted to ₹10 lakh; fewer TDS rates overall to simplify compliance. (Press Information Bureau)
The macro math investors track
- Expenditure: ₹50.65 lakh crore; Receipts (ex-borrowings): ₹34.96 lakh crore.
- Fiscal deficit target: 4.4% of GDP for FY26—consistent with consolidation from FY25’s revised 4.8%, with provisional data showing the target met. (Press Information Bureau, Drishti IAS)
- Capex: ₹11.21 lakh crore to crowd-in private investment and support construction, capital goods, cement, and logistics. (Press Information Bureau)
- Gross market borrowing: ₹14.82 lakh crore—a guidepost for gilt supply, yield curve shape, and duration risk in debt portfolios. (Press Information Bureau)
Implication: A steady consolidation path with elevated capex is typically equity-positive (cyclicals, infra) and duration-sensitive for debt (watch supply and RBI stance). For tactical debt allocation, consider laddered or target-maturity exposure aligned to your horizon and risk budget.
Sectoral priorities & likely market impact
1) Agriculture (engine #1)
- Dhan-Dhaanya Krishi Yojana across 100 lower-productivity districts; 6-year pulses mission (Tur, Urad, Masoor); cotton productivity mission; KCC limit raised to ₹5 lakh; Namrup urea plant. Expect tailwinds for agri-inputs, irrigation, warehousing, agro-chemicals over a multi-year horizon. (Press Information Bureau)
2) MSMEs & Manufacturing
- MSME classification thresholds raised (investment & turnover), Udyam credit card (₹5 lakh) for micro units, Fund of Funds (₹10,000 crore), toy cluster push, and a National Manufacturing Mission. Positive for lending NBFCs, small-ticket credit, capital goods, and select export-oriented MSMEs. (Press Information Bureau)
3) Infrastructure & Real Estate
- 50-year, ₹1.5 lakh crore interest-free state capex loans; Asset Monetisation Plan 2025–30 targeting ₹10 lakh crore; UDAN revamp (120 new destinations); SWAMIH Fund 2 (₹15,000 crore) to complete ~1 lakh homes. Supports roads, airports, ports, EPCs, cement, housing financiers. (Press Information Bureau)
4) Innovation & Deep Tech
- ₹20,000 crore private-sector-led R&D initiative (as announced earlier), AI CoE for education (₹500 crore), 10,000 research fellowships, Deep Tech FoF (exploratory). Tailwinds for IT services, ER&D, semicon ecosystem over time. (Press Information Bureau)
5) Exports & Financial Sector Reforms
- Export Promotion Mission, BharatTradeNet for unified trade documentation/finance; FDI in insurance to 100% (with India-investment conditions); NaBFID credit enhancement for infra bonds; AIF tax certainty for Cat I/II investing in infra; startup incorporation window extended to 1-Apr-2030. Beneficiaries: insurance, infra developers, bond markets, export enablers. (Press Information Bureau)
6) Indirect tax rationalisation (customs)
- Fewer tariff rates (remove seven more) and limited cess/surcharge stacking; lifesaving drugs fully/partly exempted; critical minerals (incl. cobalt, Li-ion scrap) duty relief; targeted shifts for electronics, shipping, telecom, textiles. Watch EV supply chain, display panels, shipbuilding, and handicraft/leather exporters. (Press Information Bureau)
What this could mean for markets & your portfolio
Equities
- Pro-cyclical tilt: Infra/capex, industrials, building materials, logistics may see earnings visibility improve from public spending. Export enablers benefit from BTN and trade facilitation. Insurance rerating potential hinges on execution of FDI conditions. (Press Information Bureau)
- Consumer & MSME: Tax relief and MSME credit access can aid discretionary demand and working-capital cycles.
Fixed Income
- With gross borrowing at ₹14.82 lakh crore, supply is ample; duration calls should factor RBI stance, inflation trajectory, and global yields. Consider laddered/roll-down strategies in high-quality target-maturity funds aligned to your time horizon. (Press Information Bureau)
Asset allocation (simple rule-of-thumb)
- Align to goals; rebalance if any segment >5% off target.
- For HNIs, evaluate credit-enhanced infra bonds as the NaBFID facility scales (do thorough due diligence). (Press Information Bureau)
Handy formulas & quick checks
- Effective Tax Rate (new regime) = (Total tax before cess ÷ Total income) × 100.
- Post-tax return target = Pre-tax return × (1 – Marginal tax rate).
- Debt fund duration fit:
- ≤1 year goals → liquid/ultra-short
- 1–3 years → short-duration/roll-down
- 5–7 years → target-maturity (laddered)
FAQs (Investor-focused)
Q1. What are the new tax slabs and NIL tax limit?
See slab table above; NIL up to ₹12 lakh (₹12.75 lakh for salaried with ₹75,000 standard deduction). (Income Tax India)
Q2. Did TDS/TCS rules change for common transactions?
Yes—interest for seniors (₹1 lakh), rent (₹6 lakh), LRS TCS threshold (₹10 lakh); fewer TDS rates overall. (Press Information Bureau)
Q3. What are the key macro numbers I should remember?
Fiscal deficit 4.4%, capex ₹11.21 lakh crore, gross borrowing ₹14.82 lakh crore, total expenditure ₹50.65 lakh crore. (Press Information Bureau)
Q4. Any headline reform for financial services?
FDI in insurance to 100% (with conditions), AIF tax clarity for infra-focused funds, startup window extended to 1-Apr-2030, and a credit enhancement facility for infra bonds. (Press Information Bureau)
Sources & further reading
- PIB: “Highlights of Union Budget 2025–26” (official figures, tax and sectoral measures). (Press Information Bureau)
- Income Tax Dept: Budget 2025 FAQs (new slabs, standard deduction, marginal relief). (Income Tax India)
- GoI Budget Spotlight (expenditure, receipts, borrowing, capex). (India Government)
- Reuters (Feb 1, 2025): Fiscal deficit target 4.4% (context). (Reuters)
- CGA provisional data: FY25 deficit met at 4.8% (consolidation backdrop). (Drishti IAS)
Bottom line
Budget 2025 balances consolidation (4.4% deficit) with a strong capex engine, while simplifying and easing personal taxes. For Indian investors, the stance is growth-supportive without abandoning prudence—favouring quality cyclicals, domestic capex plays, and a disciplined, horizon-matched debt strategy.