No tax for income up to 12 lakh in new regime, revised estimates for many schemes down for current FY

Finance Minister Nirmala Sitharaman has announced significant tax relief for the middle class, especially salaried individuals, in the ₹50.65 lakh crore budget for the financial year 2025-26. Under the new income tax regime, individuals earning up to ₹12 lakh annually will not have to pay any tax. However, the old tax regime retains the previous exemption limit of ₹5 lakh.  

The budget includes several announcements for the agriculture sector. Some of them are- Dhan Dhanya Krishi Yojana for 100 low-productivity districts, National Mission for Food Oils and Seeds, A six-year mission for self-sufficiency in pulses. Additionally, the loan limit under the Kisan Credit Card (KCC) has been increased from ₹3 lakh to ₹5 lakh.  

In the current financial year, the government has reduced its expenditure. The revised estimate has been brought down to ₹47.16 lakh crore from the initial budget estimate of ₹48.20 lakh crore. This has impacted allocations for key schemes. The agriculture budget has been reduced from the estimated ₹1.52 lakh crore to ₹1.41 lakh crore. The rural development budget has been cut by 28% this year.  
However, the budgets for some schemes like MGNREGA and PM Garib Kalyan Yojana have either been retained or slightly reduced.

Income Tax
Giving major relief to the middle class, the Union Budget 2025-26 has announced a tax exemption for individuals with an annual income of up to ₹12 lakh. Salaried individuals will also benefit from a standard deduction of ₹75,000. This effectively increases the tax-free limit to ₹12.75 lakh for them.  

However, if the annual income exceeds this limit, tax will be levied under either the new or old tax regime, depending on the taxpayer's choice at the beginning of the financial year. Under the old tax regime, income up to ₹5 lakh remains tax-free. The new tax regime has also introduced revised tax slabs, which are as follows:  
Annual Income - Tax Rate
- ₹4 lakh to ₹8 lakh - 5%  
- ₹8 lakh to ₹12 lakh - 10%  
- ₹12 lakh to ₹16 lakh - 15%  
- ₹16 lakh to ₹20 lakh - 20%  
- ₹20 lakh to ₹24 lakh - 25%  
- Above ₹24 lakh - 30%

Size of the Budget
The budget size for the financial year 2025-26 is estimated to be ₹50.65 lakh crore, which is 7.4% higher than the revised estimate for 2023-24. The budget size for the current financial year has been reduced. The budget estimate for this year was ₹48.20 lakh crore, while the revised estimate stands at ₹47.16 lakh crore. The central government's tax revenue for this year has also been revised from the budget estimate of ₹25.83 lakh crore to ₹25.56 lakh crore. For the next year, tax revenue is estimated to be ₹28.37 lakh crore. The fiscal deficit for the current financial year is expected to be 4.8% of GDP, compared to the budget estimate of 4.9%. The target for 2025-26 has been set at 4.4%.

The corporate tax collection from companies in the current year is estimated to be around ₹40,000 crore lower than the budget expectations, while personal income tax collection has increased. Corporate tax stands at ₹9.80 lakh crore compared to the budget estimate of ₹10.20 lakh crore. Income tax has risen to ₹12.57 lakh crore against the estimated ₹11.87 lakh crore.  

For the next financial year, corporate tax is projected at ₹10.82 lakh crore, and income tax at ₹14.38 lakh crore. GST collections this year are expected to match the budget estimate of ₹10.61 lakh crore, while for the next year, a target of ₹11.78 lakh crore has been set.  

In the financial year 2025-26, for the first time, tax revenue is expected to equal 12% of GDP, with 7.1% from direct taxes and 4.9% from indirect taxes. In the current financial year, tax revenue accounts for 11.9% of GDP.

Agriculture and Rural Development
For the financial year 2025-26, a provision of ₹1,71,437 crore has been made for the agriculture and allied sectors. This is 21.70% higher than this year’s revised estimate. But this year's revised estimates represents a reduction from the current year’s budget estimate. The budget estimate for this year was ₹1,51,851 crore, which was later revised down to ₹1,40,859 crore.  

In the current financial year, an even larger cut has been made in the rural development budget. The budget estimate for this sector was ₹2,65,808 crore, but the revised estimate reduced it to ₹1,90,675 crore, marking a 28% cut. For 2025-26, a provision of ₹2.67 lakh crore has been allocated.  

A provision of ₹86,000 crore has been made for MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act), which remains the same as both the budget and revised estimates for the current financial year. The budget for the PM-Kisan Samman Nidhi scheme is ₹63,500 crore, the same as this year’s revised estimate, although the initial budget estimate was ₹60,000 crore.  

For the PM Garib Kalyan Anna Yojana, ₹2.03 lakh crore has been allocated in the 2025-26 budget. This year’s budget provision was ₹2,05,250 crore, but the revised estimate is ₹1.97 lakh crore. Budget cuts have also been made in education and social welfare. The education budget has been reduced from the initial estimate of ₹1,25,638 crore to ₹1,14,054 crore. For 2025-26, ₹1,28,650 crore has been allocated. The social welfare budget was revised from ₹56,501 crore to ₹46,482 crore this year, while ₹60,000 crore has been allocated for the next financial year.  

Looking at key schemes, the expenditure for the National Agriculture Plan in the current financial year was only ₹6,000 crore compared to the initial allocation of ₹7,553 crore. Similarly, the budget for the Krishonnati Yojana was revised from ₹7,447 crore to ₹7,106 crore. For 2025-26, ₹8,500 crore and ₹8,000 crore have been allocated for these two schemes, respectively. Under the Pradhan Mantri Matsya Sampada Yojana, ₹2,465 crore has been allocated, but the current year’s provision of ₹2,352 crore was reduced to ₹1,500 crore.  

The budget for the PM Krishi Sinchayee Yojana was cut from ₹8,250 crore to ₹6,621 crore this year, while ₹8,260 crore has been allocated for next year. Under the PM Gram Sadak Yojana, only ₹14,500 crore will be spent this year against the initial allocation of ₹19,000 crore, but for 2025-26, the allocation has been restored to ₹19,000 crore. The Deendayal Antyodaya Yojana - National Rural Livelihoods Mission has been stable at ₹15,047 crore this year, while ₹19,000 crore has been allocated for the next year.

A major budget cut has been made in the Jal Jeevan Mission. The 2024-25 budget allocation of ₹70,163 crore has been revised down to ₹22,694 crore. For 2025-26, ₹67,000 crore has been allocated. The Kisan Urja Suraksha evam Utthan Mahabhiyan (KUSUM) scheme has been allocated ₹2,600 crore. This year’s budget provision of ₹1,996 crore was revised to ₹2,525 crore.  

For the Crop Insurance Scheme, ₹12,242 crore has been allocated for 2025-26. The current financial year’s budget allocation was ₹14,600 crore, which was later revised to ₹15,864 crore. The allocation for livestock health and disease control remains ₹1,980 crore for both this year and next year. The budget provision for this year was ₹2,465 crore. For dairy development, ₹1,000 crore has been allocated, compared to this year's ₹371 crore in the initial budget and ₹450 crore in the revised estimate.

Subsidies
A total of ₹1,67,887 crore has been allocated for fertilizer subsidies. This includes ₹1,18,900 crore for urea subsidy and ₹49,000 crore for nutrient-based subsidy. The revised estimate for fertilizer subsidies in the current financial year is ₹1,71,299 crore, compared to the budget estimate of ₹1.64 lakh crore. This includes ₹1.19 lakh crore for urea subsidy and ₹52,310 crore for nutrient-based subsidy. While the urea subsidy remains as per the budget estimate, the budget provision for nutrient-based subsidy was ₹45,000 crore.

The food subsidy has been lower than the budget estimate. The budget estimate for the current year was ₹2,05,250 crore, while the revised estimate stands at ₹1,97,420 crore. For the next financial year, the food subsidy has been set at ₹2,03,420 crore, and the petroleum subsidy at ₹12,100 crore.

Infrastructure
The target expenditure on infrastructure for 2025-26 has been set at ₹11.2 lakh crore. However, only ₹10.2 lakh crore could be spent compared to ₹11.11 lakh crore in the current financial year. Including grants, the total capital expenditure will be ₹13.2 lakh crore in the current financial year and ₹15.5 lakh crore in the next financial year. This will be equivalent to 4.1% of GDP this year and 4.3% next year.  

For the PM Awas Yojana - Urban, the budget allocation for the current financial year was ₹30,171 crore, but less than half of it was utilized. The revised estimate has been reduced to ₹13,670 crore. For the next year, ₹19,794 crore has been allocated. A provision of ₹3,500 crore has been made for the second phase (2.0) of the scheme.  

For the PM Awas Yojana - Rural, the budget has also been reduced this year, from the estimated ₹54,500 crore to ₹32,426 crore. However, for the next year, a provision of ₹54,832 crore has been made.  

Under the New Employment Generation Scheme, ₹20,000 crore has been allocated for 2025-26. The provision for the current financial year was ₹10,000 crore, but only ₹6,799 crore is expected to be spent.  

Under the India AI Mission, only ₹173 crore is estimated to be spent out of the ₹552 crore budget for the current financial year. However, ₹2,000 crore has been allocated for the next year.  

For the development of the semiconductor and display manufacturing ecosystem, ₹7,000 crore has been allocated for the next financial year. In the current year, out of the ₹6,903 crore budget, only ₹3,816 crore is expected to be spent. 

In infrastructure, NHAI has been allocated ₹1.70 lakh crore, which is slightly higher than the revised estimate of ₹1.69 lakh crore for the current financial year.