The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, introduces several measures aimed at accelerating economic growth and providing substantial relief to the middle class. Here’s a comprehensive look at what gets cheaper, what becomes costlier, and how these changes impact the Indian economy.
Major Highlights of Budget 2025
Income Tax Relief
One of the most significant announcements is the increase in the income tax exemption limit. Individuals earning up to ₹12 lakh per year will now pay zero tax. After adding a standard deduction of ₹75,000, the effective tax-free income limit rises to ₹12.75 lakh. This move is expected to provide major relief to the middle class, with the government forgoing approximately ₹1 lakh crore in direct taxes to facilitate this benefit.
What’s Getting Cheaper?
Several essential goods and services will become more affordable due to customs duty reductions:
- Medicines and healthcare: Basic customs duty has been removed on 37 critical medicines, including drugs for cancer and rare diseases.
- Mobile phones: Reduced customs duty on key components used in battery production will lead to lower mobile phone prices.
- Electric vehicle (EV) components: Exemptions on cobalt powder and lithium-ion battery scrap aim to boost domestic EV manufacturing.
- Critical minerals: 12 essential minerals, crucial for sectors like electronics and renewable energy, have been granted duty exemptions.
What’s Getting Costlier?
On the other hand, some products will see price increases due to higher customs duties:
- Interactive flat panel displays: Duties doubled from 10% to 20%, addressing an inverted duty structure where finished products were taxed less than raw materials.
- Textiles and electronics: Certain textile and electronic products will see price hikes due to increased import tariffs.
Economic Outlook for FY 2025-26
The Economic Survey forecasts GDP growth between 6.3% and 6.8%, driven by strong domestic demand and government investments. Inflation is expected to ease, supported by an improved food supply and a strong Rabi harvest. However, uncertainties in global markets and climate conditions could pose risks.
Final Thoughts
Budget 2025 presents a balanced approach, offering tax relief for the middle class while encouraging domestic manufacturing in healthcare, technology, and renewable energy. While many essential goods will see price reductions, certain electronics and textiles may become costlier. Overall, the budget reflects the government’s strategy to stimulate economic growth while ensuring affordability in key sectors.