The much-awaited Union Budget 2025 presented by Finance Minister Nirmala Sitharaman has sparked both applause and criticism. With masterstrokes like 10 crores for startups or no Income Tax Up to ₹12 Lakh, She has played the opposite of all the assumptions.
While some hail the government’s measures as transformative, others see them as short-term sops aimed at placating taxpayers and startups ahead of elections. Let’s break down the key announcements and their implications.
No Income Tax Up to ₹12 Lakh: A Welcome Relief or Fiscal Risk?
One of the headline-grabbing decisions is the exemption of income tax for individuals earning up to ₹12 lakh annually. This move is expected to significantly boost disposable income for the middle class.
Is this too good to be true? Critics argue that such sweeping exemptions could create a revenue shortfall for the government, leading to cuts in crucial welfare schemes or increased borrowing. With India’s fiscal deficit targeted at 4.4% of GDP, many are questioning how the government plans to bridge the gap.
Revised Income Tax Slabs 2025
The revamped tax structure under the Union Budget 2025 brings relief to various income groups, especially middle-class taxpayers. Here’s a breakdown of the updated income tax slabs:
Annual Income (₹) | Tax Rate | Key Highlights |
---|---|---|
Up to ₹12,00,000 | 0% | Complete tax exemption for middle-income earners. |
₹12,00,001 to ₹18,00,000 | 10% | Low tax burden for income just above the exemption limit. |
₹18,00,001 to ₹25,00,000 | 20% | Moderate tax rate for high-middle-income earners. |
Above ₹25,00,000 | 30% | Highest tax rate for high-income earners, ensuring progressivity. |
Startup Boost: ₹10 Crore Fund Allocation
Startups have always been seen as key drivers of innovation and employment. The budget’s announcement of a ₹10 crore fund dedicated to fostering startup growth sounds promising.
But here’s the catch: Many experts believe that merely allocating funds is insufficient. Startups often face bureaucratic hurdles that stifle growth. Red tape—in the form of lengthy approval processes, compliance burdens, and excessive documentation—remains a persistent challenge for new and emerging businesses. Will this allocation come with streamlined processes, or will it be another fund lost in red tape?
Concerns Over Fiscal Discipline
With massive tax cuts and ambitious spending plans, maintaining fiscal discipline becomes a significant challenge. Economists warn that an over-reliance on borrowing could lead to long-term economic instability.
Nirmala Sitharaman’s Gamble: Political Ploy or Economic Masterstroke?
The budget is undoubtedly a bold move by Nirmala Sitharaman. However, some analysts view it as a politically motivated gamble aimed at gaining voter favor ahead of crucial elections.
Key questions remain:
- How will the government compensate for the revenue loss from tax exemptions?
- Will the benefits trickle down to the intended segments of society?
Conclusion: A Balancing Act
While the Union Budget 2025 brings much-needed relief to taxpayers and startups, the government must tread carefully to avoid fiscal imbalances. Nirmala Sitharaman’s bold announcements may win accolades in the short term, but their long-term sustainability remains to be seen.
As India stands at the crossroads of economic transformation, only time will tell whether this budget is a visionary leap or a populist gamble.