How Budget 2025 Impacts Taxpayers: Key Highlights

The Union Budget 2025, presented amidst global economic uncertainties and domestic growth ambitions, has drawn significant attention from taxpayers across all segments. With a clear focus on fostering economic stability, encouraging investments, and offering relief to the middle class, the budget is a mixed bag of reforms, incentives, and strategic shifts.

In this blog, we’ll explore the Union Budget 2025 highlights and break down what they mean for individual taxpayers, salaried employees, small business owners, and investors. If you’re trying to decode how the latest announcements will impact your finances, read on for a comprehensive analysis.

1. Revised Income Tax Slabs Under the New Regime

One of the most anticipated Union Budget 2025 highlights is the revision of income tax slabs under the new tax regime. The government has increased the basic exemption limit from ₹3 lakh to ₹3.5 lakh and adjusted subsequent tax brackets to provide better relief to middle-income earners.

Here’s a snapshot of the updated slabs under the new regime:

• ₹0 – ₹3.5 lakh: Nil

• ₹3.5 lakh – ₹6 lakh: 5%

• ₹6 lakh – ₹9 lakh: 10%

• ₹9 lakh – ₹15 lakh: 15%

• Above ₹15 lakh: 30%

This move is designed to simplify compliance and encourage taxpayers to opt for the new regime, one of the key Union Budget 2025 highlights that aligns with the government’s agenda to reduce exemptions and promote transparency.

2. Standard Deduction Extended to All Regimes

Another welcome announcement among the Union Budget 2025 highlights is the extension of the standard deduction of ₹50,000 to all taxpayers, irrespective of the tax regime they choose. Previously, this benefit was available only under the old regime.

This change brings uniformity and offers moderate relief to salaried individuals and pensioners, effectively increasing disposable income and addressing rising living costs.

3. Increased Deduction for Home Loan Interest

Housing continues to be a priority for the government. As part of the Union Budget 2025 highlights, the deduction limit for interest on home loans has been increased from ₹2 lakh to ₹2.5 lakh for first-time buyers purchasing affordable housing. This step is intended to boost real estate demand and make housing more accessible.

Taxpayers planning to invest in residential property now have greater financial incentive, especially under the affordable housing category.

4. No Change in Capital Gains Tax Structure

Many expected reforms in capital gains taxation, particularly a restructuring of the holding period and rates. However, the Union Budget 2025 highlights revealed no significant changes in this area. Short-term and long-term capital gains tax rates remain unchanged, disappointing some investors who hoped for a more rationalized system.

However, the budget did propose simplification of capital gains reporting in the ITR, aiming to improve compliance and reduce audit scrutiny.

5. TDS Thresholds Revised for Freelancers and Gig Workers

Freelancers and gig economy workers can breathe a sigh of relief with one of the Union Budget 2025 highlights addressing their concerns. The TDS threshold under Section 194J has been increased from ₹30,000 to ₹50,000 per annum, reducing tax burdens on small-ticket earners.

This move reflects the government’s recognition of evolving work models and ensures that the gig economy remains vibrant and well-supported.

6. Boost to Taxpayer Services and Faster Refunds

Among the administrative Union Budget 2025 highlights, the government has committed to improving taxpayer services. Faster processing of refunds, faceless assessments, and simplified grievance redressal mechanisms are set to enhance the overall tax experience.

A central AI-powered tax assistant is also proposed to help individuals file returns accurately and resolve queries in real-time—a big step forward in digital governance.

7. Increased Limits Under Section 80C and 80D

In light of rising education and healthcare costs, the government has increased deduction limits:

• Section 80C: Raised from ₹1.5 lakh to ₹2 lakh

• Section 80D (Health Insurance): Increased from ₹25,000 to ₹40,000 for individuals under 60, and from ₹50,000 to ₹60,000 for senior citizens

These changes are among the most significant Union Budget 2025 highlights, directly impacting taxpayers’ ability to save and manage health-related expenses.

8. Tax Incentives for Women and Senior Citizens

The Union Budget 2025 highlights also include targeted incentives. Women taxpayers will receive an additional rebate of ₹25,000 under the new regime, while senior citizens (above 75 years) now benefit from auto-filing options and exemption from filing returns if income is only from pension and interest.

This inclusive approach aims to empower vulnerable sections and make compliance simpler for them.

9. Startups and MSMEs Get Tax Relief

Small businesses and startups weren’t left behind. One of the Union Budget 2025 highlights includes extending the 15% concessional tax rate for new manufacturing companies by two years. Additionally, startups incorporated until March 2026 can now claim tax holiday benefits for four consecutive years within a ten-year window.

This will bolster entrepreneurial growth and support India’s Make-in-India vision.

10. No Wealth Tax or Inheritance Tax Introduced

Despite ongoing discussions, the government has not introduced wealth or inheritance tax. This absence is also notable among the Union Budget 2025 highlights, signaling stability and investor confidence, especially among HNIs and family-owned businesses.

11. Digital Transactions and Crypto Taxation

The budget reiterated the 1% TDS on crypto transactions, with no new changes in crypto tax rates. However, among the Union Budget 2025 highlights, it was announced that a regulatory framework for digital assets would be tabled soon.

This indicates that while the government is cautious, it acknowledges the growing digital economy and aims to regulate it without stifling innovation.

Final Thoughts

The Union Budget 2025 highlights reflect a thoughtful balance between fiscal responsibility and taxpayer welfare. While it doesn’t bring sweeping tax reforms, it does provide relief in strategic areas, simplifies compliance, and promotes inclusivity.

Taxpayers should reassess their financial plans in light of these developments and take advantage of increased deductions, revised slabs, and administrative ease. The focus on digital tax governance, rationalized rates, and sector-specific benefits indicates that the government is keen on steady, inclusive growth.

As we digest these Union Budget 2025 highlights, it’s clear that the direction is forward-looking—with an eye on middle-class support, startup empowerment, and economic stability. Make sure to consult a tax advisor to align your personal or business finances with the new provisions and maximize your benefits under Budget 2025.