Union Budget 2025-26: Key updates for employers and employees

Blog3 mins read1.6K views | Posted on February 10, 2025 | By Durgadharshini J

Union Budget 2025

The Union Budget 2025–26, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, marks her eighth budget and outlines a comprehensive strategy aimed at driving economic growth, offering relief to taxpayers, and fortifying crucial sectors.

The following highlights cover the vital takeaways for both employers and employees in India.

What does this Union Budget 2025 mean for employees?

Revised income tax slabs

Here are the revised income tax slabs for the year 2025 under the new tax regime:

Taxable income (₹)Tax rate (%)
Up to ₹4 lakhNil
₹4 lakh to ₹8 lakh5%
₹8 lakh to ₹12 lakh10%
₹12 lakh to ₹16 lakh15%
₹16 lakh to ₹20 lakh20%
₹20 lakh to ₹24 lakh25%
Above ₹24 lakh30%

Pro tip: Calculate your income tax easily with our newly updated free calculator.
 

With the revised rebate under Section 87A, salaried individuals earning up to ₹12.75 lakh owe no tax, factoring in the ₹75,000 standard deduction and zero tax liability for net taxable income up to ₹12 lakh.

These changes aim to provide greater tax relief by raising the exemption thresholds and lowering the tax rates for various income levels.  

Gig workers' welfare

Gig workers can now access various government welfare schemes under Pradhan Mantri Jan Arogya Yojana (PMJAY), by registering on the e-Shram portal. Nearly 1 crore gig workers will benefit from this health insurance coverage, ensuring they have access to essential medical services.

Boosting social security

To enhance pension offerings, a regulatory coordination forum will be established, ensuring better long-term financial planning for employees.

Tax relief on NPS for minors

Contributions made by parents or guardians to their minor children's NPS accounts can now be claimed as an exemption under Section 80CCD(1B), offering tax relief for those supporting their children's long-term financial security.

Benefits for employers at a glance

Tax reforms and compliance simplification

The new income tax bill, set to be introduced in Parliament this week based on the Direct Taxes Code, aims to simplify tax compliance and make tax laws more accessible for individuals and businesses. Additionally, a provision to extend the time limit for filing an updated return from 24 months to 48 months will offer greater flexibility for corrections.

Financial support for MSMEs and startups

To support the growth of micro, small, and medium enterprises (MSMEs), the government is launching a ₹5 lakh Customized Credit Card for micro-enterprises registered on the Udyam portal, improving access to credit. Additionally, the credit guarantee cover for micro and small enterprises has been increased from ₹5 crore to ₹10 crore, while the startup limit has doubled from ₹10 crore to ₹20 crore. With expanded investment and turnover limits—2.5 times and 2 times higher, respectively—more businesses will qualify as MSMEs and benefit from a range of schemes.

Higher TDS exemption on professional/technical services

TDS exemption limit for professional/technical services under Section 194J was raised from ₹30,000 to ₹50,000 per year. This change simplifies tax compliance for businesses and allows service providers to receive larger payments without TDS deductions.

Workforce development and training

A ₹3,000 crore allocation has been made for the Industrial Training Institutes (ITI) upgradation program, significantly increasing funding to expand skill education and create employment opportunities.

Conclusion

Apart from these, numerous other reforms and initiatives have been introduced across various sectors, including infrastructure, healthcare, renewable energy, and digital transformation. The Union Budget 2025–2026 also emphasises agricultural resilience, export promotion, and innovation-driven growth, ensuring a balanced approach to economic progress. With a strong focus on sustainability and technological advancements, the government aims to strengthen India's position as a global economic powerhouse.

For a deeper understanding, refer to the government's Budget booklet available here.

You can also read the Budget speech at this link.

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