On February 1, 2025, Finance Minister Nirmala Sitharaman presented India’s Union Budget for the fiscal year 2025-26, focusing on tax relief for the middle class, fiscal consolidation, and sectoral reforms to stimulate economic growth. Key Highlights: Income Tax Reforms: • The budget introduces significant relief for the middle class by exempting annual incomes up to ₹12 lakh from income tax under the new tax regime. • Revised tax slabs are as follows: • ₹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% • A new income tax bill is set to be introduced next week to simplify tax compliance.  Fiscal Deficit and Borrowing: • The government aims to reduce the fiscal deficit to 4.4% of GDP for 2025-26. • To fund this deficit, plans include borrowing ₹14.82 trillion through bonds.  Foreign Direct Investment (FDI): • The FDI limit in the insurance sector has been raised from 74% to 100%, with certain restrictions, to attract more foreign capital and expertise.  Support for Senior Citizens: • The limit for tax deduction on interest income for senior citizens has been doubled to ₹1 lakh. • The threshold for Tax Deducted at Source (TDS) on rent has been increased from ₹2.4 lakh to ₹6 lakh, benefiting small taxpayers.  Sectoral Initiatives: • Agriculture: A nationwide program for high-yielding crops will be launched, benefiting 17 million farmers. Subsidized credit limits for farmers will also be increased.  • Nuclear Energy: A Nuclear Energy Mission aims to develop at least 100 GW of nuclear power by 2047, with amendments to relevant acts to encourage private sector participation.  • Startups and Innovation: A new fund will be established to support startups, particularly in deep tech and high-impact sectors, fostering innovation and job creation.  Market Reactions: • The budget’s modest increase in capital expenditure led to a decline in infrastructure-related stocks. • However, consumption-driven sectors like fast-moving consumer goods and automobiles saw gains, driven by the reduction in personal income tax rates aimed at boosting spending.  Overall, the 2025-26 budget focuses on providing tax relief to the middle class, promoting private investment, and implementing sector-specific reforms to drive sustainable economic growth.