Budget 2025-26 Explained Simply: More Money in Your Pocket!

18th April 2025, Gaurav Kumar Singh

1. Big Relief for the Middle Class

 Minister Nirmala Sitharaman made a big announcement in the Union Budget 2025-26. The goal is simple – reduce taxes for the middle class, so they have more money to spend or save. This will help the economy grow, especially during these challenging times.

2. No Tax if You Earn Up to ₹12 Lakh

This is the headline benefit:

1. If your annual income is up to ₹12 lakh, you don’t have to pay any income tax (only under the new tax regime).
2. This means more savings and higher disposable income for salaried people and families.

Earlier, this limit was:

1. ₹2.5 lakh in 2014
2. ₹5 lakh in 2019
3. ₹7 lakh in 2023

Now it’s a huge jump to ₹12 lakh!

Also:

1. If you earn ₹18 lakh, you save ₹70,000 in tax.
2. If you earn ₹25 lakh, you save ₹1.1 lakh in tax.

3. What is the New Tax Regime?

It’s a simplified version of tax where:

1. You don’t get many deductions like PPF or ELSS.
2. But you get lower tax rates.
3. A standard deduction of ₹75,000 is allowed.

The main benefit – fewer complications and lower taxes for many.

4. Filing Returns – You Get More Time

The government has extended the deadline to file “updated returns” (corrected tax returns):

1. Earlier: 24 months from the end of the financial year
2. Now: 48 months (4 years)

But if you file after 2 years, you’ll pay extra tax:

1. 60% extra if filed within 3 years
2. 70% extra if filed within 4 years

5. Life Insurance & ULIPs – New Rules

1. ULIP premiums above ₹2.5 lakh (after Feb 2021) and other policies above ₹5 lakh (after April 2023) won’t get tax benefits under Section 10(10D).
2. If you break this limit, any returns from such policies will be taxed.
3. This ensures high-value insurance is not misused as a tax-free investment.

6. Good News for National Savings Scheme (NSS) Investors

1. If you withdraw from NSS on or after 29th August 2024, and the amount was deposited before that date, the interest earned will be tax-free.

7. Changes in TCS (Tax Collected at Source)

1. The TCS limit on foreign remittances under the RBI’s LRS is raised from ₹7 lakh to ₹10 lakh.
2. TCS on education loans taken from approved lenders is removed.
3. This helps students and families sending money abroad.

8. TDS on Dividends – More Room for Investors

1. TDS exemption on dividends is now up to ₹10,000 (earlier ₹5,000).
2. Mutual fund investors also get this benefit.
3. Small investors will now see lower tax deduction at source (TDS).

9. Encouragement to Foreign Investors

1. Tax rules for foreign investors and NRIs are made simpler and fairer.
2. This helps attract more investment into India’s stock markets.

10. Boost to Mutual Funds & Middle Class Investing

1. New KYC norms and tech platforms will make investing easier and quicker.
2. With more money in hand (thanks to tax cuts), the middle class may invest more in:
3. Mutual funds
4. SIPs
5. Stocks
6. Retirement plans

11. Government’s Bigger Picture

Instead of spending more on big projects (called “capital expenditure”), the government wants to put money directly in people’s hands.

The thinking is: when people have more money, they will spend and invest – helping the economy grow naturally.

In Simple Words:

1. You get to keep more of your money.
2. Less tax = more savings or spending.
3. Simplified rules = fewer headaches.
4. Good news for salaried individuals, investors, and students.

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