The Union Budget for 2025–26, presented by Finance Minister Nirmala Sitharaman, marks a significant shift in India’s direct tax landscape. Aimed at boosting consumption, simplifying compliance, and fostering economic growth, the budget introduces several key reforms, particularly benefiting the salaried middle class.​AP News

🧾 Major Personal Tax Reforms

1. Tax-Free Income Up to ₹12 Lakh

A landmark change is the introduction of a “nil tax” slab for annual incomes up to ₹12 lakh. With the standard deduction of ₹75,000, the effective tax-free income limit for salaried individuals rises to ₹12.75 lakh. This move is designed to enhance disposable income, thereby stimulating household consumption and savings. ​Reuters+2The Times of India+2India Today+2India Today

2. Revised Income Tax Slabs

The new tax regime introduces a progressive structure:​

  • Up to ₹4 lakh: Nil
  • ₹4 lakh – ₹8 lakh: 5%
  • ₹8 lakh – ₹12 lakh: 10%
  • ₹12 lakh – ₹16 lakh: 15%
  • ₹16 lakh – ₹20 lakh: 20%
  • ₹20 lakh – ₹24 lakh: 25%
  • Above ₹24 lakh: 30%​ETCFO.com+1India Today+1India Today+1ETCFO.com+1

This structure aims to ease the tax burden on middle-income earners while maintaining progressivity for higher-income brackets. ​ETCFO.com

3. Enhanced Tax Relief for Senior Citizens

The limit for tax deduction on interest income for senior citizens has been doubled from ₹50,000 to ₹1 lakh, providing greater relief to retirees. Additionally, the TDS threshold for rental income has increased from ₹2.4 lakh to ₹6 lakh, benefiting property owners. ​juristax.com+6ETCFO.com+6The Times of India+6

📉 Simplification of Tax Compliance

1. Extension of Time for Filing Updated Returns

The time limit for filing updated income tax returns has been extended from two years to four years, allowing taxpayers more time to correct any omissions in their income declarations. ​India Today+2Business & Finance News+2The Times of India+2

2. Rationalization of TDS/TCS Provisions

Several measures have been introduced to reduce the compliance burden:​ETCFO.com+4CAclubindia+4The Times of India+4

These changes aim to simplify the tax process and reduce the number of transactions subject to TDS, benefiting small taxpayers. ​Business & Finance News+1CAclubindia+1

🏢 Corporate and Investment Tax Reforms

1. Extension of Start-up Tax Benefits

The eligibility period for start-ups to claim tax benefits under Section 80-IAC has been extended until March 31, 2030, encouraging innovation and entrepreneurship. ​India Briefing+2Business & Finance News+2juristax.com+2

2. Presumptive Taxation for Electronics Manufacturing

A presumptive taxation regime has been introduced for non-residents providing services to electronics manufacturing facilities, offering tax certainty and attracting foreign investment in the sector. ​Business & Finance News+1ETCFO.com+1

3. Extension of Tax Concessions for Sovereign and Pension Funds

The deadline for making investments in Sovereign Wealth Funds and Pension Funds to qualify for tax exemptions has been extended to March 31, 2030, promoting infrastructure funding. ​ETCFO.com+1India Briefing+1

🌐 Broader Economic Implications

These direct tax reforms are part of a broader strategy to stimulate economic growth amidst global uncertainties. By enhancing disposable income, simplifying compliance, and encouraging investment, the government aims to boost domestic demand and private sector activity. While the revenue impact is estimated at ₹1 trillion, the focus remains on long-term growth and stability. ​ReutersFinancial Times

✅ Conclusion

The Union Budget 2025–26 introduces transformative direct tax reforms that significantly benefit the middle class, simplify compliance, and encourage investment. By enhancing disposable income and reducing administrative burdens, these measures are poised to stimulate economic growth and foster a more inclusive financial environment.