The Union Budget 2025-26 has sparked widespread interest across households, businesses, and professionals alike — and for good reason. With a clear focus on good governance, voluntary compliance, and tax simplification, Finance Minister Nirmala Sitharaman has unveiled a tax-friendly budget that places the common man at its heart.
As a tax practitioner, I’ve taken a deep dive into the proposals to decode what it all means for you — whether you’re a salaried employee, a senior citizen, a small business owner, or an investor.
1. A Middle-Class Bonanza: Higher Income, Zero Tax
The most striking announcement? An individual earning up to ₹12 lakh annually will pay zero tax under the new regime.
- New Tax Exemption Limit: ₹12 lakh (₹1 lakh/month average)
- For Salaried Individuals: Limit rises to ₹12.75 lakh with ₹75,000 standard deduction
This is a massive relief for the middle class, making a significant part of the workforce virtually tax-free, thereby enhancing disposable income and encouraging spending.
2. Relief for Senior Citizens
Senior citizens with interest income can now breathe easy:
- TDS threshold on bank/post office interest raised from ₹50,000 to ₹1,00,000
This move aims to cut down TDS hassles for elderly individuals, ensuring more liquidity in hand and reducing unnecessary compliance.
3. Renters & Landlords: Higher TDS Limit on Rent
- TDS on rent threshold increased from ₹2.40 lakh to ₹6 lakh per annum.
This simplifies life for both landlords and tenants, especially in smaller towns and for individuals renting out modest properties.
4. Making Voluntary Compliance Easier
- Updated ITR time-limit extended from 2 to 4 years.
This gives taxpayers more room to rectify omissions or update financial disclosures, promoting transparency without penalties.
5. Virtual Digital Assets (Crypto) Brought Into the Net
- Mandatory disclosure of crypto transactions in prescribed statements
- Definitions aligned with international norms
This reinforces the government’s intention to bring digital assets into the formal economy, without stifling innovation.
6. Small Charitable Trusts: Lesser Burden, Longer Tenure
- Registration period extended from 5 years to 10 years
This move reduces paperwork and instils long-term operational stability for genuine charitable institutions.
7. No Tax on Two Self-Occupied Properties
The earlier restriction on claiming only one self-occupied property as tax-free is now gone. Homeowners can now:
- Claim “Nil Annual Value” for two self-occupied houses without condition.
This gives relief to families owning more than one house — say, a working home in the city and ancestral property in their hometown.
8. TCS Relaxation: Smoother Foreign Remittances
- TCS under LRS (Liberalized Remittance Scheme) raised from ₹7 lakh to ₹10 lakh
- Delayed payment of TCS decriminalized (if paid by due date)
This eases the process for international travel, education, or investment abroad, especially for middle-class families sending kids overseas.
9. Simplified Transfer Pricing for Businesses
- New block pricing regime proposed for a 3-year period, instead of annual assessment
- Expansion of Safe Harbour Rules
This adds predictability and reduces litigation for companies involved in international transactions.
10. More Push for Start-ups, IFSC & Shipping
- Start-up incorporation deadline extended to April 1, 2030
- Benefits to ship-leasing, insurance, and treasury units in IFSC
- Tonnage tax extended to inland vessels
These steps aim to revive entrepreneurship, boost Make in India, and make India a global financial hub.
11. Infrastructure Gets a Capital Boost
- Tax exemption extension for Sovereign Wealth Funds and Pension Funds investing in Indian infrastructure until March 31, 2030
This will fuel long-term investments into roads, railways, logistics, and energy sectors, with cascading benefits for employment and GDP.
12. Capital Gains: Parity for NRIs
- Long-term capital gains tax parity introduced for non-resident investors
This improves investor confidence and aligns with the objective of ease of doing business globally.
13. Relief for Small Businesses:
- No TCS on sale of specified goods worth more than ₹50 lakh
A clear signal to support MSMEs and bring informal transactions into the tax net without creating new burdens.
Final Thoughts
The Union Budget 2025-26 doesn’t try to be all things to all people — and that’s precisely why it’s effective. It shows a clear preference for:
- Tax simplification
- Trust-based governance
- Empowering the middle class
- Ease of doing business
- Encouraging voluntary compliance
For the common man, this translates to less tax, less paperwork, and more peace of mind.
As a tax practitioner, I view this budget as a balanced blend of relief and reform. While it may cost the exchequer nearly ₹1 lakh crore in revenue, the long-term benefits of increased compliance, transparency, and taxpayer goodwill are immeasurable.
Have Questions?
Feel free to reach out or drop your queries in the comments. Whether you’re salaried, self-employed, or retired — let’s discuss how this Budget impacts you.
