Budget 2025 Expectations: Key Expectations and Budget 2025 Date
The Union Budget 2025 is almost here, set to be presented on February 1, 2025 by Finance Minister Nirmala Sitharaman. It’s a much-anticipated event for salaried individuals, businesses, and industries likewise. This year’s budget will play a crucial role in shaping India’s economic policies and is expected to focus on boosting economic growth, aligning with the vision of ‘Viksit Bharat’ by 2047.
In this blog, let’s explore what to expect and how it might impact various stakeholders.
Table of content
1. Income Tax Reforms: Relief for Taxpayers
Taxpayers across India are hoping for significant reforms in income tax policies. Here are some expectations:
Revised Income Tax Slabs
There is widespread speculation that the government might modify income tax slabs to reduce the burden on middle-class taxpayers.
The new tax regime, introduced a few years ago, is expected to become more attractive by adding most common deductions and exemptions to it.
Increased Section 80C Limits
The current limit of Rs 1.5 lakh for deductions under Section 80C has remained unchanged for years. Taxpayers are hoping for this to be increased to Rs 2 lakh or more, encouraging higher savings and investments in PPF, ELSS, and other instruments.
Higher Deduction for Home Loan Interest
Currently, individuals can claim up to Rs 2 lakh as a deduction on home loan interest under Section 24(b). The expectation is that this limit will increase to Rs 3 lakh, making homeownership more affordable with time.
Enhanced Benefits Under Section 80D
With rising healthcare costs, tax deductions for health insurance premiums under Section 80D might see a rise. The limit could increase from Rs 25,000 to Rs 50,000 for individuals and from Rs 50,000 to Rs 1 lakh for senior citizens.
2. Corporate Tax Reforms
Businesses are eagerly awaiting announcements regarding corporate tax rates. Some potential measures include:
A further reduction in corporate tax rates to attract more foreign investments and boost competitiveness.
Startups and MSMEs might receive additional tax relief and incentives to promote entrepreneurship and innovation.
Increased support for industries involved in R&D, green energy, and digital transformation.
3. Infrastructure Development: Driving Economic Growth
The government is expected to significantly increase its capital expenditure on infrastructure projects to drive economic growth. Key areas of focus include:
Highways and Railways: Increased budget allocations to expand and modernize transportation networks.
Green Infrastructure: Investments in renewable energy projects and sustainable urban planning.
Smart Cities: Boosting urban development through smart city initiatives, focusing on digital connectivity and efficient resource management.
4. GST Reforms: Simplifying Tax Compliance
The Goods and Services Tax (GST) is another area where reforms are anticipated:
Simplification of GST Slabs: There is hope for a streamlined GST structure, reducing the current complexity of multiple slabs.
Sector-Specific Relief: Industries like hospitality and tourism, which are still recovering from recent disruptions, are expecting GST rate cuts to stimulate demand.
Improved Refund Process: Making GST refunds faster and more transparent for businesses.
5. Subsidies to Combat Inflation
To address rising living costs, the government is expected to increase subsidies. Potential announcements include:
Higher subsidies for essential commodities like food, fertilizers, and cooking gas.
Increased support for rural and agricultural communities to stabilize prices and ensure food security.
6. Sector-Specific Budgetary Expectations
Real Estate
Affordable housing schemes might receive additional incentives to encourage first-time homebuyers.
Relaxation in taxation norms for developers to boost the real estate sector.
Automobiles
To promote electric vehicles (EVs), the budget may introduce higher subsidies, tax incentives, and increased spending on EV infrastructure, like charging stations.
Healthcare
Greater allocations are expected for public healthcare infrastructure, especially in rural areas.
Incentives for private sector partnerships to improve access to quality healthcare services.
Agriculture
Increased budgetary support for irrigation projects, crop storage facilities, and modern farming techniques.
Special incentives for organic farming and exports.
7. Social Welfare and Employment Generation
The government might introduce or expand welfare schemes focusing on education, skill development, and job creation. Digital literacy initiatives and e-governance programs could also see a push to empower rural areas.
8. Digital Economy and Startups
India’s digital economy is growing rapidly, and Budget 2025 could provide a significant boost:
Tax incentives for startups in fintech, edtech, and health tech sectors.
Increased allocation for digital infrastructure, including 5G expansion and rural internet connectivity.
Simplified compliance procedures for startups to encourage innovation.
Conclusion
As the Budget 2025 date, February 1, 2025, approaches, the excitement around its announcements continues to grow. From tax reforms to infrastructure spending, this budget could bring transformative changes for individuals, businesses, and the nation as a whole. Keep an eye out for the announcements and start planning your finances accordingly.
Looking for expert advice on taxes or investments post-Budget 2025? TaxBuddy is here to help you make the most of the new changes!
FAQs
1. When is Budget 2025 being presented?
The Union Budget 2025 is scheduled to be presented on February 1, 2025.
2. Who will present Budget 2025?
Finance Minister Nirmala Sitharaman will present the Union Budget 2025.
3. What are the key expectations for Budget 2025?
Key expectations include income tax reforms, increased infrastructure spending, GST rationalization, and higher subsidies to address inflation.
4. Will there be changes in income tax slabs?
There is speculation that income tax slabs may be revised to provide relief to middle-class taxpayers.
5. What changes are expected in Section 80C deductions?
The deduction limit under Section 80C might increase from Rs 1.5 lakh to Rs 2 lakh or more to encourage savings.
6. Are there any benefits for homebuyers in Budget 2025?
Yes, the government might raise the tax deduction limit on home loan interest from Rs 2 lakh to Rs 3 lakh.
7. What changes were introduced in the New Tax Regime in 2024?
In the July 2024 Budget, the government raised the basic exemption limit under the New Tax Regime from Rs 2.5 lakh to Rs 3 lakh. Standard deductions, which were already available to salaried employees, were increased to Rs 75,000.
8. Were there any changes in TDS rules in 2024?
Yes, the TDS threshold for interest income was increased from Rs 40,000 to Rs 50,000 for senior citizens. Additionally, the TDS rate for contractual work was reduced from 10% to 8%.
9. How will GST changes impact small businesses?
Small businesses might benefit from simplified GST compliance and faster refunds, encouraging growth in the MSME sector.
10. How did July 2024 Budget address capital gains tax?
The government increased the tax on short-term capital gains for equity investments to 20% and long-term gains to 12.5%, effective October 2024.
11. What changes were introduced for property taxation?
A new option allowed taxpayers to choose between a 12.5% long-term capital gains tax without indexation or a 20% tax with indexation benefits for property sales post-July 2024.
12. What is the new holding period for capital assets in Budget 2024?
For classifying assets into long-term and short-term, there will only be two holding periods: 12 months and 24 months. The 36-month holding period has been removed. The holding period for all listed securities is 12 months, meaning all listed securities held for more than 12 months are now considered long-term. The holding period for all other assets is 24 months.
13. What is expected for electric vehicles (EVs) in Budget 2025?
Higher subsidies and tax benefits for EVs, along with increased spending on charging infrastructure, are anticipated.
14. How will Budget 2025 address inflation?
The government may increase subsidies on essential commodities like food, fertilizers, and cooking gas to ease inflation.
15. What support is expected for startups?
Startups may benefit from tax rebates, easier compliance procedures, and better access to funding, especially in fintech and edtech sectors.
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