Budget 2025 Expectations

With the unveiling of the Union Budget 2025 around the corner, Budget expectations in India are at an all-time high among taxpayers, especially middle-class families, waiting for tax reforms to ease their financial situation. Individuals and experts alike are hopeful that the new budget will usher in major income tax changes, additional tax benefits and changes to the old regime. 

Union Finance Minister Nirmala Sitharaman is set to present the Union Budget at 11 a.m. on Saturday, February 1, 2025, in parliament. Here are the top items on the wishlist of most people in the country. 

Top Expectations from Budget 2025

Individuals, businesses, experts, and industry stakeholders have all voiced their wishlists regarding the new Union Budget. Here are the most popular budget expectations for 2025 across different sectors: 

Changes in Personal Income Tax Rules

Due to recent high inflation, many people have asked for income tax relief in the upcoming Union Budget. Experts agree that financial relief to low-income and middle-income groups will boost household income and consumption. The Union Budget could make minor changes to the existing income tax slabs, making annual incomes of up to ₹10 lakh tax-exempt. 

Here are other popular income tax budget expectations for salaried employees:

• Increase in the basic exemption limit
• Increase in the standard deduction amount
• Changes in tax slabs under the old regime
• Relief in long-term capital gains tax

Increased Capital Expenditure on Infrastructure

As India strives to become a $7 trillion economy by 2030, the government will likely focus on infrastructure growth and development in the country. By increasing capital expenditure, the government can develop urban infrastructure in tier-II and tier-III cities and provide last-mile connectivity. 

The government may introduce measures to speed up the implementation of PM Gati Shakti, creating more efficient supply chains and reducing transportation costs. This will require investments in railways, highways, ports and metro rails. 

Boosting Cybersecurity and Digital Infrastructure

For experts and representatives in the banking and financial sector, the top budget expectation in India is for a huge investment in digital infrastructure. Alongside, the government needs to develop robust cybersecurity frameworks and innovative, forward-looking regulations. These measures will enable responsible lending practices, safeguard investors’ trust and enable new tech-enabled solutions. 

Reduced Taxation and Increased Investments in the Healthcare Sector

Representatives of the healthcare sector are seeking more investments and lesser taxes to boost the healthcare sector and improve the quality of lives of Indians. The government could increase its share of healthcare spending in terms of gross domestic product (GDP) to improve healthcare in rural India and tier-II and tier-III cities. 

Experts are calling for strengthening primary and secondary healthcare systems, creating new public awareness campaigns, and lowering taxes on insurance premiums. 

Developing Smart Cities and Industrial Corridors

Another top expectation from Budget 2025 among industry veterans is the continued development of and investment in smart cities and industrial corridors. For this, the government needs to invest more capital in water supply systems, transportation, technology innovation and renewable energy. 

A stronger push into renewables, including green hydrogen, offshore wind, solar and small modular reactors, would bolster long-term energy security and self-reliance. Other areas where capital could be deployed include the modernisation of ports, the promotion of clean technologies and the development of industrial clusters. 

Significant Investments in AI Research 

For the education sector, the top demands among industry stakeholders are increased investments in AI research, improvements in digital infrastructure and rationalisation of GST rates. Increased allocation is necessary both for stakeholders in the education sector as well as for meeting the goals of NEP 2020. 

Due to the proliferation of AI, India's workforce needs to be upskilled and reskilled to ensure they remain competitive in the global landscape. Significant investments are also required for AI research, with a focus on developing large language models (LLMs) and developing AI chips domestically. 

Tax Reforms and Financial Inclusion for MSMEs

As India aims to become a global manufacturing hub, the government needs to address various systematic inefficiencies and bottlenecks in the MSME sector. One of the top budget expectations in India includes a revamp of the GST payment structure, which overburdens small businesses. Simplification of the GST rates and GST liability of buyers would alleviate some of these challenges. 

In addition, industry experts want the government to create new microfinance schemes and exclusive liquidity windows for NBFCs to boost the financial inclusion of MSMEs. Tax reforms such as relief on TDS will also boost credit availability for MSMEs.

Allocating Funds For Skilling Initiatives

With the rise of skill-based hiring and changing technologies, there is a need for improvements in skill development. According to the Confederation of Indian Industry (CII), the government should form a comprehensive National Employment Policy to consolidate various employment-generating policies. Policy support with incentives and flexible work arrangements would boost female employment. 

The Union Budget is likely to announce the allocation of funds to skilling initiatives, adding to the ₹4,520 crore allocated to the Ministry of Skill Development and Entrepreneurship. A greater focus on the distribution of funds through each state will help the country's workforce. 

Affordable Housing Initiatives

To address the rising cost of housing in metro cities, the government may offer additional support through RBI's priority sector lending segment. Many Indian cities such as Bengaluru, Delhi-NCR, Chennai and Hyderabad are almost devoid of any affordable housing. 

Experts agree that increasing the home loan limit of ₹20 lakh for affordable houses would increase accessibility and address rising land costs. The government may also increase the interest subsidy on the Pradhan Mantri Awas Yojana (PMAY) and provide direct a subsidy for home construction. 

Benefits for Senior Citizens 

As the elderly population of India is set to grow by 22% in the next 6 years, tax relief and investment scheme benefits are the top new budget expectations of senior citizens. Since senior citizens are usually not working, higher tax relief on annuity products and retirement schemes like the National Pension Scheme (NPS) and Senior Citizen Savings Scheme (SCSS) would put more money in the hands of the elderly. 

Higher interest rates of government schemes for the elderly would also help that segment of the population deal with the effects of rising inflation. Given the rising healthcare costs, an increase in tax benefits on health insurance premiums under Section 80D would reduce the financial burden of senior citizens.

And Finally…

With the Union Budget around the corner, everyone, from individuals to experts and stakeholders has been presenting their Budget expectations in India for FY2025-26. People from various sectors have voiced their concerns and hopes with the aim of encouraging the government to take steps to grow the economy and ease people's financial burden. 

Disclaimer: The content of the blog is only for educational purposes. Any investments/securities mentioned in the blog are not recommendatory.