As India gears up for the much-anticipated Union Budget 2025-26, all eyes are on Finance Minister Nirmala Sitharaman, who will present the budget on February 1, 2025. This marks the first full-fledged budget of the new Modi government after securing a third consecutive term in May 2024. Expectations are high across industries, with a strong focus on tax relief, economic growth, and simplified compliance processes.
Here’s a deep dive into the major expectations from Budget 2025, covering tax reforms, sector-specific demands, and economic policies that could shape India’s financial future.
1. Tax Reforms & Simplification
1.1 Lowering GST on Key Sectors
Industry leaders are calling for lower GST rates, especially in sectors like real estate, healthcare, and insurance. Tax structure reforms and easing of input tax credit could provide much-needed relief to businesses and consumers alike. The real estate industry, in particular, expects GST reductions and enhanced access to housing finance to support its projected $1 trillion growth by 2030.
1.2 Increase in Section 80C & 80D Limits
Taxpayers are urging the government to increase the Section 80C deduction limit from ₹1.5 lakh to ₹5 lakh to boost savings and investment. Similarly, there is a strong demand to raise the Section 80D limit for health insurance premiums from ₹25,000 to ₹50,000 and reduce GST on insurance premiums from 18% to 5% to enhance affordability.
1.3 Scrapping the Old Income Tax Regime & Simplifying Direct Taxes
Experts suggest phasing out the old tax regime and lowering the tax burden on the middle class. Proposals include reducing the average tax rate to 10% for incomes up to ₹20 lakh and ensuring better synchronization between direct and indirect taxes to eliminate multiple taxation on the same income.
1.4 Revised Income Tax Slabs & Rebates
There is a push for raising the minimum tax slab from ₹3 lakh to ₹5 lakh under the new tax regime. Additionally, the 100% rebate currently available to individuals earning up to ₹7.5 lakh should be extended to ₹10 lakh to provide more disposable income to middle-class taxpayers.
2. Boosting Investments & Economic Growth
2.1 Incentives for Startups & MSMEs
The government is expected to extend the sunset clause under Section 80-IAC, which allows startups to claim a 100% tax deduction for three consecutive years. Additionally, tax incentives for green tech, AI, and blockchain startups could encourage innovation and attract foreign investment.
2.2 Capital Gains & Real Estate Tax Reforms
The real estate sector seeks higher exemptions on long-term capital gains (LTCG) for share sales and easier tax processes for non-resident property sellers to boost liquidity in the housing market. Simplifying TDS obligations on property transactions and reducing bureaucratic hurdles could further streamline real estate investments.
3. Simplifying Compliance & Digital Integration
3.1 Streamlining TDS & GST Processes
Industry experts are calling for simplification of TDS/TCS regulations, particularly under Sections 194Q and 206C(1H), to reduce compliance burdens for businesses. The introduction of automated tracking mechanisms for rectifications and appeals is also being sought to ensure faster resolution of tax disputes.
3.2 Enhanced Digital Infrastructure for Tax Compliance
With India’s rapid digital transformation, there is a need for AI-driven tax compliance tools that automate return filings, identify deductions, and improve overall efficiency. Expanding e-invoicing frameworks and integrating GST compliance with banking systems could further reduce errors and fraud.
Conclusion: A Budget That Drives Growth & Inclusivity
The Union Budget 2025 is expected to focus on tax rationalization, compliance simplification, and strategic investments to strengthen India’s economy. With reforms in income tax, GST, real estate, healthcare, and startups, this budget has the potential to shape a more resilient, inclusive, and growth-oriented financial future for the country.
Stay tuned for the Union Budget 2025! All updates and detailed analysis will be available on your official website under the ‘Budget Corner – Union Budget 2025.’