As we all know the Union Finance Minister Nirmala Sitharaman is scheduled to present the Union Budget 2025 on February 1, 2025, at 11:00 AM IST. This will mark her eighth budget presentation, including six full budgets and two interim ones.
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Big Expectations From Budget 2025
Tax Relief for Individuals: Expectations from Budget 2025
As the government gears up for the presentation of Budget 2025, individual taxpayers are optimistic about potential relief measures. The following are some key expectations that individuals may have for tax relief in Budget 2025:
Increase in Basic Exemption Limit
Currently, the basic exemption limit under the old tax regime is ₹2.5 lakh (₹3 lakh for senior citizens and ₹5 lakh for super senior citizens). Taxpayers are hopeful for an increase in this threshold to ₹3 lakh or ₹5 lakh to account for inflation and rising living costs.
Revision of Section 80C Limit
The deduction under Section 80C of the Income Tax Act, capped at ₹1.5 lakh, has remained unchanged since FY 2014-15. Individuals expect a revision of this limit to at least ₹2.5 lakh, offering more room for savings and investments in eligible instruments such as:
- Public Provident Fund (PPF)
- National Pension System (NPS)
- Life insurance premiums
- Equity Linked Savings Schemes (ELS)
Enhanced Standard Deduction
The current standard deduction for salaried individuals and pensioners is ₹50,000. An increase to ₹75,000 or ₹1 lakh could provide significant relief to the salaried class, especially amidst rising inflation.
Higher Deduction for Health Insurance Premiums (Section 80D)
With rising healthcare costs, taxpayers hope for a higher deduction under Section 80D for health insurance premiums:
- From ₹25,000 to ₹50,000 for individuals
- From ₹50,000 to ₹75,000 for senior citizens
Enhanced Tax Benefits for Housing
Affordable housing remains a major focus area, and taxpayers may expect:
- Increase in the deduction limit on housing loan interest under Section 24(b) from ₹2 lakh to ₹3 lakh.
- Extension or renewal of special benefits under Section 80EE for first-time homebuyers.
Rationalization of New vs. Old Tax Regime
While the new tax regime introduced in Budget 2020 offers lower tax rates without exemptions, its adoption has been limited. Individuals anticipate:
- Tweaks to make it more attractive, such as allowing specific exemptions/deductions.
- Increased income thresholds in the slab rates for both regimes.
Introduction of Tax-Saving Instruments for Millennials
Younger taxpayers may seek innovative instruments aligned with modern financial goals, such as:
- Incentives for investing in ESG funds or green bonds.
- Deductions for expenses on electric vehicles (EVs) under existing or new sections.
Reduction in Surcharge and Cess
High-income earners may expect a rationalization of the current surcharge and cess rates, especially in light of the increased tax outgo due to these levies.
Relief on Capital Gains Taxation
- Simplification and rationalization of the taxation system for long-term and short-term capital gains.
- Introduction of a uniform holding period for long-term gains across asset classes.
Additional Measures
- Higher deductions for expenses related to work-from-home setups for salaried individuals.
- Relaxation or higher thresholds for exemption limits on family pensions.
- Tax benefits for parents paying tuition fees or educational loans due to escalating education costs.
Reducing Excise Duty on Fuel: Expectations from Union Budget 2025
As India gears up for the presentation of the Union Budget 2025, all eyes are on the measures the government might adopt to address fuel prices—an issue that significantly affects both individual consumers and the economy at large. High fuel prices have been a consistent concern for citizens and industries, and a reduction in excise duty is a much-discussed potential policy move.
Discussions around bringing petrol and diesel under the GST regime could offer a more uniform and lower taxation framework, reducing the dependence on excise duties.
Tackling Dumping by China
Tackling dumping by China is a critical issue, especially for sectors facing intense price competition due to imports. If this concern is addressed in Budget 2025, here’s what you might expect:
Strengthened Anti-Dumping Duties
- Objective: Protect domestic industries, such as steel, chemicals, and electronics, from the adverse impact of underpriced imports.
- Likely Action:
- Expansion of the list of products eligible for anti-dumping duties.
- Shortening the review period for imposing and reviewing duties to respond quickly to dumping cases.
- Outcome: Encourage fair competition and level the playing field for Indian manufacturers.
Customs Policy Adjustments
- Enhanced tariff structures on specific imported goods to curb unfair pricing without violating WTO norms.
- Introduction of non-tariff measures, like stringent quality standards and certifications, to ensure imports meet domestic norms.
Production-Linked Incentives (PLI)
- Increased budget allocation to PLI schemes targeting industries vulnerable to dumping, such as:
- Renewable energy equipment
- Automotive parts
- Electronics
- Focus on promoting self-reliance and increasing exports.
Support for Domestic Industry
- Funding and subsidies for innovation, research, and technology upgradation in sectors like manufacturing and chemicals to improve global competitiveness.
- Incentivizing MSMEs to adopt modern production methods.
Trade Policy Coordination
- Integration of anti-dumping measures with overall trade policy.
- Enhanced engagement with WTO mechanisms to streamline dispute resolution processes for dumping cases.
Data-Driven Monitoring
- Creation of a real-time trade analytics platform to track imports and dumping trends effectively.
- Implementation of AI-based systems to flag discrepancies in import pricing and volume.
Key Expectations
If the government aligns its budget policies with industry demands, measures tackling dumping can:
- Boost domestic employment.
- Encourage long-term capital investments.
- Strengthen India’s position in global supply chains.
The final implementation will require balancing protectionist policies with commitments to free trade under international agreements. Would you like an analysis on specific industries or additional measures?