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WHAT TO EXPECT IN BUDGET 2025?

Jan-27-2025Blog by – Mr. Dhruv AjmeraRead Time: 3 Min.Word Count: 358
16WHAT TO EXPECT IN BUDGET 2025?

India will get to know about what the budget beholds for its citizens on February 01st 2025

However here in this page we will discuss and post what we expect and need as a country from this Budget


  1. Economic Push


To achieve sustainable growth in FY26, the government must prioritize reducing the fiscal deficit to 4.5% of GDP in FY26 while reducing the debt-to-GDP ratio, which stands at 54.4%, well above the FRBM target of 40%. A medium-term real GDP growth target of 6.5% or higher may require boosting the aggregate investment rate (GFCF) measured at constant prices to 34%. This may be achieved by increasing government’s capital expenditure, improving capital efficiency and encouraging states to enhance their investment spending. To stimulate private sector investment, a progressive reduction in interest rates maybe be considered. Additionally, targeted employment schemes might be fast-tracked to uplift urban demand and support economic momentum in FY26.


  1. Tax Simplification

As a part of tax law simplification exercise, in the previous budget, TDS rate rationalization was undertaken to a certain extent. To further simplify the entire gamut of withholding tax provisions, TDS rate structure could be divided into three to four broad categories with lower rates and a negative list.


In the Union Budget 2024 presented in July, government had rationalized the capital gains structure in terms of holding period of assets and tax rates. The government may further address some of the unintended anomalies to make the rationalization of capital gains more complete. For instance, the holding period for capital assets, such as business undertakings in slump sales may be reduced from 36 months to 24 months and unlisted shares in IPO Offer for Sale (OFS) (from two years to one year), aligning them with listed securities. Exemptions for sovereign wealth and pension funds investing in infrastructure should be clarified to preserve their eligibility for long-term capital gains benefits.




  1. Proposed tax Releifs

The upcoming budget should focus on personal tax relief by raising the basic exemption limit in the new tax regime from ? 3 lakh to ? 5 lakh and reducing tax rates. Clarifications on the perquisite valuation for EVs and clear guidelines for the taxation of cryptocurrency and non-fungible tokens (NFT), including the treatment of virtual digital asset (VDA) losses, are needed. The cap on the set-off of house property losses against other heads should also be removed. Including tier-2 cities like Hyderabad, Pune, Bengaluru, and Ahmedabad in the HRA exemption at 50% will provide tax parity. Further simplification is needed for employer contributions exceeding ? 7.5 lakhs to specified funds. Deferring TDS on PF interest (above ? 2.5 lakhs) until the withdrawal stage will reduce compliance burdens. The ESOP tax deferment benefit should be extended to all employers, allowing tax payment at the sale stage.

Further 

 The government Should consider two key options to make the new tax regime more appealing. 

The first is to raise the standard deduction limit from ? 75,000 per annum, providing immediate relief to salaried and pensioned individuals.

The second option could involve an adjustment in the tax slabs in the new regime. Within this option, there are two proposals under discussion. One is to expand the 20% tax slab to include individuals earning between ? 12 lakh and ? 18 lakh or ? 20 lakh annually. Secondly, following the first proposal, the 30% tax rate could be imposed on incomes exceeding ?18 lakh or ? 20 lakh," sources said.

Also Further

It is expected that the government will increase the limit under Section 80C from ? 1.5 lakhs to ? 2 lakhs, which has remained unchanged since 2014.

The government may increase the deduction limit under section 24(b) on interest on home loans from  ? 2 lakhs to ? 3 lakhs to promote homeownership and help the growth of the real estate sector.


  1. Improvement in Hospitality Sector

Investments in wellness infrastructure, green initiatives, and job creation are key. A reduction in GST from 18% to 12% for hotels with room rates above  ? 7,500 would provide a significant boost to both domestic and inbound tourism. We also call for a focus on tourism and infrastructure investments, ease of doing business, enhanced connectivity, and streamlined tax rates. Sustainable tourism initiatives should be incentivized through renewable energy investments and targeted sector-specific policies. Tax relief on operational expenses and improved access to credit will further encourage innovation and business growth.


  1. Health  Insurance Deductions for old and new regime


Increasing deduction limits for health insurance premiums to ?50,000 for individuals and ?1,00,000 for senior citizens,” noting this would align with rising medical costs and provide significant relief.

“extending Section 80D deductions to all taxpayers, irrespective of the chosen tax regime,” to promote broader health insurance adoption under the government’s “Insurance for All” vision.


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