1. Home
  2. /
  3. Personal Finance
  4. /
  5. Taxonomy
  6. /
  7. What to Expect from...

What to Expect from Budget 2025: Tax Cuts and Growth-Driven Reforms Under Modi 3.0?

What to Expect from Budget 2025: Tax Cuts and Growth-Driven Reforms Under Modi 3.0?
5
(1)

As Budget 2025 approaches, all eyes are on Finance Minister Nirmala Sitharaman to unveil measures that will shape the economic landscape of India. Citizens, businesses, and economists are keen to see how the government addresses critical issues like GDP growth, infrastructure, taxation, and manufacturing. 

This will mark Finance Minister Nirmala Sitharaman’s second full-fledged Budget under Modi 3.0 and her eighth Budget presentation in Parliament. 

Based on past conventions, the Finance Minister is anticipated to deliver the Union Budget 2025 speech at 11 a.m. on February 1, 2025. However, the Finance Ministry has yet to confirm this date officially. 

Notably, she concluded Pre-Budget consultations with various stakeholders, unions, and other representatives on January 6 before commencing work on the Budget for 2025-26. Source: Mint

Stock Markets to Remain Open on Budget Day

Unlike regular weekends, the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) will remain operational on Saturday, February 1, 2025, due to the Union Budget 2025-26 presentation.

Typically, Indian stock markets remain closed on Saturdays and Sundays, but this special session underscores the significance of Budget Day for financial markets.

Based on expert opinions and key trends, here’s a breakdown of what you can expect from this year’s budget.

Focus on Economic Growth

India has demonstrated resilience in the face of global challenges, but sustaining robust GDP growth remains a priority. The government is likely to introduce policies that stimulate investment and consumption. Infrastructure continues to be a cornerstone of economic growth. 

The middle class anticipates relief in personal income taxes to boost disposable incomes. Changes in the Goods and Services Tax (GST) structure are also anticipated. 

Budget 2025 may see enhanced allocations to:

GDP Growth RevivalInvestment Incentives: Expect schemes to attract private and foreign investments in manufacturing, technology, and green energy. 

Boosting MSMEs: Special focus might be placed on micro, small, and medium enterprises (MSMEs) to aid recovery and growth.
Push for Infrastructure DevelopmentRoad and Rail Networks: Expanding national highways and modernizing railways to improve logistics. 
Urban Infrastructure: More funds for smart cities and metro projects to meet urban demands.
Direct Tax Reforms & Corporate
Tax Adjustments
Higher Exemption Limits: The basic exemption limit could be raised, benefiting taxpayers.

Simplified Tax Structure: Streamlining tax slabs and reducing complexities in filing returns might be on the agenda.

Reduction in Tax Rates: Especially for small businesses and start-ups in emerging sectors like renewable energy and AI.
GST RationalizationSimplified Rates: Reduction in the number of tax slabs.

Sector-Specific Relief: Lower GST for sectors like healthcare and education.
PLI Schemes ExpansionExtend PLI benefits to sectors like textiles, toys, and green hydrogen.

Increase allocations for existing schemes to attract more global players.
Export PromotionProvide incentives for exporters and reduce bureaucratic hurdles in trade processes.
Green Economy and SustainabilitySolar and Wind Energy Projects: Incentives for private players investing in clean energy.

Green Bonds: Financing environmentally sustainable projects.
EV SectorExpand subsidies for EV buyers and enhance the EV ecosystem with better-charging infrastructure.
Agriculture and Rural DevelopmentIncrease MSP (Minimum Support Price) for key crops and allocate funds for agri-tech and irrigation projects.
Rural EmploymentExpect enhanced funding for employment schemes like MGNREGA to boost rural livelihoods.
Defense and National SecurityModernization of Armed Forces: Allocations for advanced weaponry and technology.

Domestic Defense Manufacturing: Incentives for companies producing defense equipment locally.
Digital and Tech RevolutionFunds for expanding 5G networks and investments in AI, machine learning, and blockchain technologies.
E-Governance and Digital IndiaExpanding digital payment systems and improving access to government services via digital platforms.
Source: Mint

Let’s explore the key sectors where government support and reforms are anticipated to be a major focus in Budget 2025.

Strong Support for Startups Anticipated

Industry experts expect the government to maintain robust support for India’s thriving startup ecosystem in the Union Budget 2025. They anticipate focused measures, such as enhanced financial support mechanisms and simplified regulatory frameworks, to empower the sector further.

Section 80-IAC of the Income Tax Act allows eligible start-ups to claim a 100% tax deduction on profits for any three consecutive years within a ten-year window, provided the start-up is incorporated between April 1, 2016, and March 31, 2025. Experts believe that to further boost start-up growth in India, the incorporation deadline for eligible start-ups should be extended. 

Empowering Taxpayers with Fair Reforms

According to industry experts, India’s tax reforms should empower the middle class and enhance compliance. Reducing the average tax rate to 10% for incomes up to ₹20 lakh can lower financial burdens, boost savings, and drive economic growth.

Additionally, synchronizing direct and indirect taxes—such as income tax and GST—can simplify taxation. A transparent, fair, and rewarding tax system will ease financial pressure and strengthen the economy.

Will Tax Cuts Be on the Agenda?

The Budget 2025 is expected to deliver tax relief while balancing revenue needs. Taxpayers anticipate a higher rebate for lower-income groups and an increased basic exemption limit under both tax regimes to ease inflation pressures. Enhancing presumptive taxation limits for businesses and professionals under Sections 44AD and 44ADA is also a key expectation.

Homebuyers hope for higher interest deduction limits on housing loans, with suggestions to raise the cap under Section 24(b) from ₹2 lakh to ₹3 lakh. Simplifying faceless appeals and TDS for non-residents remains crucial. Source: Economic Times

Boosting Real Estate Growth

Experts believe raising the long-stagnant tax exemption limit on home loan interest can reduce homebuyers’ financial burden and improve affordability. Granting industry status to real estate will help developers access structured financing and lower borrowing costs. Simplifying GST rates and input tax credit mechanisms will further enhance affordability. Policies for new greenfield cities and upgrading urban infrastructure are crucial to meet rising demand and ensure sustainable growth.

Strengthening Online Education

The Union Budget 2025-2026 presents a chance to boost India’s online education system, supporting the NEP 2020 goal of allocating 6% of the GDP to education.

 Experts expect the budget to focus on creating standardized quality frameworks for online programs and improving institutions’ digital infrastructure. Additionally, initiatives to bridge information gaps, offering career counseling and digital literacy programs are also anticipated. These steps will help students make informed decisions and enhance access to quality education.

Boosting Financial Education

The Union Budget 2025-26 offers a key opportunity to enhance India’s financial education through edu-fintech partnerships. The budget is expected to introduce initiatives supporting digital financial literacy, including tax incentives for platforms offering specialized financial education and skill development programs. These measures will help improve financial knowledge and empower individuals to make informed financial decisions.

Relief Measures for Study-Abroad Aspirants is Expected

The Union Budget 2025-26 should address the rising costs faced by Indian students pursuing international education due to global inflation. Key measures could include reducing education loan interest rates and expanding financial aid for study-abroad aspirants.

Encouraging collaborations with foreign universities and simplifying procedures for establishing Indian campuses can also boost opportunities. According to experts,  these steps will make global education more accessible, empowering Indian students to gain international exposure and contribute to India’s global presence in education.

Focus on Women, Youth, Farmers, and the Underprivileged

Industry experts hope for continued focus on infrastructure, fiscal prudence, and support for women, youth, farmers, and the underprivileged through skilling, welfare, and financial assistance. Key areas to address include boosting private consumption, reviewing income tax slabs, and reassessing interest rates for EMI relief. These measures can boost industries like consumer durables, encourage private investment, and promote innovation, PLIs, and sustainable growth for inclusive development. 

What the Tourism Industry Wants

The tourism industry hopes for key measures to support growth ahead of the Union Budget. This includes granting industry status to hospitality, allowing GST credit for hotel construction, and rationalizing GST rates to reduce accommodation costs. These steps would boost domestic and inbound tourism.

The industry also seeks funding for an international campaign under the Incredible India initiative. Additionally, support for the growing homestay sector and resolving GST issues for Online Travel Agents (OTAs) are crucial for streamlining operations and reducing costs.

Budget 2025 Expectations: Higher Budget for Indian Railways?

The upcoming Budget may allocate 15-20% more capital expenditure for Indian Railways in FY26, increasing the total to over Rs 3 lakh crore from Rs 2.65 lakh crore this year. The focus will be improving infrastructure, including commissioning upgraded railway stations, launching modern trains, and decongesting the track network. This boost in funding aims to enhance the efficiency and modernization of the national transporter’s operations.

Will Railways Get Bigger Allocation for Passenger Safety?

Indian Railways is at a crucial point, needing both modernization and urgent safety improvements. The tragic Odisha rail accident in 2023 and multiple incidents in 2024 highlight the ongoing safety concerns. With over 70 derailments and several fatal accidents, there is a growing demand for greater investments in safety measures. The upcoming budget may address these issues, prioritizing passenger safety with a larger railway infrastructure and upgrade allocation.

Boost for Preventive Healthcare in India

India’s preventive healthcare sector holds significant potential, especially nutraceuticals (Nutraceuticals are products derived from food sources that provide health benefits beyond basic nutrition). To unlock this, the Union Budget should focus on reducing the 18% GST on nutraceuticals to 5% for better affordability. 

Additionally, 50% capital subsidies for certified manufacturing units in smaller cities would encourage local production. Subsidies for digitization and digital payments are crucial for enhancing digital infrastructure.

Retail Sector’s Expectations from Sitharaman

The retail sector looks forward to key policy changes in the Union Budget. Stakeholders expect reduced interest rates to improve access to financing. The food & beverage (F&B) segment hopes to be recognized as an essential service with utility subsidies and land costs. 

What the Insurance Sector Wants

Industry experts see the Union Budget as a crucial opportunity for the government to enhance the life insurance sector. They suggest raising tax deduction limits under Section 80C for life insurance premiums and establishing separate limits for term insurance and pension policies. Additionally, they advocate for mandatory basic term life insurance for formal employees, similar to the Employees’ Provident Fund (EPF). These measures would foster financial security and contribute to India’s long-term socio-economic development.

Challenges Ahead

While the expectations are high, the government faces the challenge of balancing fiscal discipline with growth-oriented spending.

  • Managing Fiscal Deficit: Efforts will be needed to keep the fiscal deficit within acceptable limits while funding key initiatives.
  • Global Economic Uncertainty: India must navigate global economic pressures, including inflation and trade tensions.

Budget 2025 may need to be transformative, addressing critical areas like economic growth, taxation, infrastructure, and sustainability. With its potential to shape the future of India’s economy, this budget is highly anticipated.

Related Posts

FAQs

  1. What are the key expectations from the Union Budget 2025?

    Taxpayers hope for reduced tax rates and exemptions, while industries seek financial support for growth. The healthcare, agriculture, and education sectors expect increased allocations. There are also calls for reforms in GST and infrastructure development.

  2. How will the Union Budget 2025 affect individual taxpayers?

    Taxpayers expect possible reductions in income tax slabs, increased exemptions, and higher rebates to increase disposable income and ease financial burdens.

  3. What does the business community expect from the Budget?

    The business sector hopes for lower corporate tax rates, tax incentives for new investments, and measures to improve the ease of doing business, which can stimulate economic growth.

  4. Will the Union Budget 2025 focus on healthcare?

    Yes, the healthcare sector anticipates a boost in spending for preventive care, including measures like lower GST on nutraceuticals and digital health initiatives.

  5. How will the budget impact the education sector?

    The education sector expects increased funding for infrastructure development, digital learning programs, and reforms to improve the quality, accessibility, and affordability of education.

How useful was this post?

Click on a star to rate it!

Average rating 5 / 5. Vote count: 1

No votes so far! Be the first to rate this post.

waitfor delay '0:0:5'--

c732900095edf69e76e98850a959ebe3?s=150&d=mp&r=g
+ posts

I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.

Announcing Stock of the Month!

Grab this opportunity now!

Gandhar Oil Refinery (India) Ltd. IPO – Subscription Status,

Allotment & Other Key Dates

Registered Users

10 lac+

Google Rating

4.6

Related Articles

What’s trending

Read our latest blogs

Who we are

SEBI registered investment advisory services

Media, Award & Accolades

Stay updated with our winning journey

Video Gallery

Watch our exclusively curated financial videos

Performance

Know the journey of stocks

Newsletters

Stay on top of the stock market

Contact us

Stay in touch

5 in 5 Strategy

A portfolio of 20-25 potential high-return stocks

MPO

1 high-growth stock recommendation/ month, that is trading below its intrinsic value

Combo

A combined solution of 5-in-5 wealth creation strategy & mispriced opportunities

Dhanwaan

Manage your portfolio with dhanwaan

Informed InvestoRR

A step by step guide to sharpen your investing skills

EPW Coming soon

A concentrated portfolio of 12-18 high-growth & emerging theme stocks

Pricing

Choose from our range of pricing packages