Budget 2025: Key industry expectations from tax cuts to reforms

A key expectation is the introduction of higher income tax exemptions to boost disposable income for middle-income households

On January 6, Union Finance Minister Nirmala Sitharaman concluded month-long consultation with industry and sector stakeholders ahead of the Union Budget 2025, which will be tabled on February 1.

 

“In the course of the in-person consultations, more than 100 invitees across 9 stakeholder groups, including experts and representatives from farmer associations & agriculture economists; trade unions; education & health sector; MSME; trade & services; industry; economists; financial sector & capital markets; as well as, infrastructure, energy and urban sector, participated in the meetings,” it said.

 

Key elements such as taxation policies, investment incentives, and welfare programs are expected to play a pivotal role in striking a balance between fiscal discipline and strategic spending.

 

 

Voices from the industry

 

“We would expect some steps to enhance the disposable incomes of the salaried tax payers by realigning and reducing the existing income tax slabs. The middle income urban population has seen limited inflation adjusted income growth in the post Covid period which has impacted discretionary purchases -- higher tax savings can lead to stronger urban consumption demand. This can also strengthen demand for more affordable housing projects in the urban areas. In the earlier budget, the government had brought out schemes to incentivise employment by the private sector, further measures may be taken in the budget to ensure that such employment generation witnesses an acceleration,” said Suman Chowdhury, from Acuite Ratings.

 

Trivesh, COO of Tradejini, emphasises on the significance of balancing economic stability and public expectations in the budget.

 

“The Indian economy is going through rapid shifts with technology, evolving consumer preferences, and global trade uncertainties. Tax cuts for the middle class, measures to promote small businesses, and sustainable initiatives like renewable energy could be pivotal,” he says.

 

Yash Sedani, Assistant Vice President, Investment Strategy at 1 Finance, underscores the need for tax reforms to encourage investments. “Reducing transaction charges like Stamp Duty and GST, abolishing Long-Term Capital Gains Tax, and removing GST on health insurance premiums could significantly boost investor participation and economic growth,” he notes.

 

Real estate industry and stakeholders anticipate measures that could drive growth, address challenges, and ensure sustainability Pushpamitra Das, Founder & Director, JUSTO (real estate solutions company) mentioned some points:

 

Higher tax deductions on home loan interest

 

Provide tax benefits to Real Estate Investment Trusts (REITs) to encourage retail and institutional participation, boosting commercial real estate.

 

Reforms in land acquisition policies and single-window clearance system

 

Increased focus on rental housing through tax benefits for both owners and tenants and co living assets

  Extension of SEZ benefits to boost commercial real estate

 

Green building incentives through additional tax benefits