As February approaches, optimistic expectations around the Union Budget 2025 are brewing across the country. Indian taxpayers, particularly the middle class, have pinned their hopes on the Finance Ministry to help combat inflation and increase disposable income via reduced income tax slabs, lowered GST rates, industry-specific allocations, and tax reforms. On the other hand, commercial sectors like healthcare, real estate, and import and export companies are looking at increased government support and progressive measures to reshape their operations and boost the current economic situation. Overall, India is awaiting a balanced budget that will ease tax burden and foster long-term prosperity for the nation.
Below is an outline of tax-related priorities of the Indian government and expectations of commoners and industries
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Pivotal Expectations
- Income Tax Revision
Taxpayers will expect changes in income tax slabs and increased standard deductions. For instance, the basic tax exemption limit is likely to increase from ₹3 lakhs to ₹ 5 lakhs. Improvements in exemptions and deductions, including health insurance premiums and HRAs will also be expected. The government may introduce more NPS-related income tax reliefs as well, especially in the tier-II accounts in the updated tax framework. - Fiscal Consolidation
Significantly, a focus remains on reducing the fiscal deficit to 4.5% of the GDP. This is imperative to strengthen the country’s financial health and sustain macroeconomic stability – all of which are expected to be done with an infrastructure push, green transition, and catalysing employment for a significant growth in the economy. - Expansion of MSMEs and Startups
Introduction of special incentives for green MSMEs and clean-tech, agritech, deep-tech, EV, and startups are a part of the Union Budget 2025-26. Further, the government is also focused on increasing the outlay of existing Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). The government should expand initiatives such as the Fund of Funds for Startups (FFS) to provide early-stage funding. It is increasingly anticipated that the three-year tax vacation for startups under Section 80-IAC will be extended to five years.
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Support for Key Industries
- Real Estate: The major demands include tax benefits, more funds to be allocated, and real estate to be granted industry status which enables reduced loan rates and construction expenses. A reduction in stamp duty rates as recommended to state governments, maybe a revision in tax policies including the allowance of GST Input Tax Credit for property leasing.
- Healthcare and Pharma: The Indian pharmaceutical industry might be worth $130 billion by 2030. In addition, it has the potential to reach $450 billion by 2047. Experts advise the government to eliminate the import tax on life-saving medications and the GST. Investment in R&D must expand and encourage domestic API manufacturers and expand PLI schemes.
- Infrastructure: In budget 2024-25, Government allocated ₹11.1 lakh crore for infrastructure development and a further 30% increase in allocation is expected in 2025 with missions like Atal Mission for Rejuvenation and Urban Transformation (AMRUT).
Budget 2025 presents a defining moment for the startup ecosystem of India as well. India would be catalyzing its next wave of entrepreneurial success by making policies aligned with global best practices while simultaneously catering to local challenges. Venture capital firms call for the creation of a sustainable, innovation-driven environment that empowers startups to compete and thrive on a global stage. India is poised to become a global startup powerhouse. Strategic policy measures in this budget can then transform aspiration into action, ensuring that the startup ecosystem remains a core anchor of India’s growth story.
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Budget Expectation 2025 Quote on behalf of Mr. Alouk Kumar, CEO and Founder of Inductus Group
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