Budget 2025 expectations: Revised income tax slab to infra development

Finance Minister Nirmala Sitharaman is all set to table the Union Budget on February 1, 2025. There are huge expectations for a raft of reforms to energize key sectors, including infrastructure, agriculture, and other crucial tax reforms for economic growth.

The budget is expected to demonstrate the Centre's dedication to fiscal discipline, outlining plans to reduce the fiscal deficit and ratio by 0.5% to approximately 4.3-4.4% of GDP for the financial year 2026.

The government is likely to prioritize sustained investments in key capital expenditure areas, including railways, roads, and defense, although a substantial overall increase in capital spending is considered improbable.

The budget is expected to introduce several tax breaks for salaried and middle-class taxpayers. The new tax regime is expected to have revised tax slabs, providing relief to taxpayers. It is also expected that government may introduce tax reforms benefiting senior citizens, such as increased exemptions or deductions.

The deduction limit under Section 80C is likely to be increased, allowing taxpayers to save more on their investments. Increase in exemption and deduction limits in health and life insurance premiums and voluntary NPS contributions by the employee are also likely. 

The government is likely to increase import duty on gold to reduce imports and boost domestic demand. 

Additionally, the budget is expected to announce benefits for Micro, Small, and Medium Enterprises (MSMEs) and industries through the Production-Linked Incentive (PLI) scheme, with possible special incentives for MSMEs.

As India aims to become a $7 trillion economy by 2030, the infrastructure sector is eagerly awaiting government initiatives that prioritize infrastructure development, ensure policy stability, and promote technological advancements.

Stakeholders are advocating for taxation reforms to boost India's agricultural sector. Proposed reforms include GST exemptions on essential items and reforming agricultural income taxation in the upcoming budget 2025.

This information is not DNA's opinion but obtained from media reports