Budget 2025 Expectations Updates: Halwa ceremony sets the ball rolling for Budget presentation on Feb 1

Udit Jain, Director of One Group, highlights that rising land and construction material costs, coupled with continued demand, have significantly inflated property prices, making homeownership difficult for many across the country. He stresses the need for strong government support to make homes more affordable, particularly through measures like increasing the income tax deduction limit for home loan interest, which has remained unchanged for over a decade. Jain also calls for the expansion of the Credit Linked Subsidy Scheme (CLSS) and an increase in property price thresholds for affordable housing eligibility to help middle-income families. Additionally, he suggests rationalizing stamp duty rates in Tier-II and Tier-III cities to boost housing demand and address challenges caused by discrepancies between circle rates and market prices in certain cities.

Karnataka Minister Priyank Kharge expressed a lack of expectations from the upcoming Union Budget, reflecting on the economic performance under "Modinomics" over the past 11 years. Kharge says, "I have no expectations from the union budget. We have seen 11 years of 'Modinomics' and what has that resulted in? It has resulted in in rupee being the weakest. It has resulted in higher consumer price indexes. It has resulted in the 'thali' price going up. The petrol and diesel prices are going up. The tax formulas have collapsed the middle class and the business class. SMEs and MSMEs have collapsed and there is absolutely no job creation. Agriculture production is at its lowest. FDI is at its lowest. People are taking money out of the country. In January month alone, more than $9 billion of investments have been pulled out by foreign countries..."

Samir Krishan Modi, Managing Director of Modi Enterprises, highlighted that empowering consumers and stimulating consumption-driven demand are crucial for reviving economic growth as we approach the Union Budget 2025-26. He emphasized that tax relief, GST rationalization, and targeted initiatives for rural areas would increase purchasing power, drive private consumption, and support industries, ensuring equitable growth. Modi also stressed the importance of safeguarding small retailers, promoting fair trade, and investing in rural skilling and entrepreneurship to unlock India’s economic potential. He praised the government’s approach to addressing economic challenges and expressed confidence that the upcoming Budget will continue focusing on inclusive growth and sustainable development.

Vivek Kumar Gupta, Registrar at Sharda University, emphasized the need for significant financial investments in India’s higher education sector to achieve the ambitious Gross Enrolment Ratio (GER) target of 50% by 2035, as outlined in the National Education Policy (NEP) 2020. He pointed to China’s substantial investment in higher education and its focus on global competitiveness as a model for India to follow. Gupta stressed the need for consistent budgetary increases, higher per-student spending, and targeted support for marginalized communities to improve access to quality education. Additionally, he called for greater investments in research, innovation, and infrastructure to drive the expansion and modernization of India’s higher education system.

Vivek Jalan, Partner at Tax Connect Advisory Services LLP, has called for a comprehensive overhaul of the TDS/TCS provisions in the upcoming Union Budget 2025. He highlighted that the current system, with 71 Sections under TDS/TCS, remains complex, redundant, and often leads to confusion and litigation. Despite some rationalization in the previous budget, the rates are still high, and overlap between TCS and TDS provisions continues to create challenges. Jalan suggested that a single comprehensive Schedule of Rates for TDS, similar to the Customs Tariff Act, could streamline the process. He also proposed withdrawing the issuance of TDS/TCS certificates to ease compliance, benefiting over 10 lakh tax-deductors and taxpayers, while promoting a more organized sector.

Vivek Jalan, Partner at Tax Connect Advisory Services LLP, advocates for scrapping the old tax regime entirely and rationalizing income tax slabs under the new regime in light of its simplicity. He highlights that the current exemption of Rs. 7 Lakhs has already reduced tax burdens for many taxpayers, and urges the government to consider making the new regime the sole option in the upcoming comprehensive review of the Income Tax Act in February 2025.

Jalan also proposes extending the exemption/rebate to Rs. 9 Lakhs to provide more disposable income to the middle class, accounting for the impact of inflation. For high-income earners above Rs. 15 Lakhs, he suggests introducing a new tax slab of Rs. 15 Lakhs to Rs. 18 Lakhs at a rate of 25%, to ease their transition to the new regime and mitigate financial impact. These measures, according to Jalan, would encourage consumption and boost GDP.

Pradeep Gupta, Executive Director and India Head of Investment at Lighthouse Canton, highlights the complexities the government faces in managing expectations for the upcoming Union Budget amidst slower economic growth. With GDP growth for FY25 expected to hit a four-year low of 6.4% and inflation revised upward to 4.8%, Gupta emphasizes the challenges posed by mixed domestic demand, urban struggles, global turmoil, and weak exports. The approach to balancing growth and inflation will be critical.

Gupta anticipates continued focus on fiscal prudence with a commitment to maintaining a sub-4.5% fiscal deficit target for FY26, and key priorities such as public capex, infrastructure, and job creation. However, nominal GDP projections remain subdued, and while direct tax collections may grow, indirect tax revenue could face pressure due to global tariff wars. Gupta does not foresee significant personal income tax relief but expects broader consumption-boosting reforms.

Fiscal space from the RBI’s dividend payout remains uncertain, and estimates suggest the government may fall short of its current capex target by INR 1 trillion. For FY25, a capex growth of 10%-12% is expected, with continued incentives to support manufacturing through the PLI scheme. Addressing weak private capex and demand distortions will be key in the upcoming budget.

On Union Budget to be tabled in the upcoming parliament session, Karnataka Minister & Congress leader Krishna Byre Gowda says, "In the pre-budget meeting convened by the union finance minister, Karnataka has already articulated its expectations from the budget. Primarily, the devolution to Karnataka has been cut severely, on top of that injury, govt of India is meeting out very unfavourable cut to Karnataka by denying a special grant of 11,495 crores recommended by the finance commission..."

Vivek Jalan from Tax Connect Advisory Services LLP suggests that the upcoming Union Budget should offer relief to Indian intermediaries, such as auctioneers, e-commerce platforms, and brokers serving international markets, by providing a GST exemption on services offered to clients outside India. He said, "To bring a much-needed relief for Indian intermediaries like Indian Auctioneers/ E-Auction platforms, E-Commerce platforms serving international markets, textile and other brokers serving international clients, it is expected that the Union Budget would provide a GST exemption on their services when provided to persons out of India. For Eg. Commission received by Indian agents for goods which are supplied as well as received out of India is now sought to be exempt from GST. The same is expected to be done by deleting Section 13(8)(b) of IGST Act 2017, on place of supply for intermediaries."

Vivek Jalan, Partner at Tax Connect Advisory Services LLP, a leading consulting firm, emphasizes two key areas where reform is urgently needed in the upcoming Union Budget 2025 to support India's Electric Vehicle (EV) and trade sectors. He said, "Exemption of Customs duty on import of technology, machines, equipment for manufacturing Li-Io Cells in India - With Electric Vehicle Sector focus area of the Government, relief is expected for manufacturing of EVs and parts of EVs, especially Lithium Ion Celss (batteries), which are the biggest component of EVs. It is understood that technology, machines, equipment for manufacturing Li-Io Cells have to be sourced from out of India as of now as India does not have the requisite capabilities. Customs duty payment on these would lead to cost inefficiencies for Li-Io battery manufacturers in India. Industry as well as other Ministries have represented to the MoF already regarding exemption of Customs duty on import of technology, machines, equipment for manufacturing Li-Io Cells in India. This should get some consideration from Government in Union Budget 2025. Settlement of Dispute Scheme in Customs – As per information It is understood that more than 50000 cases of Customs are pending before Supreme Court, High Court, CESTAT and Commissioner Appeals stage. Further more than 5000 cases are registered every year. All kinds of disputes are there ranging from valuation, classification, refunds, interests, penalties, remission of duties, etc. Even the judiciary is clogged and Government’s revenue is also stuck in the genuine cases too. A Settlement of Dispute Scheme in Customs is long pending now that such Schemes have been rolled out In all other tax laws. Hence it is expected that such a Scheme may see light of day in Customs too. It will help importers/ Exporters"

Additionally, industry experts are urging the government to introduce Production-Linked Incentive (PLI) schemes for battery manufacturers and the associated industries, such as those producing battery chemicals.

This, they believe, would significantly boost the electric vehicle ecosystem and accelerate adoption rates.

If implemented, these policies could have a positive impact on key industry players such as Ami Organics, SRF, Navin Fluorine, Deepak Nitrite, and Gujarat Fluorochemicals.

The chemical sector is advocating for targeted tax incentives, especially in manufacturing hubs like Gujarat, which would benefit Indian chemical manufacturers.

These proposals align with broader economic trends, including India’s demographic advantages, its growing manufacturing capabilities, and the global shift towards Euro+1 and China+1 strategies.

The chemical sector has highlighted the need to focus on key products such as polyethylene terephthalate (PET) and polyvinyl chloride (PVC), which are critical to India’s industrial ecosystem.

Revising import duties on these products is seen as a vital step to enhance the industry's competitiveness and safeguard domestic producers.

With the chemical sector grappling with a challenging environment, industry stakeholders are looking to the upcoming Union Budget for critical policy interventions.

Among the top demands are the introduction of a Production-Linked Incentive (PLI) scheme aimed at boosting domestic manufacturing and adjustments to customs duties on chemical imports, particularly those from China, to address competition and promote local production.

"As the Union Budget 2025 approaches, there are high expectations for measures aimed at simplifying compliance, resolving disputes, and enhancing India’s global competitiveness," said Ranjeet Mahtani, Partner, Dhruva Advisors.

"A comprehensive digital overhaul of Customs processes is essential to minimize manual errors and delays. An Amnesty Scheme for pending Customs disputes, inspired by successful precedents in VAT, Service Tax, and Income Tax, is a pressing need. Rationalizing tariffs to correct inverted duties is crucial to bolstering domestic manufacturing under the 'Make in India' initiative, while reducing customs duties on renewable energy and EV components would align with India’s sustainability goals," he further noted.

"As we approach the Union Budget, we remain optimistic about its potential to drive growth across key sectors, including infrastructure, energy, and construction. The government’s continued focus on energy and infrastructure is expected to provide a strong boost to the EPC industry. Investments in green energy initiatives will further enhance India’s competitiveness globally by moving towards net zero carbon emissions. At KPIL, we are aligned with these national priorities and committed to contributing meaningfully by delivering innovative, sustainable, and high-quality solutions across our projects. With a positive outlook for the year, we look forward to working collaboratively with all stakeholders to achieve India’s long-term ‘Viksit Bharat 2047’ development goals."

Dr. Vipul Lunawat, Founder Director of the Institute of Sports Science and Technology (ISST), Pune, highlighted that to ensure sustainable sports development in the country, the budget for 2025 should ideally range between Rs 3,600 crore and Rs 3,800 crore. This would provide the necessary financial backing to further elevate India's sports sector in preparation for hosting the prestigious event. Read more.

To make India ready to host the 2036 Olympics, sports sector insiders are calling for a higher budget allocation in the upcoming 2025 Union Budget. According to experts, this would be a crucial step toward bolstering India's sporting infrastructure and capabilities.

In the 2024 Union Budget, the government made a notable commitment to developing India as an elite sporting nation, with an all-time high allocation of Rs 3,442 crore for sports, a slight increase from Rs 3,396 crore in the previous year.

The RoDTEP scheme, introduced in 2021, aims to support exporters by refunding taxes and duties on exported goods, thereby encouraging exports. It replaced the Merchandise Exports from India Scheme (MEIS) to align with World Trade Organisation (WTO) guidelines.

Meanwhile, the IES offers interest subvention to exporters on pre- and post-shipment rupee export credit, helping them stay competitive in global markets.

With expectations running high, the industry is looking to the budget for measures that can support growth and sustain India’s position as a leading IT exporter.

As Finance Minister Nirmala Sitharaman prepares to present the Budget 2025, leaders from the Indian IT industry are urging the government to implement measures that will help maintain the country’s global leadership in the sector.

Industry representatives are particularly focused on the Special Economic Zones (SEZs) and have requested an extension of the SEZ tax holidays.

They are also seeking the reinstatement of key export incentives, including the Remission of Duties and Taxes on Exported Products (RoDTEP) and the Interest Equalisation Scheme (IES), both of which expired on December 31.

The Union Budget for FY 2025-26 is expected to earmark ₹1.7 lakh crore for fertiliser subsidies, a slight increase from the ₹1.64 lakh crore allocated in FY25, according to government sources.

As part of the second Budget of the Modi 3.0 government, there may also be a focus on promoting organic farming alternatives through enhanced funding for the Market Development Assistance (MDA) scheme, the sources added.

“Fertiliser demand often rises with a good monsoon, though multiple factors, including weather conditions, influence consumption,” a senior government official told Moneycontrol anonymously. Learn more.