Budget 2025 Expectations Live: Will govt hike capital gains tax again?

In line with the aforementioned, a few suggestions around the tax reforms are as under:

Need to fast track appeals pending at first appellate stage, with focus on disposing old appeals in a time bound manner.

Dedicated Alternate Dispute Resolution mechanisms like DRC may need to be entrusted with more powers and made more flexible.

Adopting a more liberal approach in prosecution by decriminalization of TDS defaults under section 276B.

Broadening the tax base to achieve reduced tax rates for existing taxpayers.

Introducing a system of issuing position papers, clarifying revenue’s stand on various issues, as practiced by some jurisdictions, can substantially reduce litigation.

Consideration of re-introduction/ revival of provision contained in Section 115 BAB i.e. Tax on income of new manufacturing domestic companies, which remained to be further extended in the Interim Budget 2024.

Taxation of AIF Category-III - FPI has been provided with the certainty that gains on sale of shares will be taxed as Capital gains under the Act.

There is no certainty regarding domestic funds registered as AIF-III with similar operations as FPI. This is a long pending request for providing tax certainty.

The hike in capital gains tax which came out as a pain point for investors in the last budget, having left many fearing it was the first step toward further increases. The government had raised the short-term capital gains tax on equity holdings held for less than one year from 15 percent to 20 percent. Similarly, the long-term capital gains tax on holdings sold after one year was increased from 10 percent to 12.5 percent. Read more

Majority of the Indian startups are contemplating to shift their base to India or do reverse flipping, so that they can list their shares on Indian stock exchanges. Recently, Peppery.com redomiciled to India through Inbound merger of its foreign parent company with Indian subsidiary company. In the NCLT filings of the Peppery Limited, they have clearly mentioned that the reason for Inbound merger is to list on Indian stock exchanges and also to streamline its group structure through amalgamation. Similarly, Groww a Stock broking platform looking for a potential initial public offering completed the flip back of its parent entity to India from the US to facilitate its India listing. Zepto India also participated in the reverse flipping and got NCLT approval for merger of parent entity into its subsidiary. While reverse flipping through inbound merger (not permissible in each foreign jurisdiction where parent company is incorporated) may be tax neutral, however reverse flippling through swap of shares is subject to capital gains tax in India which ranges between 12.5 to 35% plus appropriate surcharge and cess. It is expected that Budget 2025 may amend capital gains tax provisions and make reverse flipping tax neutral for both the scenarios viz. Inbound merger as well swap of shares.-Rahul Charkha, Partner at Economic Laws Practice -

The infrastructure sector is the backbone of India's economic growth, playing a pivotal role in realizing the vision of becoming a $5 trillion economy by 2025 and a $26 trillion economy in the future. As we approach Budget 2025-26, there is significant anticipation for policies that drive forward initiatives such as Gati Shakti, the National Infrastructure Pipeline (NIP), and the PLI scheme. We also expect the allocation for the infrastructure sector to surpass last year’s budget figures. Investments in transportation, energy, water, and urban infrastructure, alongside a focus on smart cities, affordable housing, and digital infrastructure, are crucial for maintaining the sector's momentum. Further, projects like new airports, Metro network expansions, and NaMo Bharat in emerging cities will enhance connectivity and urban transformation, improving the ease of doing business and quality of life. The government’s emphasis on constructing large expo centers and world-class venues is a step toward bolstering trade, tourism, and industry. As organisers of leading expos that bring industries together, we see these modern facilities as vital platforms for businesses to foster domestic and international collaborations. Such initiatives align with India’s larger goals of economic growth and global engagement, ensuring the infrastructure sector continues to flourish with sustained government and private sector support.- Yogesh Mudras, MD of Informa Markets in India

Three requests of Vinumon S, founder and CEO, Thence, for Budget 2025

1. Reduce TDS Default Slab for MSMEs

The current 10% TDS on revenue assumes a Profit Before Tax (PBT) margin of 35% or higher (for Corporate Tax slab of 27.5%). However, many MSMEs operate on lower margins, making this TDS rate excessive. This leads to significant cash flow constraints, as refunds may take 1-1.5 years to process. To address this, I propose to reduce the default TDS slab for MSMEs to a lower rate (e.g., 4-5%) and tag only companies with income tax exceeding 10% of revenue during the last three years to be added to the 10% TDS bracket, rather than keeping it as the default rate

2. Allow GST Filing and Direct Collection from Clients

Currently, service providers bear the responsibility of filing returns and paying dues by the 20th of the next month, despite the GST liability resting with the customer. The client payments mostly get delayed due to the payment cycles and credit periods, causing undue burden on cash-constrained service providers. By permitting clients to account for GST and pay dues directly to tax authorities, MSMEs can avoid this cash flow challenge.

3. Streamline MSME Samadhan for Timely Dispute Resolution

The MSME Samadhan initiative aimed to facilitate MSMEs' recovery of dues from defaulting clients. However, recent experiences have been marred by significant delays, with cases often initiated only after a year of filing. Procedural issues and arbitration referrals further exacerbate these delays, denying MSMEs timely justice and alleviating cash flow constraints. To address this, I request establishing a framework to provide closure within six months of filing.

As we approach the 2025 budget, Clirnet anticipates a strong focus on advancing the healthcare sector through innovation and sustainability. With a growing demand for quality care and digital solutions, we expect the budget to prioritize investments in healthtech, AI-driven healthcare technologies, and enhanced medical infrastructure. These measures will not only improve patient outcomes but also create a more efficient, accessible healthcare system. At Clirnet, we are committed to supporting these initiatives, ensuring that healthcare evolves to meet the needs of the future with cutting-edge, data-driven solutions.-Saurav Kasera, Co-Founder and CEO, Clirnet and DocTube

The year 2024 has been defined by an undeniable shift towards luxury living, with real estate projects setting new standards for upscale residences. This surge in demand for luxury and ultra-luxury homes reflects a growing appetite for properties that offer both opulence and long-term investment potential. The upcoming Union Budget holds great promise for further fueling this growth. We anticipate policy measures that will enhance affordability, provide tax incentives, and stimulate infrastructure development, enabling us to meet the aspirations of high-net-worth individuals. These strategic interventions are expected to not only strengthen the luxury housing market but also drive the overall growth and resilience of the real estate sector in the coming year.-Santosh Agarwal, CFO & Executive Director, Alphacorp

The year 2024 has been defined by an undeniable shift towards luxury living, with real estate projects setting new standards for upscale residences. This surge in demand for luxury and ultra-luxury homes reflects a growing appetite for properties that offer both opulence and long-term investment potential. The upcoming Union Budget holds great promise for further fueling this growth. We anticipate policy measures that will enhance affordability, provide tax incentives, and stimulate infrastructure development, enabling us to meet the aspirations of high-net-worth individuals. These strategic interventions are expected to not only strengthen the luxury housing market but also drive the overall growth and resilience of the real estate sector in the coming year. - Santosh Agarwal, CFO & Executive Director, Alphacorp

• “Last year, the real estate sector witnessed strong growth driven by rising urbanization and increasing demand across affordable, mid-income, and luxury segments. We are hoping that the upcoming budget will prioritise tax relief for homebuyers and streamline regulations. Additionally, introducing tax benefits for those investing in REITs focused on premium commercial or residential assets would encourage more investments and boost the sector. We are also hoping that the government will continue to invest in infrastructure projects. These measures will help the housing sector remain a key contributor to economic progress.
• Granting industry status to the real estate sector has been a long-standing demand, and we remain hopeful it will finally be addressed this year. Such a move has the potential to significantly stimulate growth, benefiting numerous ancillary industries, driving job creation, enhancing skill development, and amplifying overall economic activity,” says Aditya Kushwaha, CEO and Director, Axis Ecorp

• “As the Union Budget 2025-26 approaches, the real estate sector remains hopeful for forward-looking reforms that can amplify growth and reinforce its role in India’s economic progression. Increasing the tax deduction limit for housing loan interest under Section 24(b) to Rs 5 lakh would align with the rising aspirations of homebuyers while addressing evolving market conditions. Similarly, introducing a single-window clearance mechanism could streamline processes, expediting project approvals and enhancing operational efficiency.
• Granting 'industry status' to real estate is another vital step that would unlock greater access to institutional capital, stimulating growth across the entire value chain, including over 200 interdependent industries. The rationalization of GST rates and an optimized input tax credit framework for construction materials are equally crucial to mitigate costs and maintain the competitiveness of premium projects.
• We also encourage strategic incentives to boost investments in advanced infrastructure, laying the foundation for India’s transformation into a global hub for luxury living and modern urban development. These progressive measures, supported by the positive momentum from last year’s budget, would establish real estate as a cornerstone in achieving India’s vision of becoming a developed economy by 2047.” - Vivek Singhal, CEO, Smartworld Developers

"As we approach the Union Budget 2025-26, the real estate sector continues to be a cornerstone of India’s economic framework, contributing significantly to GDP growth and employment generation. This year, we look forward to policy interventions that will address long-standing challenges and unlock the sector's true potential. Recognising real estate with 'industry status' remains a crucial demand, as it would streamline access to institutional funding and lower financing costs. Additionally, measures like single-window clearance for approvals and rationalization of GST on construction materials can dramatically enhance operational efficiency and cost management. We hope to see fiscal incentives that not only stimulate demand across all segments but also promote sustainable and innovative urban development." - Mr Kunal Rishi, COO, Paras Buildtech

• Introducing a dedicated tax exemption for term insurance premiums could reshape how individuals view life insurance, encouraging families to secure their financial future. Additionally, providing incentives for employers to offer group term insurance plans and allocating budgetary support for low-income group term insurance schemes would help extend life coverage to underserved communities. These initiatives not only safeguard vulnerable populations but also strengthen the nation’s financial resilience in times of crisis.
• On the investment front, revising tax policies for equity, debt, and gold schemes can unlock significant growth potential. For equity-linked schemes, raising the ELSS limit to Rs 3 lakh and increasing the LTCG exemption threshold to Rs 10 lakh for long-term holdings would reward patient investors and foster wealth creation. Reinstating the LTCG benefit for debt schemes with a modest 10% tax rate, without indexation, could revitalize interest in this category. Introducing parity between physical gold and gold schemes through LTCG provisions would attract more investors to this vital asset class. These measures reflect a balanced approach to empowering investors while promoting economic inclusivity and growth across all financial segments. - Nehal Mota, Co-founder & CEO, Finnovate

The government is likely to stay on the fiscal consolidation path and set the fiscal deficit target at 4.5 percent of the GDP in the Union Budget for 2025-26, showed a Moneycontrol poll of 13 economists. (Read More)

• Govt believes tax breaks will mean more disposable income and boost spending power, reports CNBC-TV18
• Increased spending by common man to help recovery in both direct tax and GST collection
• Finance Ministry and PMO to take final call on tax break options, decision expected closer to budget, reports CNBC-TV18

• Govt actively considering personal income tax breaks to spur consumption demand, boost economy, reports CNBC-TV18
• Govt studying 2 options on tax breaks, decision to target making new tax regime more attractive,reports CNBC-TV18
• Govt considering option of hiking standard deduction limit from Rs 75,000/Year
• Govt studying expanding income range for 20% rate to Rs 12-20 lakh from Rs 12-15 lakh
• Tax slab change to give relief to people with taxable income in Rs 15- 20 lakh range

• With Budget 2025 on the horizon, taxpayers and the business community are looking forward to key reforms designed to provide financial relief and simplify the tax framework. CA Anuj Garg, Director – Taxation at AHSG & Co LLP, has highlighted the potential for significant relief for individual taxpayers and measures to foster the growth of startups in India.
• One of Garg’s primary recommendations is to raise the minimum tax exemption limit under the new tax regime. Currently, individuals earning up to Rs 3 lakh annually are exempt from taxes. Garg proposes increasing this threshold to Rs 5 lakh, which he believes would offer immediate relief to middle-income taxpayers, boost consumption, and drive economic growth.

• The government may consider imposing higher tariffs on imports in the upcoming Budget to address the sharp depreciation of the rupee witnessed in recent months, according to EY Chief Policy Advisor DK Srivastava.
• Srivastava suggested that increasing import duties could reduce the demand for dollars from importers, thereby helping to stabilise the rupee, which hit a historic low of 86.70 against the dollar on January 13.
• In an interview with PTI, Srivastava highlighted that the rupee's sudden decline against the US dollar poses a significant challenge for policymakers—both for fiscal planning in the Budget and for the RBI's monetary strategies. He noted that the US economy is expected to recover, prompting financial resources to flow toward the world's largest economy.

As the Union Budget 2025 approaches, taxpayers and industry professionals are expecting notable tax reforms. Key demands include higher exemption limits, increased housing-related reliefs, clearer guidelines for taxation of modern assets, and enhanced deductions for investments. These measures aim to ease tax burdens and stimulate economic growth. (Read More)

When compared with peers, India’s economy has been characterized by high savings rate, mainly driven by its households. Indeed, in the two decades following the 1990s reforms that opened up the economy to foreign capital, household savings grew exponentially. Savings are a function of income, and debt. Historically, Indian households have exhibited low levels of debt and high investments into physical assets which were shown as high savings. (Read More)

• Ahead of the Union Budget, the startup industry on Thursday called for increased support for deep-tech ventures and thematic financing in critical technology sectors.
• Speaking at the National Startup Day event, which marks nine years of the Startup India program, Anjali Bansal, Founder of Avaana Capital, highlighted the "extremely supportive" policy environment for startups in recent years.
• "Our next frontier for startup entrepreneurship focuses on core technology and innovation, which require a distinct playbook and longer gestation periods. Greater support is needed for core research and development, engineering, product development, and manufacturing—such as precision manufacturing, spacetech, deeptech, and biotech. The future lies in advancing deep-tech engineering and innovation in India," she said.

• The Confederation of Real Estate Developers' Associations of India (CREDAI) has proposed several measures to tackle challenges in the property sector, especially in affordable housing. Noting that housing prices have surged by over 50% since 2017, CREDAI has called for a revision of the Rs 45-lakh price cap on affordable housing.
• Boman Irani, President of CREDAI, emphasized, "The Indian real estate sector plays a vital role in GDP contribution, employment generation, and infrastructure development. Influencing nearly 53% of India's GDP, both directly and indirectly, and employing over 8 crore people, the sector is crucial in addressing the housing needs of the 40 crore Indians who lack adequate homes."

• Indian Railways is expected to receive a 15-20% increase in capital expenditure allocation for FY26 in the upcoming budget, aiming to utilize the current year's funds efficiently. This boost could raise the total capital expenditure for the national transporter to over Rs 3 lakh crore, up from the Rs 2.65 lakh crore allocated in the current fiscal year.
• Next year’s focus will be on commissioning upgraded railway stations, launching modern trains, and decongesting the track network.

As Asia's third-largest economy grapples with slowing growth and rising global uncertainties, Finance Minister Nirmala Sitharaman is set to present the Union Budget 2025 on February 1. A key focus of the budget will be potential announcements on income tax rebates. There is increasing speculation about raising the basic exemption limit under both the old and new tax regimes. Will Sitharaman deliver relief for individual taxpayers to counter inflationary pressures? Stay tuned for the latest updates on Union Budget 2025.