Union Budget 2025 Expectations Live: Finance Minister to meet bank heads on Wed to review financial inclusion schemes

The Finance Ministry has scheduled a meeting with the heads of Public Sector Banks (PSBs) on Wednesday to assess the progress of key financial inclusion initiatives, including Jan Suraksha and Mudra Yojana. The session, which will also include representatives from private sector banks, will be chaired by Financial Services Secretary M Nagaraju.

"Over the past few years, the restaurant industry has not only contributed substantially to economic growth but has also been a steadfast source of employment generation. As we move closer to the Union Budget 2025, the restaurant sector has high expectations from the government. One critical aspect that needs urgent attention has been reinstating input tax credit (ITC) for the industry. The budget needs to revisit the input tax credit on GST for the sector as this would help reduce operational costs and improve profitability," said Sandeep Jain, Founder and MD, Desi Masala.

"As we approach the budget, I'm optimistic about the potential for further growth in India's tech landscape, particularly within Web3 and cybersecurity. I anticipate continued government support for digital infrastructure development, which fosters innovation in these sectors. Specifically, I'm looking for policies that encourage R&D in blockchain technologies and provide clearer regulatory frameworks for Web3 businesses," said Abhishek Singh, Co-founder of SecureDapp.

To reduce the extensive nature of labour compliance requirements, CII calls for the Shram Suvidha Portal to be expanded into a centralized portal covering all central and state labour laws.

The CII recommends incentivizing states to develop an online integrated land authority to digitize land records, provide information on disputed land, and streamline land acquisition processes.

The industry body calls for improving court capacity and expanding the use of Alternative Dispute Resolution (ADR) mechanisms to speed up the resolution of business disputes.

Ahead of the upcoming Budget, industry body CII on Sunday suggested a 10-point agenda to drive ease of doing business reforms, aimed at reducing compliance burden, simplifying regulatory frameworks, and improving transparency. Among the ”urgent policy interventions”, the industry body has recommended that all regulatory approvals — central, state and local levels — must mandatorily be provided only through the National Single Window System.

In the past, the government has introduced amnesty schemes for excise, service tax, and income tax but not for customs. Currently, over 40,000 customs duty cases are estimated to be pending in various courts and tribunals. EY India, a consultancy firm, highlighted that these long-standing litigations demand significant time and effort from both taxpayers and the government for resolution.

To promote ease of doing business and reduce litigation, Finance Minister Nirmala Sitharaman is likely to announce an Amnesty Scheme for customs in the upcoming Budget. “Reducing litigation has been a key objective of the government, and an amnesty scheme for customs, particularly addressing pre-GST legacy taxes like additional duty and special additional duty, has been a significant demand from the industry,” said Anurag Sehgal, Managing Director of Price Waterhouse & Co LLP. (PTI)

To ensure the success of CBG production, IBA proposed that the government offer grants to cover the transportation costs of feedstock, such as crop residues like paddy straw, from farms to biogas plants. This would reduce logistical barriers and further support the biogas sector's growth.

The association also called for expedited legislation regarding the tokenization and trading of renewable energy certificates, which would improve the profitability of clean energy projects. Additionally, IBA recommended implementing cap-and-trade practices for carbon-intensive industries, subsidizing a portion of the carbon premium to kick-start the process.

As part of its vision to foster the growth of the biogas sector, IBA proposed that a framework be developed to allow biogas plant promoters to sell carbon credits both domestically and internationally. This would help India meet its climate change targets while creating new revenue opportunities for CBG producers.

To encourage cleaner biogas production, IBA suggested that the government promote the use of agricultural residues, thus reducing burning-related pollution. The association proposed scaling up Haryana's initiative, which offers Rs 1,000 per acre to farmers who refrain from burning paddy. States like Punjab, Haryana, Uttar Pradesh, and Bihar, which have high agricultural residue, should be prioritized for the scheme.

Tax relief would enable CBG producers to offer their products at competitive prices, helping to drive the adoption of CBG in India. IBA also emphasized that this initiative would reduce the use of agricultural residues like paddy straw and crop waste in burning, addressing both pollution and energy production needs.

According to IBA, the estimated tax loss of around Rs 100 crore from a full tax waiver would be a short-term loss, but one that would help the renewable energy industry thrive in the long run. The move would encourage private investment, support job creation, and reduce pollution by incentivizing CBG adoption as part of India's energy mix.

In a letter to Finance Minister Nirmala Sitharaman earlier this month, IBA proposed a blanket corporate tax holiday for CBG production, with a complete tax waiver for producers during the initial years of operation. The association argues that this move would act as a strong incentive for businesses willing to invest in CBG production.

The Indian Biogas Association (IBA) has called on the finance ministry to introduce corporate tax holidays for compressed biogas (CBG) production in the upcoming General Budget, aiming to attract more investment into the renewable energy sector. The industry body highlighted that such tax incentives would be crucial for scaling up CBG production, contributing to cleaner energy generation and helping India meet its renewable energy goals.

Non-resident taxpayers continue to face challenges when filing returns. One of the key issues is that refunds are not directly credited to overseas bank accounts, making the process cumbersome. Additionally, the 30-day limit to submit the ITR-V (return acknowledgment) in physical form places unnecessary stress on non-residents. Tax experts recommend extending this time limit to 120 days, with more options for e-verification to improve the process for NRIs.

With the growing household expenses due to inflation, many consultants are advocating for a higher standard deduction. Despite a hike in the deduction from Rs 50,000 to Rs 75,000 last year, it remains insufficient in light of rising expenses. Tax experts suggest an increase to at least Rs 1 lakh to help offset the additional financial pressures on taxpayers.

Tax experts believe that the new tax regime could be made more attractive by including the house rent allowance (HRA) exemption. Many taxpayers have hesitated to switch to the new regime due to the loss of HRA benefits, which are a key part of the old regime. Bringing HRA into the new structure could incentivize taxpayers to make the switch. “Housing is a basic necessity, and rent is not a discretionary expense,” explains Mayank Mohanka, Founder-Director of TaxAaram.com.

Apart from increasing basic exemption limits and standard deductions, taxpayers are calling for simplification of tax laws and the income tax return-filing process. While this may not have significant revenue implications, it is a realistic demand that could ease the burden on taxpayers.

Last year, the Finance Minister increased the standard deduction limit and rationalized the tax slabs under the new regime. Taxpayers are hopeful for further relief this year, particularly in the context of high interest rates, increasing living expenses, and the need to boost consumption for economic growth. “Any relief this year will leave more disposable income in the hands of individual taxpayers,” says Kuldip Kumar, Partner at Mainstay Tax Advisors.

Tax experts believe that the old tax regime is unlikely to see any significant changes in favor of taxpayers. The government’s focus is likely to remain on promoting the new, minimal-exemption tax structure, which simplifies the system but still has room for improvement to attract more taxpayers.

As Finance Minister Nirmala Sitharaman prepares to present the much-anticipated budget on February 1, we’ll be bringing you all the latest updates, expert analysis, and key takeaways. With individual taxpayers hoping for relief amidst rising living costs and high inflation, the focus will be on potential changes to the tax regime and other measures to boost economic growth. Stay with us for real-time insights and detailed coverage of what Budget 2025 holds for the nation.