Union Budget 2025 Expectations: Key income tax changes that Sitharaman may unveil on Feb 1

As the Union Budget 2025 draws near, the digital home loan and fintech sector is enthusiastic. We're counting on the government to introduce policies that will supercharge growth, innovation, and financial inclusion, making homeownership a tangible reality for millions of Indians.

To achieve this, we're hoping for measures like tax incentives for first-time homebuyers, streamlined regulations for digital lending, and investments in digital infrastructure. These initiatives will not only make home loans more accessible and affordable but also promote digital literacy, credit accessibility, and customer protection.

Effective collaboration between fintech companies, banks, and housing finance institutions is also crucial for driving a more inclusive and competitive financial ecosystem. By addressing these key areas, the government can unlock the full potential of the digital home loan and fintech sector, driving economic growth, job creation, and financial empowerment for millions of Indians. We're optimistic that Budget 2025 will be a game-changer for our sector, paving the way for a brighter financial future.-Pramod Kathuria, CEO and Founder of Easiloan

The IT sector has high pre-budget expectations centered on policies that drive innovation, growth, and job creation. Industry leaders anticipate incentives for adopting emerging technologies like AI, quantum computing, and blockchain, alongside tax relief for R&D investments. Strengthened support for skilling programs, particularly in AI and cybersecurity, is crucial to bridging talent gaps. Expanding digital infrastructure, promoting startups, and incentivizing global delivery models could position India as a tech innovation hub. The sector also seeks clarity on data privacy regulations and tax structures, ensuring ease of business and competitiveness. A tech-forward budget could catalyze the sector's role in economic growth."

"As we look to the Union Budget 2025-26, the IT industry anticipates measures to further strengthen India's digital infrastructure, particularly through tax concessions for the data centre sector. Given the critical role data centres play in enabling digital services and advancing the 'Digital India' vision, such incentives will not only attract foreign investments but also generate employment and fuel a new growth trajectory for the sector. These reforms will position India as a global leader in digital infrastructure, driving innovation and economic progress.- Neeti Sharma, CEO, TeamLease Digital.

As we approach the Union Budget 2025, capital gains tax rationalization is one of the key areas that everyone has been focusing on. Some of the key demands for the rationalization of capital gains tax include lowering tax rates on long-term capital gains, revising the thresholds for LTCG tax, enhancing indexation benefits, increasing threshold limits of deductions like 54, 54F, etc., and other similar measures. The government has often balanced between making changes to encourage investment and maintaining revenue targets. The FM is likely to weigh the potential revenue impact of any changes and whether it aligns with broader economic goals.

Given the current economic priorities, such as boosting consumption, job creation, and handling fiscal deficits, tax rationalization could be linked with broader reforms. The FM's stance on capital gains tax rationalization will likely depend on a careful assessment of how much the government can afford in terms of tax cuts while still balancing its budgetary goals. While it's uncertain if the FM will concede fully to the demands of capital gains tax rationalization, the market continues to expect some changes that could benefit long-term investors- Sofiya Syed, Direct Tax Division, Dewan P.N. Chopra & Co.

While rural consumption has been on a road to recovery in the past year, the agriculture sector is hoping that the upcoming Budget of 2025 will announce measures that will further bolster rural infrastructure and improve farmer incomes. Read more

We are keenly anticipating Budget 2025, hoping for reforms that will ease distribution costs and spur growth. Among the primary expectations is a reduction in the Goods and Services Tax (GST) on insurance premiums. Lowering GST would make insurance products more affordable for policyholders, potentially boosting sales and reducing customer acquisition costs. A tiered GST structure, with reduced rates for specific products or even a zero-rating for micro-insurance and digitally sold health insurance, is suggested.

Tax incentives for technology adoption are another key demand. We propose tax breaks for investments in technology aimed at improving insurance distribution. This includes deductions for expenses on cloud computing, data analytics tools, and AI-powered underwriting platforms, which are crucial for enhancing efficiency and customer experience.

We believe that support for insurtech startups is also critical. The industry urges the government to allocate funds or create programs that facilitate the growth of these startups. This could involve grants for research and development, easier access to capital, and tax breaks for venture capitalists investing in insurtech firms. Such measures would help foster innovation and ensure the continued evolution of the insurance sector.

By addressing these areas, Budget 2025 can significantly reduce distribution costs for insurtech companies, enabling them to deliver more affordable and accessible insurance products to a broader audience.- Pankaj Nawani, CEO, CarePal Secure

The Union Budget 2025, which is set to be presented on February 1, is expected to introduce reforms aimed at supporting the growth and accessibility of financial services in Tier 2 and Tier 3 cities. With the industry witnessing growth in recent years, we are looking forward to measures that could enhance financial inclusion and security.

Recently, the newly appointed RBI Governor also stressed on promoting financial inclusion as a key priority. The Indian government has been actively promoting financial inclusion, especially in Tier 2 and Tier 3 cities. These efforts aim to integrate underserved populations into the formal financial system, providing them with access to essential financial services.

It's not only a social imperative to extend financial inclusion in Tier 2 and Tier 3 cities, but also a powerful engine of growth for the economy. At BLS E-services we are dedicated to transforming the delivery of government and financial services across India. With an unwavering focus on ‘Delighting the Citizen. Strengthening the Nation,’ with our innovation and ease of accessibility through our 1 lakh touchpoints across India, BLS E- Services operates through multiple models to ensure seamless citizen engagement and financial inclusion.

The betterment of citizens' lives with access to credit, savings and insurance allows us to realize their full potential for national development. We expect this budget should, therefore, further enhance our commitment through the targeted policies and services in the underserved area.-Shikhar Aggarwal, Chairman of BLS E-Services

Ahead of the Union Budget 2025-26, we anticipate the government will continue its strong support for India's startup ecosystem, recognizing its pivotal role in driving the nation’s long-term growth. As a startup committed to advancing India's green mobility transition, we expect focused measures that include enhanced financial support mechanisms and simplified regulatory frameworks to further empower the sector. In particular, we look forward to initiatives that will enable innovative companies to scale quickly, while ensuring that sustainable technologies become more accessible, affordable, and impactful for a wider audience. A more holistic and strategic approach is essential for the continued growth of India’s EV sector. While initiatives like the PM E-Drive are commendable, the sector now requires further support in key areas such as infrastructure development and financing solutions. The upcoming budget should prioritize creating a conducive ecosystem that not only supports the adoption of electric vehicles but also makes them a viable and accessible option for consumers. These measures will be crucial in driving the next phase of EV uptake across the country.-Kunal Mundra, CEO & Co-founder, Electrifi Mobility

The Global Trade Research Initiative (GTRI) proposed six reforms for Budget 2025-26 to boost India’s trade and manufacturing. The proposals include reducing the average import tariffs to around 10 percent to increase domestic production and avoid international scrutiny. Read more

India’s subsidy spending has grown at a faster post-Covid than in the first term of the National Democratic Alliance government of Prime Minister Narendra Modi, a Moneycontrol analysis has found. Read more

The long-awaited industry status and a host of reforms that would drive growth and improve its operational efficiency rank high on the wish list of the real estate sector for the Union Budget 2025.

Experts said the sector has pinned hopes on the Union Budget 2025 for securing the industry status along with major policy reforms and tax incentives to firm up the homebuyer sentiment. Read more

As the government gears up to unveil the 2025 Union Budget, the NBFC/Fintech sector is abuzz with anticipation. We're eagerly waiting to see how the budget will propel growth, innovation, and financial inclusion in our sector. At the top of our wish list are initiatives that boost financial inclusion through digital lending platforms, bringing credit access to the unbanked population. Tax incentives for digital lending platforms would be a huge bonus, especially if they include tax relief for companies investing in cutting-edge technology. We're also hoping to see policies that enhance digital infrastructure, facilitate data-sharing frameworks, and promote credit health awareness through nationwide credit literacy programs. Of course, encouraging responsible lending practices, fostering collaboration between fintech and traditional financial institutions, and providing regulatory support that balances innovation with customer protection will be vital. By tackling these key areas, the government can unlock the full potential of the NBFC/Fintech sector, driving financial inclusion and economic growth that benefits everyone.- Rohit Garg, co-founder and CEO, of Olyv (Formerly Smartcoin)

• MSMEs are urging the Union Budget 2025-26 to prioritize reduction in compliance burdens, enhancing export incentives and expanding the PLI scheme to drive manufacturing growth. The industry also seeks tax reforms and better access to essential inputs like steel, aluminium and plastics. Speedier dispute resolution mechanisms are critical for improving competitiveness and unlocking Indian business potential in domestic and global markets.
• However, the declining share of consumer spending in GDP is a pressing concern that demands attention. A strong focus on boosting consumer spending can stimulate demand across industries, encouraging production, investment, and job creation. This creates a virtuous cycle of growth, reinforcing the industrial ecosystem while complementing government-led initiatives. By nurturing consumer confidence and spending power, the economy can achieve more balanced and resilient GDP growth, driven by both public and private momentum. - Wonderchef Co-Founder & Managing Director Ravi Saxena

As Budget 2025 approaches, the Edu-Fintech industry remains optimistic about measures aimed at improving financial accessibility and fostering innovation in education. Introducing interest-free or subsidised schemes, digital financial solutions, and tax incentives for education-related expenses can benefit both students and institutions. Policies that encourage partnerships between fintech companies and educational institutions will accelerate the adoption of technology-driven financial systems, bridging funding gaps and enhancing cash flow management. This budget has the potential to promote equitable access to education while encouraging innovation and collaboration in the Edu-Fintech space, ultimately contributing to India’s economic and social development. - Rohit Gajbhiye, Founder and MD of LEO1

• The Union Budget 2025 presents an opportunity to address key challenges faced by NBFCs providing short-term loans to salaried employees. Lowering the SARFAESI Act threshold to Rs 1 lakh could streamline the recovery process for smaller-ticket loans, improving cash flow for lenders and expediting credit access for borrowers.
• Additionally, introducing a 10% TDS exemption on interest income would enhance liquidity, enabling NBFCs to offer more affordable and efficient lending solutions. With salaried professionals increasingly relying on short-term credit for emergencies and lifestyle needs, these reforms would empower NBFCs to drive financial inclusion while ensuring sustainable growth. - Kaushik Chatterjee, Founder & CEO, lendingplate (UCIL)

• The upcoming Union Budget presents a vital opportunity to bridge the financial inclusion gap by empowering NBFCs, particularly those serving underserved and unbanked segments. NBFCs play an essential role in providing short-term and personal loans to individuals, meeting the needs of salaried employees and urban customers often overlooked by traditional banks.
• We anticipate initiatives that support digital transformation and enhance credit delivery through technology. Subsidising digital infrastructure for small and mid-sized NBFCs could accelerate digitization, reduce operational costs, and expand customer outreach.
• The Budget could also introduce a framework to promote co-lending partnerships between NBFCs and banks, facilitating seamless credit delivery at competitive rates. Additionally, tax incentives for lending to priority sectors and rationalizing GST on financial services would significantly boost the viability of small-ticket loans.
• A reform-focused Budget can strengthen the NBFC sector's ability to drive financial inclusion, fostering equitable economic growth and extending credit access to those who need it most. - Ankit Modi, Managing Director, SalaryOnTime

• As the Union Budget approaches, we look forward to policy measures that acknowledge the crucial role of NBFCs in driving infrastructure growth. With our flexibility in underwriting and ability to offer tailored solutions, NBFCs are well-positioned to make significant contributions to infrastructure financing.
• We anticipate announcements of long-term funding mechanisms or partial credit enhancement programs designed specifically for NBFCs. Additionally, extending the benefit of tax-free infrastructure bonds to NBFCs could help reduce borrowing costs and enhance credit flow to key sectors such as transportation, energy, and urban development. Simplifying regulatory guidelines to lower compliance costs and fostering public-private partnerships would further support this goal.
• This year’s Budget should prioritise boosting credit availability and minimising operational challenges, empowering NBFCs to play a meaningful role in advancing India’s growth trajectory. - Vikkas Goyal, Founder Rupee112

• The Union Budget 2025-26 represents a crucial opportunity for the rice milling industry, a cornerstone of food security and rural economic support. Key expectations include incentives to modernize rice mills with advanced machinery, enhancing efficiency, minimizing wastage, and improving output quality. Subsidies or tax exemptions for energy-efficient and automated technologies can foster innovation and lower operational costs. Additionally, better access to financing and interest subvention schemes for millers would further bolster the sector.
• From an ethanol perspective, leveraging by-products like rice husk for ethanol production can generate additional revenue streams while aligning with India’s energy goals. Building infrastructure to integrate rice milling outputs into ethanol production processes can create synergies between the two industries.
• These initiatives would not only modernize the rice milling sector but also position it as a pivotal contributor to India’s ethanol blending targets and sustainable energy transition. Policy support for rice milling and ethanol production will enhance rural livelihoods, strengthen the agricultural economy, and elevate India’s standing in global agriculture and biofuel markets. - Vasu Naren, Chairman & Managing Director, Sona Machinery

• As the Union Budget approaches, there are three key areas of focus:
• Financial Inclusion: Regulatory tightening in recent years has limited credit access for urban low-income groups and hindered rural infrastructure, such as micro-ATMs. There is a need for regulatory stability and clarity regarding NBFC and fintech partnerships, along with initiatives to revive and prioritize financial inclusion.
• Labour Codes for Gig Workers: Gig workers have played a crucial role in employment generation. Formal recognition and comprehensive social security coverage under updated labour codes could further empower this vital sector.Healthcare for Urban Low-Income Households: This demographic often falls through the gaps, as they are neither classified as BPL nor EWS but remain in need of support. Measures such as removing GST on insurance, incentivizing standardized health coverage plans, and expanding the Ayushman Bharat program to include these households could significantly improve their access to essential healthcare. -  Anshul Khurana, Co-founder and CEO – Entitled Solutions

A delegation of pensioners met Finance Minister Nirmala Sitharaman on January 10, 2025, during a pre-budget consultation, advocating for an increase in pensions along with additional benefits such as a dearness allowance (DA) hike and free medical care for pensioners and their spouses, according to a report by Financial Express.

The government is reportedly considering increasing the minimum monthly pension under the Employees’ Pension Scheme (EPS) to Rs 7,500, a move that could significantly benefit private sector employees. This proposal comes in response to longstanding appeals from EPS-95 pensioners, who currently receive a modest Rs 1,000 per month.

Congress MP Gaurav Gogoi demanded a revamp of different rates under the Goods and Services Tax (GST) to give relief to the “hardworking citizens” of the country.

With enhanced awareness about stock markets, an increasing number of entities are now trading in equities. They could be corporates, domestic institutional investors (DIIs), foreign institutional investors (FIIs), foreign portfolio investors (FPIs), individuals, proprietorship traders, and others. (Read More)

• In an unusual decision, both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) will remain open for trading on February 1, even though it falls on a Saturday.
• As per a circular from the exchanges, live trading sessions will be held to account for the budget's impact on the financial markets. This move highlights the significance of the budget in influencing market sentiment.

The government may consider increasing the import duty on gold to address concerns about the trade deficit and curb excessive imports. Currently, India imposes a 6% import tax on gold. This rate was significantly reduced from 15% to 6% in the Union Budget 2024, with the cut coming into effect on July 24, 2024.

There is also discussion about raising the standard deduction for salaried individuals. Under the old tax regime, salaried employees and pensioners receive a flat standard deduction of Rs 50,000 on their taxable income, while under the new tax regime, the deduction is Rs 75,000, irrespective of their income level.

• The government may consider enhancing the new tax regime by offering additional benefits to make it more appealing to taxpayers.
• There is speculation that the government might revise the income tax slabs under the new system. Tax expert Balwant Jain was quoted by The Mint, suggesting that, to make the regime more progressive and aligned with the current state of the economy, the 30% tax rate could be applied to income levels exceeding Rs 20 lakh, taking inflation into account.

Ahead of the Budget presentation, Finance Minister Nirmala Sitharaman concluded a series of consultations with stakeholders on January 6, 2025. These discussions, which began on December 6, 2024, spanned over a month and involved more than 100 participants from nine different groups.

Ahead of the Union Budget, the auto industry believes that while the government has supported several initiatives, including the adoption of electric vehicles and the promotion of research and development, there are still numerous unresolved issues. According to a report by Deccan Herald, one of the key demands from industry stakeholders is the need for a simplified classification and Goods and Services Tax (GST) rate structure for automobiles and auto components. Currently, the classification is done under the Harmonised System of Nomenclature (HSN), which has led to increased complexities and incorrect classifications for auto companies.

Welcome to our live coverage of Union Budget expectations. As India Inc and common man wait for Nirmala Sitharaman's key speech on February 1st, here's a look at what are the expectations of various sectors, buzz around income tax tweak and much more. Stay with us for quick analysis, voices from power corridor and key data.