Union Budget 2025 expectations updates: Tax reforms, GST overhaul, and manufacturing support top recommendations for FM Sitharaman

V Balasubramanian, CEO of FSS, emphasizes the need for a progressive and balanced approach in the upcoming Union Budget to incorporate AI into India’s financial ecosystem. With AI expected to contribute $15.7 trillion to the global economy by 2030, he advocates for targeted investments in AI-driven payment systems to position India as a leader in financial innovation. He believes that AI can significantly enhance the BFSI sector by improving security, reducing fraud, and optimizing customer experiences. Balasubramanian also stresses the importance of accelerating the adoption of Central Bank Digital Currency (CBDC) to promote financial inclusion, offering underserved populations access to formal financial systems and improving payment efficiency. Additionally, he calls for continued investments in digital infrastructure to drive innovation and achieve the Viksit Bharat Vision of 2047.

Gaurav Parasrampuria, CFO of Magma General Insurance Limited, expresses optimism for the upcoming Union Budget 2025, expecting the government to prioritize measures that encourage the growth of the insurance sector. He anticipates tax incentives for policyholders under section 80D and a reduction in GST on health insurance premiums, along with the retention of input tax credit benefits for the industry. These initiatives, Parasrampuria believes, will make insurance more accessible to a broader population while fostering growth and innovation in the sector. Aligned with the government’s vision of ‘Insurance for All by 2047,’ he hopes the policies will ensure every citizen has access to adequate insurance coverage, securing their financial future.

Vivek Desai, Founder & Managing Director of HOSMAC, emphasizes the need to prioritize healthcare investments in the upcoming Union Budget 2025-26. He suggests establishing a Healthcare Capex Fund with flexible loan repayment options to encourage private sector investments and support sustainable growth. Desai also advocates for rationalizing GST to alleviate the financial burden on hospitals, which are unable to claim input tax credits due to the GST exemption on healthcare services. Lowering customs duties on life-saving and high-cost diagnostic equipment would enhance access to advanced medical technology. Additionally, he stresses the importance of increasing hospital bed capacity, addressing the shortage of skilled professionals, and improving healthcare insurance schemes to create a more equitable and resilient healthcare system. Desai believes these steps will help build a solid foundation for India’s health, aligning with the vision of a thriving and healthy nation.

LC Mittal, Director of Motia Builders Group, emphasizes the need to revise the current affordable housing thresholds, which have not kept pace with rising construction costs, estimated at 30-40%. He points out that the price limit of Rs. 40 lakh, set years ago, should have been adjusted by now. Additionally, the 60-square-meter size limit for metropolitan areas no longer reflects modern lifestyle demands. Mittal calls for a more dynamic approach, considering local market prices, construction costs, and income levels to meet the goal of "Housing for All." He suggests implementing flexible pricing and boundaries to effectively address affordable housing needs.

Aman Gupta, Director of RPS Group, advocates for an increase in the tax deduction on housing loan interest to Rs.5 lakh, which would provide significant relief to the middle class. The proposed increase from Rs.2 lakh to Rs.5 lakh would reduce tax expenditure and make home ownership more affordable, especially with current EMI rates ranging from 8.5% to 9%. Gupta believes this adjustment would greatly benefit those looking to invest in tier-2 and tier-3 cities, leading to a potential 30% increase in demand for affordable housing in the next financial year.

Anurag Goel, Director of Goel Ganga Developments, points out that the real estate sector, particularly affordable housing, has not received adequate attention or recognition compared to other sectors. He suggests that providing developers and institutions with training to access affordable financing options, such as lowering capital rates by 200-300 basic points, could make a significant difference. Additionally, revisiting the 100% tax exemption for affordable housing projects would incentivize developers to focus on this segment. Goel believes that such measures would help address the current imbalance, where only 25% of new launches are in the affordable sector, despite the sector having 70% of potential buyers.

Manoj Goyal, Director of Forteasia Realty Pvt. Ltd., highlights the success of the Pradhan Mantri Awas Yojana’s (PMAY) Credit-Linked Subsidy Scheme (CLSS), which enabled millions of people from economically weaker sections to purchase their first home. Goyal emphasizes the importance of reinstating the CLSS and suggests that increasing the subsidy limits could address the significant drop in demand for homes in the Rs 40 lakh segment, especially due to rising construction costs and other expenses since 2020.

Abhinav Jain, Co-Founder & CEO of Almonds AI, expresses hope that the upcoming budget will prioritize policies that accelerate AI adoption across various industries as India continues to lead in technology and innovation. He advocates for incentives for businesses focused on green technology and sustainability, which can drive eco-friendly practices and promote corporate responsibility. Jain also highlights the importance of investments in digital infrastructure and smart technology solutions, which will empower startups and enterprises to scale effectively while bridging the gap between innovation and inclusivity. He believes that a budget focused on AI and sustainability will not only boost economic growth but also position India as a global leader in both green and digital transformation. Jain hopes for more tax breaks, funding schemes, and R&D grants targeted at tech-driven startups to help them scale and contribute to India’s vision of a greener, digital-first economy.

Kaushal Agarwal, Co-Founder & Director of The Guardians Real Estate Advisory, emphasizes that the upcoming Union Budget 2025-26 has the potential to focus on policies that stimulate growth in the real estate sector. He advocates for addressing the challenges faced by affordable housing, which has seen a decline in recent years. Reinstating the Credit-Linked Subsidy Scheme, offering tax holidays for developers, and raising the home loan interest deduction limit could enhance housing affordability and drive project development. Agarwal also suggests prioritizing infrastructure growth, urban land reforms, and implementing a single-window clearance system. Improving liquidity for developers and offering incentives to attract both domestic and foreign investments will be crucial. He believes a balanced approach will help the real estate sector contribute to urban transformation, job creation, and the realization of the 'Housing for All' vision, especially in emerging Tier-II cities.

Purusharth Malik, Tech, Smartphones & Digital Marketing Expert, anticipates that the Union Budget 2024-2025 will focus on fostering innovation and entrepreneurship by implementing targeted reforms. Simplifying business compliance processes and streamlining GST rates could improve operational efficiency and ease of doing business. He suggests that incentivizing key sectors like technology, MSMEs, and sustainable energy could boost growth and employment opportunities. Policies that support startups in emerging fields such as AI, IoT, and green technology would enhance India’s global competitiveness. Malik also emphasizes that infrastructure development, along with personal tax relief under the new tax regime, would stimulate domestic consumption and investment, contributing to overall economic growth.

Dr. Bijal Sanghvi, Managing Director of Axis Solutions Pvt. Ltd., envisions a bright future for India's engineering and manufacturing sectors, fueled by the government's commitment to clean energy, sustainability, and technological innovation. With the anticipated Budget 2025, there is hope for increased investment in renewable energy, waste reduction, and green technologies, propelling the country toward net-zero emissions through eco-friendly collaborations and sustainable practices. The focus on initiatives like the National Green Hydrogen Mission and solar energy expansion signals India's drive to create a greener industrial landscape, attracting investments, generating green jobs, and solidifying its position as a global leader in sustainable manufacturing.

At the same time, Budget 2025 is expected to accelerate the digital transformation of India's manufacturing industry, embracing Industry 4.0 technologies such as AI, IoT, IIoT, robotics, and automation. Public-private partnerships will be critical in driving innovation and integrating these technologies into traditional manufacturing processes. Programs like "Digital India," "Make in India," and "Skill India" are set to receive renewed attention, enhancing competitiveness and preparing the workforce for future challenges. Investments in infrastructure, logistics, and global trade corridors will ensure inclusive and equitable growth, creating a resilient and progressive industrial ecosystem in India.

Shetal Mehta, Co-Founder of Suchi Semicon, has highlighted that as the 2025 Budget approaches, the semiconductor industry expects policies to address key gaps in India’s semiconductor ecosystem. While the ₹10,000 crore allocation under the Production Linked Incentive (PLI) scheme has provided momentum, the industry urges increased efforts to enhance domestic manufacturing and innovation, particularly in Outsourced Semiconductor Assembly and Testing (OSAT).

With global semiconductor revenue expected to hit $676 billion by 2025, India has the opportunity to strengthen its position, though challenges in supply chain reliability and chip manufacturing remain. The 2025 Budget could foster growth by offering incentives to global producers, reducing import reliance, and supporting the domestic tech ecosystem, leading to job creation and economic growth.

Additionally, investments in semiconductor education programs and design labs, along with tax benefits for R&D and subsidies for advanced tools, would boost innovation and build a skilled workforce. These measures could help India establish itself as a major manufacturing hub and a key player in semiconductor technology.

Union Finance Minister Nirmala Sitharaman completed her month-long round of consultations with various industry and sector representatives in preparation for the 2025 Budget, PTI reported. The consultations, which began on December 6, 2024, involved over 100 participants from nine different stakeholder groups. These groups included experts and members from farmer associations, trade unions, the education and health sectors, MSMEs, industry, economists, financial sectors, and those representing infrastructure, energy, and urban development.

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Pre-budget expectations quote from Transport Corporation of India (TCI Ltd.)

“India’s logistics sector is at a fulcrum, where the government’s sustained emphasis on multimodal connectivity, infrastructure and skill development has proven to be transformative. These initiatives are driving down logistics costs as a percentage of GDP while making the sector less carbon-intensive. Building on the momentum of past trends, we are hopeful that the government will increase capital expenditure by 12-15% in the Union Budget for FY'26. This increase will catalyse the economic growth for realizing India’s vision of becoming a $30 trillion economy by 2047.

Additionally, we look forward to incentives for increasing adoption of clean fuels and large commercial EVs through the development of charging infrastructure along major routes, to align with the nation’s climate goals. Continued focus on digitization, simplification of documentation and streamlining policies to ensure seamless goods movement across states will further strengthen supply chains, enhancing India’s global trade competitiveness. Incentives for high value manufacturing, inflation control by focusing on the 360-degree ecosystem for reducing post-harvest losses through cold storage and digitization will further boost the rural economy, leading to bottom-up growth spurt. These steps will position logistics as a key driver of sustainable economic growth.” – Vineet Agarwal, Managing Director, Transport Corporation of India Ltd. (TCI)

Purusharth Malik, a Tech, Smartphones, and digital Marketing Expert, commented on the expectations of the Union Budget:

"Simplifying compliance processes for businesses and rationalizing GST rates would not only streamline operations but also enhance the ease of doing business. Incentivizing sectors such as technology, MSMEs, and sustainable energy can create opportunities for growth and employment generation."

It’s the season  for wishlists. And individual taxpayers hope that Finance Minister Nirmala Sitharaman will pay heed to some of their hopes on February 1.

The general consensus among tax experts is that the old tax regime is unlikely to see any changes in favour of taxpayers, as the government is keen to promote the new, minimal-exemption one. However, the latter can be made more appealing to attract more taxpayers towards the simpler structure that it offers. Read more