Budget 2025

India Budget 2025: Key Announcements, Tax Changes & Economic Outlook

It's February 1 and all eyes are on Finance Minister Nirmala Sitharaman as she prepares to present her eighth Union Budget in Parliament. The budget announcement is always a highly anticipated event, but this year, the focus is particularly sharp on how it will impact the poor and middle class. Salaried taxpayers, in particular, are eagerly awaiting possible income tax relief measures. With the new tax regime now serving as the default option, many are hoping for lower tax rates that would ease their financial burden. Given the rising cost of living and inflationary pressures, any relaxation in income tax slabs or increased deductions would be a welcome move for the working class.

At the same time, equity investors will closely monitor the government’s stance on market-related regulations. A key expectation is the rationalization of Long-Term Capital Gains (LTCG) tax. In the absence of the indexation benefit, which was available to the taxpayers earlier, it has been a point of concern for investors looking for better post-tax returns. The stock market, which is sensitive to budget announcements, will likely react to any proposed tax changes in the long-term capital gains. Additionally, investors are also keeping an eye on any changes in duties on gold. Given that gold plays a crucial role as an investment and a hedge against inflation, any reduction in import duties could lead to increased demand and lower consumer prices.

As India prepares for the Union Budget 2025, the economic landscape of the world’s fifth-largest economy is expected to undergo transformative changes. The Union Budget, traditionally delivered by the Finance Minister, plays a pivotal role in shaping the nation's economic policies.

The customary ‘halwa ceremony’, marking the final stage of the budget preparation, was held on 24 February. The Union Budget for FY26, which will be presented on 1 February 2025, will be FM Nirmala Sitharaman's eighth budget.

Even though 1 February is a Saturday, Indian stock exchanges will conduct a live trading session because of the Union Budget. NSE and BSE will remain open for normal trade as usual from 9:15 AM to 3:30 PM.

Union Budget 2025 Date, Time & Where to Watch Live

Union Budget 2025 will be presented on February 1, 2025. Interested viewers can watch the live telecast on government platforms and major news channels. Here’s a complete guide on where to watch the Budget 2025 live.

Historical Evolution of Union Budgets in India

India's Union Budget has seen significant changes over the years. From Jawaharlal Nehru's post-independence budgets to Nirmala Sitharaman’s digital-first approach, the Indian economy has evolved.

Early Years (1947-1970s)

In the early years, the union budgets were focused on laying the foundation for economic development, with heavy investments in public sector enterprises and industrialisation.

1980s and 1990s

The economic liberalisation policies of the 1991 budget under Finance Minister Manmohan Singh led to big-bang reforms, reducing import duties and encouraging private sector participation.

2000s

The 2004-2009 period, led by P. Chidambaram, focused on inclusive growth, prioritising social welfare programs and rural development.

Recent Budgets (2019-2024)

In recent years, especially under the leadership of Finance Minister Nirmala Sitharaman, there has been a shift towards digital infrastructure, tax reforms, and a push for a $5 trillion economy by 2024.

Key Highlights from Previous Budget

Budget 2024: Focus on Digital Economy and Green Growth

Tax Incentives for Startups

The 2024 budget introduced a slew of measures aimed at encouraging innovation, with tax exemptions for startups and greater incentives for Research & Development (R&D).

Green Energy Investments

The government earmarked substantial funds for solar energy, electric vehicles, and eco-friendly infrastructure.

Digital Infrastructure

Investment in the Digital India program and 5G spectrum allocation.

Top Expectations from Budget 2025

Personal Tax Reforms

There is a strong expectation that the government will introduce comprehensive income tax reforms, providing relief to the middle class and corporations. There is high hope that Finance Minister Nirmala Sitharaman may consider reducing income tax rates under the new tax regime in the upcoming budget to make it more attractive to taxpayers and eventually broaden the tax base.

Customs Duties

There is growing anticipation that the government may reduce import duties on certain goods to support local manufacturing, boost consumption, and increase disposable incomes. In the previous budget, the government lowered import duties on mobile phones and key components from 20% to 15%, a move aimed at benefiting consumers and strengthening India’s position as a global smartphone manufacturing hub.

Infrastructure and Job Creation

A central theme in Budget 2025 will be job creation. With millions of young people entering the workforce, the government is expected to increase its focus on infrastructure projects that generate employment.The budget is expected to prioritize smart cities, highways, investment diversification, and railway modernization.

Healthcare and Education

Post-pandemic, healthcare remains a critical area for policy focus. The government is likely to increase the allocation for healthcare, aiming to improve primary care infrastructure, medical education, and mental health services. Similarly, the education sector may see an emphasis on promoting digital education and addressing skill gaps for youth.

Focus on Green and Sustainable Development

Given the growing concerns about climate change, the 2025 Budget is likely to focus on green growth initiatives. There is an expectation for higher investments in renewable energy, electric vehicles, and sustainable agriculture. Incentives for businesses adopting eco-friendly practices and green technologies may be introduced.

Capital Gains Tax

There are expectations for capital gains tax rationalization to encourage long-term investments.

Will Budget 2025 change income tax slabs?

Possible income tax revisions are anticipated, especially for the middle class. Salaried taxpayers hope Finance Minister Nirmala Sitharaman will announce an increase in the standard deduction limit under both the old and new tax regimes. The old tax regime currently provides a fixed standard deduction of ₹50,000, while the new tax regime offers ₹75,000. Moreover, there is strong anticipation that the slab rates under the new tax regime will be reduced, encouraging more individuals to opt for it and ultimately expanding the tax base.Taxpayers who have opted for the new regime and fall within the lower tax brackets are hoping for lower income tax rates. Ahead of the Budget 2025 presentation, PM Modi said, “I pray to Goddess Lakshmi that the poor and the middle-class sections in the country are blessed by her,” further fueling hopes for income tax relief.

Conclusion

Budget 2025 is set to be a crucial financial milestone.As the government continues to address ongoing challenges such as job creation, inflation, and sustainability, the budget’s announcements will set the tone for the nation’s future growth. Budget 2025 can potentially shape India’s economy for the next decade with a focus on inclusive development, digitisation, and green initiatives. Stay tuned for live coverage and updates on Budget 2025.