The Union Budget for 2025-26, set to be presented on Saturday, is expected to strike a delicate balance between fostering economic growth and ensuring fiscal discipline, while addressing the needs of taxpayers, businesses, and key industries.
Industry leaders and experts are hopeful for measures that will stimulate consumption, incentivize capital expenditure, and support critical sectors such as real estate, MSMEs, healthcare, AI, electric vehicles (EVs), and renewable energy. Another significant expectation is continued fiscal consolidation.
A key area of focus for taxpayers is anticipated tax relief. Many expect changes in tax slabs under the new tax regime, including a potential increase in exemption limits and standard deductions. There is also a push for making annual income up to Rs 10 lakh tax-free. Taxpayers are hopeful for an increase in the standard deduction limit, which currently stands at Rs 50,000 under the old tax regime and Rs 75,000 under the new tax regime.
For businesses, the budget is expected to be growth-oriented while maintaining fiscal discipline. According to a survey by FICCI, 68% of businesses advocate for at least a 15% increase in capital expenditure allocation to drive economic growth.
The government is likely to continue its fiscal consolidation path, with a target to reduce the fiscal deficit from 4.9% in FY25 to 4.8%, and ultimately to 4.5% in FY26.
Key sectors have outlined their expectations for the budget. The real estate industry is calling for tax rationalization, an increase in the home loan interest deduction limit under Section 24(b) from Rs 2 lakh to Rs 5 lakh, and relief in long-term capital gains (LTCG) tax.
The healthcare sector is pushing for a rise in spending to 2.5% of GDP, lower GST on health insurance premiums, incentives for digital health technologies such as telesurgery and electronic health records, and reduced import duties on medical equipment.
MSMEs are seeking better access to credit and incentives for technology adoption to spur sectoral growth, while newer sectors like AI, EVs, and renewable energy are expecting policy incentives and financial support to foster innovation and industry adoption.
Tax reforms are also a significant area of focus. Industry stakeholders anticipate the introduction of a modernized Direct Tax Code (DTC) to simplify the 63-year-old Income Tax Act, much like how GST transformed indirect taxation. Simplification of complex TDS/TCS provisions is also expected to reduce litigation and compliance burdens.
With India’s economic momentum strong, 60% of businesses expect GDP growth to range between 6.5% and 7% in FY25. There is a growing emphasis on strengthening collaboration between educational institutions and industries to create a job-ready workforce, particularly in IT, healthcare, and manufacturing.
Infrastructure development and enhancing export competitiveness are also expected to be key themes. Investments in roads, railways, and other critical infrastructure are likely to remain a priority, with businesses pushing for logistics efficiency improvements and the extension of interest equalization schemes to boost India’s global trade position.
