Budget 2025: Lower Taxes, Job Creation, and Infra Boost Top Expectations
Budget 2025: Taxpayers expect higher deductions and a change in tax slabs from the FM.

Taxpayers expect higher deductions and a change in tax slabs, with the maximum tax rate of 30% to be applied after Rs 20 lakh. (Image: PIB)
Finance Minister Nirmala Sitharaman will present the Union Budget 2025 on February 1, paving the way for economic growth, infrastructure developments and rate cuts by the RBI. This budget is much awaited, and various industries along with taxpayers are keenly watching the developments and sops for them considering the slowdown in the economy, weak employment growth and global uncertainty looming large.
Taxpayers expect higher deductions and a change in tax slabs, with the maximum tax rate of 30% to be applied after Rs 20 lakh. Currently, income exceeding Rs 10 lakh falls under the 30% tax bracket in the old tax regime. In the last budget, the government brought about some changes in the slabs, but it catered to only lower incomes while those having the biggest share in paying income tax were left disappointed.
The finance minister may also announce a new tax bill that may pave the way to address the complexity of taxation and make it simple legislation. It is the priority of the government to simplify taxation in the country to bring a larger population under the income tax law.
Expectations are also high that the FM may announce the new tax regime as the only regime by making it more attractive, bringing an end to the old tax regime.
Affordable housing is going to be a focus area this year as well. However, with the CLSS benefit coming to an end, many first-time homebuyers expect the government to reintroduce the subsidy. Also, the ceiling limit under affordable housing needs to be increased to bring more people, especially in metro cities, to be eligible to buy their own houses. Rising costs and high interest rates have affected the growth of affordable housing while the luxury segment continues to grow across key cities.
Home loan interest rates are very high, which is affecting the growth of the real estate industry, the second-highest employment generator in the country. In the last 11 monetary policy meetings, the RBI kept the repo rate unchanged at 6.5%. While global rate cuts have already begun, all eyes are now on India to reduce the interest rate and propel economic growth.
To boost economic growth, the budget may also have announcements to increase infrastructure spendings that may improve the current sentiments in India. The equity market is awaiting a slew of measures from the government side.
The last six months remained highly volatile for the market due to regulatory measures from the SEBI and RBI impacting financial markets. Rising delinquencies in smaller loans is another concern that is impacting the Indian banking system.
Banks are facing a decline in deposits despite offering higher interest rates. With equity now being volatile and have given negative returns in the last few months, the focus is now shifting towards secured investment options. One expectation is to bring the tax-saving FD tenors at par with tax-saving equity investments. Right now, mutual funds have a 3-year tenor while FD has a 5-year term for claiming tax deductions. Will the government do something about these issues? That will be seen in the budget announcement.