Union Budget 2025: Expectations of the Common Man

Union Finance Minister Nirmala Sitharaman is preparing to present her eighth consecutive budget on February 1, 2025. As the date draws near, people are eagerly waiting to see what financial relief the government will offer in response to rising costs and unemployment concerns.

Income Tax Relief – A Key Expectation

One of the main expectations for the upcoming budget is income tax relief, especially for the salaried class. Many citizens, particularly those in lower and middle income groups, are hoping that tax cuts will increase their purchasing power. A recent report revealed that a majority of individual taxpayers are hoping for a reduction in taxes.

Shripal Shah, the Managing Director and CEO of Kotak Securities, believes the budget could bring good news for retail investors. If tax rates are lowered for smaller taxpayers, it would lead to more disposable income, benefitting the average citizen.

Possibility of New Tax Law and Changes in Slabs

There is speculation that the Finance Minister could introduce a bill for a new direct tax law to replace the current Income Tax Act of 1961. Since the introduction of the new tax regime in 2020, there have been hopes for revisions in the tax slabs for the 2025 budget. Currently, the basic exemption limit under the new regime is Rs. 3 lakh, but this could be increased to Rs. 5 lakh, potentially leaving individuals with more money to spend and boosting consumption.

Inflation Relief

Inflation has been a pressing issue for many households, as wages have not kept pace with rising costs. Food prices, especially for vegetables, cooking oils, milk, and packaged goods, have become a burden on household budgets.

While inflation is primarily managed by the Reserve Bank of India (RBI), the government could help ease the strain by reducing import duties on essential items, such as edible oils. This could help lower the cost of living, although experts believe the government may not be able to make major changes to indirect taxes like the Goods and Service Tax (GST).

Reforms to Simplify Taxation

Another area of focus in the budget could be reforms to the Goods and Service Tax (GST). Economists suggest that simplifying GST could encourage consumer spending and boost economic activity. They also hope for a broader tax base, which could ensure that more people contribute to the country’s finances.

Increased Deduction Limits and Tax Rebates

Some experts believe the government might increase the standard deduction limit from Rs. 75,000 to Rs. 1,00,000. This change would directly benefit taxpayers by lowering their taxable income.

Additionally, the income tax rebate under section 87A could also see a boost, potentially increasing the rebate limit to Rs. 10 lakh. This would benefit middle-income groups and offer them relief in the face of rising costs.

Affordable Housing and Employment Generation

Another significant area of focus for the government is the housing sector. India is facing a housing shortage, with over 25 million affordable housing units needed by 2030. Experts believe that to meet this demand, tax incentives for homebuyers should be introduced, along with policies to make home loans more accessible.

When it comes to employment, there is an expectation that the government will introduce measures to generate more jobs, particularly in sectors like real estate, which creates a large number of jobs. Boosting infrastructure spending and promoting labor-intensive industries could also play a key role in reducing unemployment.

As the Union Budget for 2025 approaches, all eyes are on the government to deliver tax relief and other financial support for common citizens. With rising inflation, housing needs, and unemployment concerns, the budget is expected to play a crucial role in providing relief and boosting the economy in the coming year.