Budget 2025 Live Updates: FM Nirmala Sitharaman to present Union Budget today; all eyes on income tax relief, GDP growth

Budget expectations: “India's rapid urbanization and digital transformation are driving the Out-of-Home (OOH) sector to its full potential. The Union Budget 2025-26 should prioritize investments in smart city initiatives, urban transit projects, and infrastructure renewal programs. Expanding highways, metro networks, and high-traffic urban corridors will foster economic growth and create new opportunities for OOH advertising.

Targeted measures include subsidies for digital billboard conversions, reduced taxes on DOOH technology imports, and support for dedicated power infrastructure. Increased investments in 5G rollout and affordable internet access are expected to improve real-time content delivery and programmatic advertising in DOOH campaigns. Simplified policies to attract FDI in advertising and media technology, GST reductions on advertising services, and special electricity tariffs can further encourage advertisers to invest in DOOH.

These initiatives will benefit stakeholders, drive inclusive growth, enable OOH players to innovate, and offer investors a scalable and future-ready market opportunity,” says Junaid Shaikh, Managing Director of RoshanSpace Brandcom.

Support women’s participation in the workforce by allowing day care expenses as an exemption up to a certain defined limit: The care economy presents a significant opportunity for both economic growth and the empowerment of women in India. The Government by providing a specific tax exemption on day care expenses can support women’s participation in the economy, says FICCI.

Government may also consider forming a statutory body to certify daycare centers and regularly monitor their quality to bring standardization.

Commuting to the place of work from home is generally seen as a constraint for women’s employment in manufacturing sector, especially when such places are away from residential areas. Building dormitories would enable more women participation in manufacturing. Government may consider allowing CSR funds to be used for setting up and maintenance of dormitories for women.

Consider a special tax exemption upto a defined limit for working women for expenses incurred on childcare for children upto the age of 5 years.

“It will require appropriate skilling and education for India’s youth to take advantage of technological advances such as Artificial Intelligence, enabling its population to stay one step ahead of technological developments. That would minimise or even eliminate the potential adverse impact on employment and, if possible, turn it into a force for augmenting employment. It would require a departure from ‘business as usual’ for collaboration between academic institutions and businesses. Innovation should be facilitated through resource flows, setting up centres of excellence in different technologies and expanding autonomy for academic and research institutions to attract top talent from the rest of the world to India. Policy action on this front is already underway, with recent budgets reflecting a clear focus on a technology driven economy. This includes establishing Artificial Intelligence Centres of Excellence (CoE) at top educational institutions across India and the announcement of a ₹1 lakh crore financing corpus to catalyse private sector innovation and R&D in sunrise sectors,” says Economic Survey 2025.

Ask #1 The government has increased its budgetary allocation over time to focus on developing physical and social infrastructure. This has led to a decline in logistics costs (10 percent of GDP in 2013 to 8.9 percent of GDP in 2022) and improved women participation in the labour force (23.3 percent in 2018 to 37 percent in 2023). The upcoming budget is also expected to focus on these sectors. Within infrastructure, we expect changes in allocation priorities leading to a higher allocation towards improving port and shipping; energy, especially green and sustainable energy; and urban infrastructure. The government is expected to continue prioritising spending on health, education and skilling in the social sector.

Ask #2 One of the biggest challenges will be to revive merchandise exports that contracted by 3 percent in FY2024. To achieve its US$1 trillion target by 2030, it will have to create a roadmap to reach it. We expect the government to soon complete the FTA talks with Oman, Peru, the UK, the European Union, Chile, the South African Customs Union and the Gulf Cooperation Council. This could boost exports in these regions amid global uncertainties. The government is expected to expedite digital networking opportunities, such as the Trade Connect platform, to facilitate exporters’ connections with international trade counterparts.

Ask #3 Energy demand is expected to increase for the fastest-growing nation, and India must prioritise energy security and energy self-reliance while ensuring a push towards alternate, cleaner energy sources. We expect an overhaul of the power supply ecosystem through energy reforms that address legacy issues. Green mobility and energy sources are also expected to get a leg up as the government emphasises building the supporting infrastructure and accelerates its efforts for the uptake of PLI schemes in solar photovoltaic modules and chemical cells, says Dr. Rumki Majumdar, Economist, Deloitte India.

Government could consider providing ‘consumption vouchers’ to people in lower income group. The vouchers could be designed to be spent on designated items (specific goods and services) and could be valid for a designated time (like 6-8 months), to ensure spending. One criteria to identify the beneficiaries could be Jan Dhan account holders, who are not beneficiaries this year, under the schemes specified in the point on ‘Increase per unit benefit under various schemes’, says CII.

In the medium term, the real GDP growth target should be 6.5% or above.

This would call for an aggregate real investment rate (GFCF) of 34% with an ICOR of about 5.2.
With global economic uncertainties likely to continue, India’s growth will largely depend on domestic demand. GoI should ensure robust investment demand and persuade state governments also to increase their capital expenditure growth.

The private sector should be facilitated to increase its investment rate by progressive reduction in the interest rates.

Growth in urban demand is falling below that of rural demand. Government’s newly introduced employment related schemes should be implemented on a priority basis in order to uplift urban demand, says EY.

• FICCI says only defence equipment made in India / partnered in India should be procured.
• Intensify research efforts to develop technologies to keep Indian armed forces ahead in areas such as robotics, quantum computing, sensors, hypersonics, directed energy and AI & ML.
• Build capabilities for millions of inexpensive small and micro-drone swarms that are weaponizable.
• Set up a Defence Export Promotion Agency that can co-ordinate with armed services, their foreign directorates, DPSUs, private manufacturers, MEA, Indian embassies, and MoD and communicate with foreign government and buyers, says FICCI.

“The 2025 Union Budget will continue to focus on transformative reforms in the financial services sector, driving growth and innovation. We anticipate the budget to be focusing on a slew of measures such as simplifying regulatory frameworks, incentivising technological advancements, infrastructure investments and enhancing financial inclusion while continuing to focus on some of the past budget themes including 2024. Additionally, key measures around ease of doing business at IFSC GIFT City, capital market and insurance sector reforms will be important in positioning India as a global financial hub, while laying a strong foundation for a resilient and inclusive financial ecosystem,” says Vivek Iyer, Partner, Grant Thornton Bharat.

Foreign bank tax rates: Previous budget reduced tax rates for foreign companies. However, foreign bank branches in India still face higher taxes than Indian banks. Further tax rate reduction needed for competitiveness

Securities Transaction Tax (STT): Originally introduced for tax exemptions on long-term capital gains and concessional rates for short-term gains. With competitive tax rates now in place, STT abolition is warranted

NBFCs growth and tax benefits: NBFCs expanding due to rising credit demand and digital transformation. Tax benefits for banks gradually extended to some NBFCs. Immediate notification needed for thin capitalisation interest disallowance exclusion. Amendments expected for:

Recognising interest conversion into debentures/bonds as payment
Exempting TDS on interest payable to NBFCs
GIFT-IFSC Incentives: Enhancing India's position as a global financial hub. Proposed incentives:
Extend tax holiday for insurance companies to 15-20 years
Tax exemption for non-residents on ODIs issued by IFSCA registered non-bank entities
Tax relief for green finance, including green bonds and weighted deductions

SWFs/pension funds tax relief: Extension of tax relief beyond 31 March 2025. Further relaxation in conditions could aid India's development needs
TDS on listed debentures: Budget 2023 removed TDS exemption, complicating cash flow, and yield calculations. Reinstating exemption recommended for simplicity and compliance ease

Tax refunds and appeals: Mandate timely processing of appeal effects and tax refunds by Jurisdictional Assessing Officer/Centralised Processing Centre to build taxpayer confidence, says KPMG in India.

SBI Research estimates government can ensure better tax compliance and bolster consumption through enhancing disposable income, by moving all and one under the New Tax regime, at a nominal loss(es) by foregoing certain amount of tax collection as under cases 1, 2 and 3:

Case-1: Peak rate reduced to 25% for income above 15L and all exemptions are removed but healthcare and NPS are retained at the same level of Rs 25k and Rs 50 k and increased to Rs 50k and Rs 75 k in scenario 1 and Rs 50k and Rs 1 lakh in scenario 2. The revenue losses of the Government stands at Rs 74,000 crores to Rs 1.08 lakh crores. Additionally, a flat 15% tax is imposed on bank deposits that is added to other income and delinked from highest income bucket, with an increase in limit to Rs 20,000 tax exemption for SA deposits

Case-2: Peak rate retained at 30% for income above 15L. However, tax rates are reduced to 15% from Rs 10 lakhs-Rs 15 lakhs and all exemptions are removed but healthcare and NPS are retained at the same level of Rs 25k and Rs 50 k and increased to Rs 50k and Rs 75 k in scenario 12 and Rs 50k and Rs 1lakh in scenario 2. The revenue losses of the Government stands at Rs 16,000 crores to Rs 50,000 crores. Additionally, a flat 15% tax is imposed on bank deposits that is added to other income and delinked from highest income bucket, with an increase in limit to Rs 20,000 tax exemption for SA deposits . We propose this option for the Government as also Public at large

Case3: Peak rate cut to 25% for income above 15L Tax rates are reduced to 15% from Rs 10 lakhs-Rs 15 lakhs and all exemptions are removed but healthcare and NPS are retained at the same level of Rs 25k and Rs 50 k and increased to Rs 50k and Rs 75 k in scenario 12 and Rs 50k and Rs 1lakh in scenario 2. The revenue losses of the Government stands at Rs 85,000 crores to Rs 1.19 lakh crores . Additionally, a flat 15% tax is imposed on bank deposits that is added to other income and delinked from highest income bucket, with an increase in limit to Rs 20,000 tax exemption for SA deposits

Out of all the scenarios estimated above, SBI Research is of the considered opinion that Case-2 optimizes the revenue foregone-incremental output scenario the Best by strengthening the four quadrants of Social Security, Financial Stability, Consumption boost and healthcare tweaking tax rates between the Rs 10-15 lakh bucket, removing the exemptions but bolstering the same on NPS (creating a handsome corpus for sunset years / other eventualities) and healthcare among those who can afford (that may accentuate government’s schemes like Ayushman Bharat), keeping optimal CASA deposits level in the banking system, eventually boosting consumption and investments through higher ICOR (incremental capital output ratio)

To achieve the goal of becoming a developed country, India’s real GDP needs to grow at a CAGR of 7.5-8 per cent for over the next two and half decades.

CII believes that this sustained growth, though ambitious, is achievable through a multipronged approach, which includes leveraging strengths, managing risks, strengthening resilience, improving competitiveness, and finding new growth drivers. It requires acceleration in reforms, rapid infrastructure development, building human capital for 21st century work, generating large-scale quality employment opportunities, boosting industry competitiveness, increasing the rate of innovation and technology adoption, maximizing the gains from ongoing supply chain diversification and the climate transition, continuing fiscal consolidation, and reducing government debt, all done in a climate-sustainable and inclusive manner.

Strong contributions from all sectors - agriculture, industry, and services - are essential. All components of GDP - consumption, investment, and trade - need to grow in a balanced manner.

After robust growth over the last three years, growth seems to have slowed down in the first half of the current fiscal, with both fiscal and monetary policy remaining somewhat restrictive. Further while there is pick-up in private investments, the global uncertainties emanating from slow recovery in growth, conflicts in many parts of the world, and excess capacity in China, amongst others, continue to hamper a broad-based recovery in the private sector investment.

The Union Budget 2025-26 should make interventions to support all engines of growth. The twin approach of balancing higher government expenditure, especially capex, along with fiscal prudence should continue, says CII.