As India prepares for the presentation of the Union Budget 2025, industries are keenly anticipating policy measures that will drive economic growth, enhance competitiveness and foster innovation. With rapid advancements in technology, evolving global trade dynamics, businesses are looking forward to reforms that will provide a much-needed boost to manufacturing, exports, and infrastructure.
Key sectors, including bicycles, automobiles, MSMEs, and emerging industries like electric vehicles (EVs), are expecting tax rationalization, incentives for research & development (R&D), support for technology upgradation and measures to strengthen domestic supply chains. The demand for lower GST rates, easier credit access, and infrastructure development remains high as industries seek to remain competitive in both domestic and international markets. it is crucial that this budget addresses the pressing concerns of businesses.
With these thoughts in mind, let us delve deeper into the industry expectations from the upcoming Union Budget 2025: –
1. Changes in Tax Slabs:
- The taxpayers are hoping that the current basic exemption limit of Rs. 2.5 lakh will be increased to Rs.5 lakh under both tax regimes. The current threshold of Rs.10 lakh for the 30% tax bracket may also be raised to Rs.20 lakh
- Basic exemption Limit should be increased to Rs. 5 Lacs in new as well as old tax regime.
- Annual income of up to Rs 10 lakh tax free and introducing a new 25% tax slab for annual income between Rs 15 lakh and Rs 20 lakh,
2. 80C and 80D Limit Increase:
- Deduction u/s 80Cis a major deduction claimed by taxpayers under the old regime. A hike in the current threshold of Rs.1.5 lakh to Rs. 3.00 lakh is anticipated, increasing the disposable income in the hands of taxpayers.
- Retirement Savings Push: Higher tax exemptions for contributions to PF, NPS, and other long-term savings instruments.
- Section 80Dallows an individual to claim a deduction for payment of medical insurance premiums of up to Rs.25,000. In the case of senior citizens, this threshold is Rs.50,000. The government is expected to provide tax relief by revising the erstwhile limit of Rs.25,000/Rs.50,000 to Rs.50,000/Rs 1 lakh, respectively.
3. Standard Deduction:
An increase in the standard deduction limit from Rs.50,000 to Rs.1,00,000 in old regime and from Rs. 75,000 to Rs. 1,00,000/- may also be seen in both tax regimes. There has been a significant increase in expenses and fuel costs since its introduction. Therefore, there is a strong argument for increasing the standard deduction.
4. Home Loan Interest:
Currently, taxpayers can claim a deduction for interest paid up to Rs. to Rs. 3 Lacs on a home loan. This limit may be revisited because EMIs have skyrocketed.
5. Review of Various deductions:
- Higher Education Loan should be considered in new Regime
- NPS deduction should be allowed from Rs. 50,000 t0 1,00,000
- Lower rate on FDR interest i.e. 15% is desired as all the savings of the senior citizens are mainly invested in FDR’s.
6. Relaxation in 45-day Payment Rule
Government should consider relaxing the 45-day payment rule stipulated. This potential relaxation is required to alleviate concerns that strict payment timelines could lead large corporations to seek alternative sourcing options including imports, thereby adversely affecting MSME’s / Domestic trade.
7. Rate of Taxation on Partnership Firms: –
Mostly MSME adopt Partnership Firm model of business as compared to corporate or Proprietorship Model. But Firms are taxed at 30% tax rate from the income starting from Rs. 1 as compared to 20% tax rate in case of corporate entities & exemption slab available in case of Proprietorship business.
8. To Prevent under-invoicing
The government need to took robust steps to stop China from sending under-billed products. Their dominance has ruined the Indian market.
9. Provisions like Reversal of GST Input credit for the fault of Supplier should be removed
The department should ensure the compliance at its own end and buyer should not be penalised due to the fault of the supplier.
10. Simplification of GST: –
The industry seeks a streamlined Goods and Services Tax (GST) framework. Currently, complexities in eligibility to avail GST Input tax credit, multiple GST rates, classification issues lead to compliance challenges and potential disputes. The department should ensure the compliance at its own end and buyer should not be penalised due to the fault of the supplier. A simplified structure would facilitate ease of doing business and reduce litigation.
11. Support for Research and Development (R&D):-
To foster innovation, the industry expects enhanced tax incentives for R&D activities. This support would enable the development of new technologies, including advancements in EVs and autonomous driving, positioning India as a leader in automotive innovation.
12. Inclusion of Petroleum and Power under GST:
Energy costs constitute a substantial portion of manufacturing expenses. Bringing petroleum products and electricity under the GST regime is expected to reduce input costs and simplify the tax structure, providing relief to manufacturers.
13. Technology Upgradation Support:
To compete effectively with international manufacturers, there is a pressing need for technological modernization within the industry. Stakeholders are urging the government to introduce schemes that provide financial assistance or subsidies for the adoption of advanced manufacturing technologies.
14. Increased Import Duties on Imports from China:
To protect domestic manufacturers from inexpensive imports, particularly from countries like China for Bicycle Parts & other products, there is a call to increase import duties. This measure aims to create a level playing field for local producers and encourage the use of domestically manufactured components
15. To consider a cut in the custom duty imposed on machinery and equipment’s to provide a relief to the MSME sector.
Focus should be given on the benefits that could get translate into reality for the common man, MSME, Faceless system, compliance simplifications etc to promote ease of doing business in Income Tax, GST & other acts. Further Lowering tax rates would promote Industry to pay taxes at their own.
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