Budget Union 2025-26: Reducing Taxes, Boosting Consumption
In a major move to stimulate economic growth and boost consumption, India’s Finance Minister announced the Union Budget for 2025-26, which is expected to have a positive impact on the country’s economy. The budget, which was presented to the Parliament on [date], focuses on reducing taxes, improving infrastructure, and promoting entrepreneurship, among other measures.
The budget aims to reduce the corporate tax rate from 25% to 20%, effective April 1, 2025, which is expected to increase the cash flow of companies and encourage them to invest more. Additionally, the budget has proposed to reduce the peak rate of surcharge on superannuation pension income from 37% to 10%, which is expected to benefit pensioners.
The government has also increased the basic exemption limit for individual taxpayers from Rs 2.5 lakh to Rs 3 lakh, which is expected to boost consumption and reduce the income tax liability of a large number of salaried individuals. The ceiling on cash withdrawals from the Self Assessment Tax (S&A) has also been increased from Rs 50,000 to Rs 1 lakh, allowing individuals to make larger withdrawals.
The budget has also proposed to increase the exemption limit for contributions to the National Pension System (NPS) from Rs 1.5 lakh to Rs 2 lakh, which is expected to encourage more Indians to invest in the pension system.
To boost infrastructure development, the government has allocated a significant amount for major infrastructure projects, including roads, railways, and ports. The National War Memorial, which is expected to come up in Delhi, has been allocated an allocation of Rs 1,000 crore, which is expected to create jobs and boost the economy.
The budget has also slashed customs duty on certain goods, including automobiles, electronics, and textiles, to make them more competitive and affordable. This is expected to reduce the cost of living for Indian consumers and boost consumption.
The budget has also proposed to increase the inclusion of women and youth in the workforce, by introducing policies to increase their representation in the labor force. This is expected to increase women’s participation in the workforce, which is currently at around 27%, and boost India’s economic growth.
Overall, the budget is expected to have a positive impact on the Indian economy, by reducing taxes, boosting consumption, and promoting infrastructure development. The reduction in taxes is expected to increase the cash flow of companies, which will encourage them to invest more, leading to economic growth. The increase in the exemption limit for individual taxpayers and the increase in the ceiling on cash withdrawals from S&A is expected to boost consumption, and the slashed customs duty is expected to make goods more affordable, leading to an increase in demand.
However, some economists have expressed concerns that the budget does not address the widening income inequality in the country and the lack of transparency in the allocation of funds for various schemes. They have also pointed out that the budget does not have any significant measures to reduce the country’s fiscal deficit, which is currently at around 7.2% of the GDP.
Despite these concerns, the Union Budget 2025-26 is expected to have a positive impact on the Indian economy, and the reduction in taxes and improved infrastructure is expected to boost consumption and economic growth.
