{"id":7935,"date":"2025-01-30T14:17:40","date_gmt":"2025-01-30T08:47:40","guid":{"rendered":"https:\/\/www.spidersoftwareindia.com\/blog\/?p=7935"},"modified":"2025-01-30T14:17:41","modified_gmt":"2025-01-30T08:47:41","slug":"top-5-things-finance-minister-should-introduce-in-budget-2025","status":"publish","type":"post","link":"https:\/\/www.spidersoftwareindia.com\/blog\/top-5-things-finance-minister-should-introduce-in-budget-2025\/","title":{"rendered":"Top 5 things Finance Minister should Introduce in Budget 2025"},"content":{"rendered":"\n
The Union Budget 2025 on 1 February is expected to boost growth, with investors watching for tax changes and capital spending plans.<\/p>\n\n\n\n\n\n\n
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Ahead of the Budget, there\u2019s a lot of speculation, including potential cuts to long-term capital gains tax, changes to income tax slabs, and possible fiscal deficit targets.<\/p>\n\n\n\n
Top 5 Budget 2025 expectations<\/h2>\n\n\n\n
1. Possible Changes in Capital Gains Tax<\/h2>\n\n\n\n
Reducing capital gains tax is a common demand from stock market investors in every Budget. While many experts feel that such a move could improve market sentiment, it seems unlikely that it will happen in Budget 2025.<\/p>\n\n\n\n
Discussions on taxation focus on simplifying capital gains tax to ease compliance and encourage more people to invest in the market. There\u2019s some speculation about reducing the Securities Transaction Tax (STT), but this seems unlikely given the government’s focus on revenue, according to Pranav Haridasan, MD & CEO of Axis Securities.<\/p>\n\n\n\n
Shripal Shah, MD & CEO of Kotak Securities, argues that although it may be a long shot, cutting or adjusting capital gains tax or STT could significantly improve market conditions. He believes these changes would not only boost domestic retail participation but also make Indian stocks more appealing to foreign investors, reducing FII outflows, stabilizing the rupee, and improving overall market sentiment.<\/p>\n\n\n\n
2. Expectation of Income Tax Cuts<\/h2>\n\n\n\n
There is growing speculation that the government may raise the basic exemption limit for personal income tax, with EY India suggesting an increase from \u20b93 lakh to \u20b95 lakh. This move is expected to boost disposable income and stimulate economic growth, which is currently struggling.<\/p>\n\n\n\n
Global brokerages like Citi and Jefferies also believe that cutting income tax for individuals earning \u20b910 lakh to \u20b920 lakh could boost demand, according to a Reuters report.<\/p>\n\n\n\n
Manish Chowdhury, Head of Research at StoxBox, expects the finance minister to simplify tax structures and raise tax exemption limits to drive consumption, especially in urban areas where growth has slowed recently.<\/p>\n\n\n\n
3. Fiscal Deficit Target and Its Impact<\/h2>\n\n\n\n
The government\u2019s fiscal deficit target plays a key role in influencing bond yields and equity markets. A higher fiscal deficit than expected could raise concerns about inflation, which may shake investor confidence. On the other hand, a balanced approach to managing the fiscal deficit could improve market sentiment.<\/p>\n\n\n\n
Puneet Singhania, Director at Master Trust Group, expects the government to set the fiscal deficit target at 4.5% of GDP, down from 4.8% in FY 2025. He thinks this reduction could boost confidence in the capital markets and support growth initiatives in both infrastructure and social sectors.<\/p>\n\n\n\n
4. Increase in Capital Expenditure (Capex)<\/h2>\n\n\n\n
The Indian economy faced challenges in the first half of FY25, partly due to lower capital expenditure (capex) caused by election season, extreme weather conditions, weak corporate earnings, and slower consumption. However, experts expect this trend to improve in the second half of FY25.<\/p>\n\n\n\n
Several brokerages have projected a 10% growth in capex for FY26, which could benefit sectors like infrastructure, defence, and railways.<\/p>\n\n\n\n
Manish Chowdhury from Stoxbox believes that policy continuity and fiscal prudence in the upcoming Union Budget will be crucial, especially considering the slowdown in the economy and corporate earnings. A 10-12% increase in capex, along with a fiscal deficit target of around 4.5% for FY26 and measures to revive private sector capex, could positively impact the markets.<\/p>\n\n\n\n
However, Pranav Haridasan from Axis Securities points out that a large increase in capital expenditure is unlikely, as balancing the fiscal situation remains a priority despite the focus on boosting economic growth.<\/p>\n\n\n\n
5. Potential Increase in Customs Duty on Gold<\/h2>\n\n\n\n
In the July Budget, the government reduced customs duty on gold, leading to a sharp rise in gold imports. This sparked concerns about increased consumption, which could widen the trade deficit.<\/p>\n\n\n\n
Given this, Sugandha Sachdeva, founder of SS WealthStreet, suggests that the government may raise the basic customs duty on gold in Budget 2025 to manage the rising imports.<\/p>\n\n\n\n
Sugandha Sachdeva pointed out that India spent $47 billion on gold imports in the first 11 months of 2024, far exceeding the $42.30 billion spent in all of 2023.<\/p>\n\n\n\n
To address this growing trend, especially after last year’s significant reduction in import duties, Sachdeva believes the government may consider increasing the customs duty on gold in the Union Budget 2025.<\/p>\n\n\n\n
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