Table of Contents Show
The Union Budget 2025, presented on February 1, outlines the government’s financial plans and policy priorities for the coming year. As a crucial economic event, it details revenue generation, expenditure allocation, and fiscal strategies aimed at shaping India’s growth trajectory. Businesses, investors, and citizens keenly analyse the announcements, looking for changes in taxation, subsidies, and financial reforms. This budget will play a key role in defining the economic outlook for the year ahead. Let us try to know what might be there for the common man:
Impact of Elections:
The Union Budget 2025 will be shaped by multiple factors, with elections playing a crucial role in the government’s financial decisions. The general elections held in 2024 resulted in a victory for the BJP, but they also incurred significant expenses. While these costs are officially covered by party funds, there is always an expectation of financial recovery through various means. Given this backdrop, the government is unlikely to announce any major tax relief for the common man, as maintaining revenue streams will be a priority.
Bihar Election:
Additionally, the upcoming Bihar elections, scheduled for November 22, 2025, are too far from the budget announcement to have any immediate impact on fiscal policy. Since election-driven incentives usually align with more immediate political needs, this means there is little reason to expect tax relief targeted at influencing voters in Bihar at this stage.
Delhi Election:
However, one factor that could positively influence tax policies is the Delhi Assembly elections, set to take place on February 23, 2025. As the national capital, Delhi holds significant political and symbolic importance. With the election just weeks away, the budget could be strategically used to appeal to Delhi voters. To strengthen voter sentiment and gain political traction, the government may introduce tax relief measures, leveraging the budget as a tool to drive electoral support in the region.
Inflation Impact:
As of January 31, 2025, official data for India’s January 2025 inflation rate has not yet been released. However, recent economic indicators provide some context. In December 2024, the annual retail inflation rate eased to 5.22%, down from 5.48% in November, primarily due to a deceleration in food price increases.
The Reserve Bank of India (RBI) has noted that while domestic demand is strengthening, there is a “stickiness” in food inflation that warrants careful monitoring.
Given these factors, analysts anticipate that the January 2025 inflation rate may remain around the 5% mark, though the exact figure will depend on various factors. So, overall, the inflation seems to be under control which gives lesser reasons to give a tax rebate.
GST Collection:
In the third quarter of the fiscal year 2024-25, encompassing October to December 2024, India’s Goods and Services Tax (GST) collections demonstrated notable trends. In October 2024, the GST revenue reached ₹1.62 lakh crore. November 2024 saw an increase, with collections amounting to ₹1.82 lakh crore, marking an 8.5% year-over-year growth. However, in December 2024, there was a slight decline, with GST collections totalling ₹1.77 lakh crore, though this still represented a 7.3% increase compared to December 2023.
Overall, the third quarter of FY 2024-25 reflected a robust GST revenue performance, indicating sustained economic activity and effective tax compliance. Considering the fact that the revenue is increasing, mostly a small insignificant tax benefit will be given.
What can be expected:
- Change in tax slab – The current no-tax slab of 7 lakhs can be revised to 8 lakhs.
- Increase in defense budget – With the ongoing conflicts going on amidst various nations, India has always maintained a diplomatic stance. But, with a global war looming over the head, India has to be prepared. So, the budget for defense sector will be increased.
- Healthcare – The budget for healthcare will be increased taking into consideration the rise in viruses.
- Pharma sector – Raw materials for various drugs and vaccines will be made cheaper by reducing taxation and import duties.
