Experts have shared their insights on key expectations from Budget 2025, highlighting tax reforms, investment incentives, and policy adjustments aimed at boosting financial growth and economic stability.
1. Higher Tax Exemption Limits Under Section 80C
The current ₹1.5 lakh limit under Section 80C is insufficient, given the range of eligible investments like EPF, PPF, ELSS, insurance premiums, and home loan principal repayment. Raising this cap to ₹2.5 lakh would provide significant tax relief and encourage long-term savings.
2. Increase in Standard Deduction for Salaried Individuals
With inflation eroding purchasing power, the current ₹50,000 standard deduction feels inadequate. Experts suggest raising it to ₹75,000 or ₹1 lakh to enhance disposable income and stimulate consumer spending.
3. Tax Parity Between Mutual Funds and ULIPs
Currently, ULIPs enjoy tax-free maturity benefits under Section 10(10D), unlike mutual funds. Additionally, switching between ULIP schemes is tax-free, whereas mutual fund transactions are taxed. Establishing a level playing field would ensure fair competition and more informed investment choices.
4. Incentives for Long-Term Equity Investment
To encourage retail investors to stay invested in equity markets, the government could consider reinstating the long-term capital gains (LTCG) tax exemption for investments held over three years or increasing the current ₹1 lakh exemption limit.
5. Reduction in GST on Financial Services
Essential financial services—such as mutual fund management fees, insurance premiums, and brokerage charges—are currently taxed at 18% under GST. Lowering this rate to 12% or less could encourage greater participation in organized financial markets, which remain underutilized.
6. Greater Focus on Retirement Savings
The government could introduce additional tax benefits for NPS contributions, particularly for Tier-II accounts, and create a separate tax-saving category for retirees who rely on fixed-income investments.
7. Enhancements in Sovereign Gold Bonds (SGBs)
With gold holding deep cultural significance in India, strengthening SGB incentives—such as higher interest rates or additional tax benefits for long-term holdings—could shift investor preference from physical gold to financial gold.
8. Tax-Free Income on Green Investments
To align with India’s sustainability objectives, tax-free bonds for green infrastructure projects or deductions for investments in environmentally friendly funds could promote responsible investing.
A well-structured budget sets the stage for better financial planning—let’s hope the government delivers a budget that rewards smart money management!
