Scope of Budget 2025: Key Highlights & Important Questions Answered

This blog shall highlight the key points of the 2025 budget while answering the burning Frequently Asked Questions (FAQs) regarding what to expect after an official announcement.

1.What is the announcement date of budget 2025?

The date of announcement for Budget 2025 is scheduled for February 1, 2025. For the eighth consecutive time, tune in at 11:00 AM to witness the continuation of the annual tradition where Finance Minister, Nirmala Sitharaman declares the government's financial policies and long-term plans for FY 2025-26, in the parliament. February 1st marks the onset of important economic discussions and the implementation of policies which shall vastly impact India's expansion curve. Expect to hear major news around social welfare and healthcare, economic growth and development, taxes/exemptions, etc.

2. What are the 5 types of budgets?

Here are the 5 types of budgets: 

1. Balanced Budget: In a balanced budget, the expected revenue of the government for a specific financial year is equal to the expenditure on their end. The formula, “total budget expenditure = total budget receipts” is maintained. For example, say, the budget expenditure has been set to ₹6 lakh crores and the budget receipts amount to ₹6 lakh crores, it is referred to as a balanced budget.
2. Deficit Budget: The deficit budget is one where the government’s spending exceeds the expected revenue. This results in a shortage, needing to be covered by borrowing/using reserved funds. A deficit budget is often used to finance various development projects in growing nations, providing economic stability across countries.
3.  Surplus Budget: A surplus budget is when the government's estimated revenue exceeds its planned expenditures. This results in extra funds being available for further use. This budget can be implemented as a tool to combat inflation, reducing aggregate demand/allocating excess revenue spontaneously and with effect.
4. Zero-based Budget: Zero-based budgeting or ZBB is a landmark approach that involves the curating of a budget from scratch. It includes allocating income to fixed/variable expenses/savings, to ensure efficient cost management in the long run. This is a systematic procedure that will help eliminate unnecessary expenses, optimise resource allocation, and promote financial stability.
5. Gender Budget: A gender budget analyses the government's/ organisation's budget to assess its overall impact on gender equality. It identifies resource allocations for gender-related areas of concern, promoting inclusive budgeting. This ensures that resulting financial decisions address the needs of all individuals, regardless of gender.

3. How will the budget 2025 address inflation and rising prices?

The Budget 2025 to be announced on February 1, 2025, is expected to extend tax relief. This will be ensured while also balancing the government's prerequisite to maintain stable revenue. Registered taxpayers can anticipate a modified and enhanced rebate for lower-income persons and a subsequent increase of the basic exemption limit. This will be relevant under both tax regimes, with an aim to offset inflation.

4. What are the changes expected in corporate tax policies under Budget 2025?

The Budget 2025 shall allow for a reduction in corporate taxes for the new manufacturing businesses and enterprises. With the rise of GCCs (Global Capability Centres), presently at 1,700 and heading upwards, there is news about a proposed 15% tax rate for GCCs. This will foster their expansion in general and job creation, in addition.

5. Will the Budget 2025 include exemptions for senior citizens and retirees?

There will be adjustments made in the Budget 2025, with an aim to reduce tax burdens on elderly taxpayers, especially those who only have limited income streams and other medical/financial obligations pending. Senior citizens and retirees can anticipate the Budget 2025 to raise the accepted basic exemption limit. It will be raised to a minimum of ₹ 10 lakh per annum. 

6. Are there any plans to increase subsidies on essential commodities with the Budget 2025?

The Budget 2025 will predictably offer relief to certain degrees through subsidies on essential commodities. By initiating measures to anchor utility prices and regulate fuel prices, this can be achieved. Further, the establishment of a more resilient and thorough mechanism to control inflation shall possibly ease the monthly financial pressures experienced.

7. Will the Budget 2025 introduce new deductions under Section 80C for taxpayers?

Taxpayers can anticipate an increase in the 80C Deduction Limit. The government is expected to increase the limit from ₹1.5 lakhs to ₹2 lakhs, under Section 80C. Since the year 2014, this specification will be altered for the first time.

8. What is the government’s roadmap for achieving the fiscal deficit target with Budget 2025?

The Indian government has prepared a roadmap for the fiscal glide to reduce the deficit every year. It is important to note, however, that the resounding impact of COVID-19 resulting in major economic challenges has stood as an obstacle along the way. So, the fresh plan of the government is to reduce the deficit to 4.5% by 2025-26. 

9. How will the Budget 2025 affect interest rates on loans and savings?

The Budget 2025 is expected to provide relief to individuals who have opted for home loans. This will be achieved through an increase in tax deduction limits for home loan interest. There will potentially also be a reduction in repo rates, which could, in turn, lower interest rates and associated monthly EMIs. Keep in mind that the repo rate cut will depend upon inflation, global economic trends and GDP growth.

10. Can we expect changes in the tax filing process for 2025-26 under the Budget 2025?

While it's important that one waits for an official announcement, predictions convey that tax filing procedures for 2025-26 shall be further simplified. The government is set to implement a simplified income tax system while providing relief to various sectors of people through an increase in the tax deduction limit under the new tax regime.

Be sure to check back here on this website, for any latest updates and notifications concerning the Budget 2025!