Union Budget 2025 Expectations: Important Questions Answered

Finance Minister Nirmala Sitharaman is ready to present the Union Budget 2025 in the Lok Sabha on 1st February. Industry stakeholders and experts are eagerly anticipating a variety of initiatives and declarations concerning GST rates, tax reforms, as well as matters that need attention to control inflation and enhance consumption. In this article, we have addressed several Frequently Asked Questions (FAQs) pertaining to the 2025 budget.

When will the Union Budget 2025 be presented?

The Union Budget for 2025 is set to be unveiled on February 1, 2025, at 11:00 AM. In keeping with the yearly custom, Finance Minister Nirmala Sitharaman will present the government's financial strategies and policies for the fiscal year 2025-26 for the eighth time in a row.

When will the Budget Session start and end?

The initial segment of the Parliament's Budget session is confirmed to run from January 31 to February 13, 2025. The second segment of the session will kick off on March 10 and wrap up by April 4, 2025. Nirmala Sitharaman, the finance minister, will present her ninth consecutive budget on the first of February.

What is the main focus of Budget 2025?

The government is anticipated to concentrate on crucial infrastructure areas such as roads, airports, railways, and urban development. There are high hopes that the budget will unveil updated tax brackets aimed at reducing the financial load on individuals, particularly the middle class while promoting increased consumer spending and investment. This budget is likely to emphasise economic development, aligning with the vision of 'Viksit Bharat’.

What are the key expectations from Budget 2025 for the insurance sector?

GST Rate - There are expectations that the GST rate on health insurance premiums will be reduced from 18%. Hence, it can reduce the policy price and make it more affordable to the general population. There are also expectations of raising the health insurance premiums deduction limits under Section 80D of the Income Tax Act, 1961, to ₹50,000 for individuals and ₹1,00,000 for senior citizens.

Moreover, there are expectations of introducing a health regulator in the insurance sector to handle issues, such as hospital pricing variations and medical inflation.

The insurance industry seeks an update to Rule 6E of the Income Tax Act to allow a more modern approach to calculating unexpired premium reserves, which would align India’s practices with global standards

Separate Tax Exemption for Term Insurance: The industry advocates for a dedicated tax exemption for term insurance premiums to encourage more individuals to secure adequate life coverage. This reform is seen as vital for narrowing the protection gap in India

What is a "Union Budget"?

The Union Budget is a financial report issued by the Indian government that outlines its expenditures for a single fiscal year. Essentially, a Union Budget consists of a collection of documents that, when viewed together, provide a comprehensive overview of the government's financial situation.

When did the budget-making process begin?

The process of formulating the budget begins in August–September, occurring six months prior to its presentation date. It is crafted by the Finance Minister with assistance from advisors and government officials.

What is "Fiscal Deficit"?

The fiscal deficit is defined as the gap between the total expenses of the government and its total income (excluding funds from borrowing). When governmental expenditures surpass their earnings, a fiscal deficit occurs. This shortfall is frequently addressed by borrowing, which contributes to the rise in national debt.

How much financial support is provided under Scheme A of the Prime Minister’s Package for first-time employees?

Scheme A features a Direct Benefit Transfer of one month's salary distributed in three payments of up to ₹15,000 to first-time workers registered with EPFO.

Scheme B focuses on job creation in the manufacturing sector, offering incentives directly to both employees and employers based on their EPFO contributions during the first four years of employment.

What are the main points of Budget 2025?

There are high expectations that the budget will unveil revised tax brackets designed to lessen the financial strain on individuals, particularly the middle class while promoting increased consumer expenditure and investment.

It is also expected that budget 2025 will include infrastructure initiatives, such as new power facilities, airports, heritage routes, and road construction, along with a substantial budget allocation aimed at fostering growth in both rural and urban settings.

Will there be any change in the tax slab in Budget 2025?

The standard deduction for salaried workers is suggested to be raised from ₹50,000/- to ₹75,000/-. In a similar vein, the deduction for family pensions for retirees is proposed to increase from ₹15,000/- to ₹25,000/-. As the finance minister stated during her budget address, this adjustment is expected to benefit around four crore salaried individuals and pensioners.