Finance Minister Nirmala Sitharaman can present the budget (Budget 2025-26) on 1 February. The Union Budget has been presented many times before on Saturday. Therefore, since it is Saturday, there seems to be little scope for change in this. Although the government has not announced the budget date yet, there is a lot of buzz in North Block these days regarding the budget. India has maintained its position as the world’s fastest growing major economy in the last financial year. However, the main reason for this was the government’s expenditure. Higher growth pushed corporate profits as a percentage of GDP to a 15-year high (4.8%) in FY2024, but India is lagging in terms of jobs and salaries.

Economists believe that it has become necessary to increase consumer demand to accelerate the slow growth. The share of private consumption in India’s gross domestic product (GDP), which is about 60%, fell to a seven-quarter low of 5.4% in the September quarter. Urban demand has been declining for five quarters, with middle and lower income households spending less even on essential commodities. High food inflation is also affecting demand for everything from soaps and shampoos to cars and two-wheelers, especially in cities. This is why economists are claiming that in the upcoming budget, there may be an attempt to boost consumption by putting more money in people’s pockets by giving tax breaks.

What kind of discounts can be availed?

The government is considering cutting income tax for individuals earning up to Rs 15 lakh a year in Budget 2025 to provide relief to the middle class and boost consumption, two government sources told Reuters. The move could benefit millions of taxpayers, especially city dwellers burdened by high living costs. If they opt for the 2020 tax system, they do not get exemptions like house rent. Under this system, annual income of Rs 3 lakh to Rs 15 lakh is taxed at between 5% and 20%. Income higher than this is subject to 30% income tax. There is a new plan introduced in 2020 that offers slightly lower rates, but does not allow big discounts. Keeping in mind the rising cost of living, the basic exemption limit may be increased by at least Rs 50,000 to provide more disposable income in the hands of taxpayers.

The government also plans to simplify its income tax filing rules to make it less difficult for taxpayers to comply with the law and help reduce the disputes that have plagued previous filings, a Bloomberg report said. More than 120 billion dollars have been raised in a decade. The proposed reform of the Income Tax Act 1961 is currently being finalized and will be released in the Budget. Sitharaman had announced in July that a comprehensive review of the tax law would be completed in six months to make the rules more taxpayer-friendly.

What changes can happen in the rules?

• According to Bloomberg report, these 4 changes can happen:
• Complex income calculation structures can be formula based.
• A single definition of tax year to replace the current practice of assessment year and financial year.
• Tabular illustration for similar taxpayers for easy understanding.
• Reducing the number of additional forms that taxpayers have to submit with their tax returns and making them available online.

what about jobs

Photo Credit: Meta AI

Several announcements were made in Budget 2024 on employment generation, such as incentives for first-time workers and internships in top companies. It appears that not much has happened on these fronts. An announcement more focused on employment generation can be expected in Budget 2025. According to Goldman Sachs, India needs to create 10 million jobs annually between 2024 and 2030 to maintain an average gross value-added (GVA) growth of 6.5 percent per year. According to economists, India should consider linking its education with vocational training programs so that the youth can skill themselves as per the market demand. Various measures have been announced in the past, and Industrial Training Institutes (ITIs) and various vocational institutes have played their role in bridging the gap, but much more needs to be done by the government, and Sitharaman is calling for more measures in this regard. Can announce.

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There will also be focus on training

During the last Budget, the Center had announced a package of five schemes and initiatives to create employment, skills and more opportunities for 41 million youth over a five-year period with a central outlay of Rs 2 lakh crore. In the upcoming budget, Sitharaman is likely to prioritize programs like the National Apprentice Promotion Scheme (NAPS) and Pradhan Mantri Kaushal Vikas Yojana with increased funding for skill development centres. From skills initiatives to MSME support and infrastructure investments, the Finance Minister has the opportunity to lay the foundation for inclusive and sustainable growth. However, only when the budget comes will it be known how true the claims of various agencies and economists are.