“A budget tells us where our priorities are,” said President Eisenhower. India’s Union Budget 2025 is no different. It offers a roadmap for the country’s economic journey in the coming year. The Union Budget 2025, designed to stimulate domestic growth while maintaining fiscal responsibility, brings in a more rigorous tax regimen for Non-Resident Indians (NRIs), encompassing students and young professionals residing overseas. With the government strengthening its regulatory supervision and stepping up its fight against tax avoidance, those earning income internationally will face increased examination and broader disclosure requirements. These modifications, in sync with international tax norms, create fresh financial intricacies for individuals juggling tax liabilities in both their country of residence and India.
Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman presented the Union Budget 2025-26 in Parliament today. Here are the impacts of her budget speech;
Positive Impacts of Budget
- The income tax exemption limit, raised to ₹12 lakh, will significantly boost disposable income for middle-class taxpayers, stimulating consumer spending in various sectors, such as automobiles and retail.
- A substantial allocation of ₹11 lakh crore for capital expenditure aims to improve infrastructure, driving long-term economic growth and improving connectivity throughout the country.
- The budget includes targeted support for Micro, Small, and Medium Enterprises (MSMEs), enhancing credit access and operational efficiency, which is crucial for employment generation and economic stability.
- Emphasis on clean technology and sustainable practices, including customs duty exemptions for critical minerals in electric vehicle (EV) production.
- Significant investments in the health and education sectors are aimed at improving the overall quality of life and workforce productivity, essential for sustained economic growth.
- The budget supports digital transformation initiatives, recognizing technology’s role in driving innovation and economic competitiveness.
- Reforms aimed at simplifying the tax system will enhance compliance and accessibility for taxpayers, fostering a more inclusive economic environment.
- Increased consumer sentiment from tax relief measures is expected to positively impact sectors like travel, tourism, and consumer durables, further stimulating economic recovery post-pandemic
Also Read: Indian Union Budget 2025: Expectations, Reality, and What the Middle Class Gets
Negative Impacts of Budget 2024
- Despite tax relief for the middle class, large corporations received minimal support, leading to disappointment among stakeholders. Who expected significant investments in sectors like railways, defense, and healthcare?
- The budget did not sufficiently reduce the tax burden on the middle class, which continues to face high income and indirect taxes, potentially stifling consumer spending and economic growth.
- The lack of strong incentives for startups and emerging technologies could hinder innovation and slow down India’s progress in these critical sectors.
- A potential shift away from capital expenditure could exacerbate the ongoing economic slowdown, impacting infrastructure development and job creation.
- Failure to attract long-term foreign capital through policy reforms may dampen investor confidence, negatively affecting Foreign Direct Investment (FDI) and Foreign Institutional Investors (FIIs) inflows.
- The budget led to mixed reactions in the stock market, with significant volatility indicating uncertainty among investors regarding its long-term impacts on various sectors.
- Concerns about inefficiencies in public sector enterprises and governance issues could undermine the effectiveness of budget measures. Potentially leading to reduced Foreign Direct Investment (FDI) inflows
ALSO READ: SUMMARY OF UNION BUDGET
