Budget 2025: Economists and Industry Leaders Call for Income Tax Reforms and Economic Boost
By: Admin | December 26, 2024
Categories: Income Tax News | News | 4 Min Read
As the Union Budget 2025-26 approaches, economists and industry leaders are emphasizing the need for bold measures to sustain India’s economic growth. Their recommendations include income tax reforms, rationalized tariffs, and targeted interventions to address global uncertainties.
Income Tax Relief: A Central Demand
Economists have highlighted the importance of reducing income tax rates and simplifying tax structures to enhance disposable income. This, they argue, will boost domestic consumption and support the broader economic recovery.
Past Measures in Budget 2024-25
Last year’s budget introduced notable changes, such as:
- Relaxed income tax slabs for earnings up to ₹10 lakh.
- Increased standard deductions for salaried employees and family pensioners.
- Enhanced NPS contribution deductions for private-sector employees.
Proposed Reforms for Budget 2025
Building on previous measures, experts suggest the following reforms for this year:
- Lowering tax rates for middle-income groups.
- Rationalizing capital gains tax.
- Streamlining tax compliance for easier filing and reduced litigation.
Industry Wishlist: Tax and GST Reforms
Tax Reforms and Simplification
Leading industry bodies like the Confederation of Indian Industry (CII) and PHD Chamber of Commerce and Industry (PHDCCI) have proposed:
- Comprehensive tax reforms.
- Reduction of TDS provisions to improve liquidity.
- Simplified mechanisms for resolving tax disputes.
GST Revamp
CII has advocated for a revamped GST framework, including:
- Transitioning to a three-rate GST structure for greater uniformity.
- Expanding the input tax credit chain to reduce the cost of doing business.
Customs Duties and Indirect Taxes
Key recommendations from industry leaders include:
- Zero customs duty on critical raw materials to encourage domestic manufacturing.
- Simplified appeal processes for indirect taxes to minimize delays.
Addressing Macroeconomic Challenges
Weak Consumption and Rising Inflation
India’s GDP growth slowed to 5.4% in Q2 FY25, the lowest in two years. Persistent inflation continues to strain household budgets, curbing consumption.
- November’s inflation rate surpassed the RBI’s 4% target, signaling an urgent need for supply-side measures to stabilize prices.
- Economists have called for interventions that can balance inflation control with growth.
Employment and Skilling
The government has reiterated its commitment to job creation and skill development through:
- Youth-focused job programs.
- Aligning education and skilling with market requirements.
- Promoting rural employment via enhanced agricultural productivity.
Path Forward for Budget 2025
The government faces the dual challenge of fostering economic growth while addressing global uncertainties. Economists and industry leaders believe Budget 2025 should prioritize:
- Increasing capital expenditure to strengthen infrastructure development.
- Supporting exports and attracting foreign direct investment (FDI).
- Expanding direct benefit transfers and rural public expenditure to stimulate demand.
As Finance Minister Nirmala Sitharaman prepares to present the budget on February 1, 2025, stakeholders across sectors eagerly anticipate transformative policies to steer India toward sustained economic resilience.
Stay tuned for updates and expert insights on Budget 2025 and its implications for India’s economy.
