Budget 2025 Expectations: Every year, the arrival of budget season brings a wave of anticipation, from the common man to prominent industrialists, as expectations begin to soar. Among these, the middle class remains particularly attentive, hoping for much-needed relief. Burdened by rising inflation and high taxes, the middle class eagerly looks to the budget for solutions. But will Budget 2025 deliver on their hopes? Will the government address their concerns and take meaningful steps to ease their financial pressures?
This year’s budget holds even greater significance, as it comes at a time when the nation grapples with sluggish economic growth, a weakening rupee, and global uncertainties.
Against this backdrop, let us delve into what the middle class, caught in the crossfire of inflation and taxation, anticipates from Budget 2025.
Table of Contents
When will the budget be presented?
Finance Minister Nirmala Sitharaman is set to present the Union Budget 2025 on February 1. This marks her 8th budget as Finance Minister. From taxpayers to farmers, women, and industry leaders, all eyes are on this highly anticipated budget. Key announcements are expected, including an increase in the income tax exemption limit. Additionally, various industries may receive a boost through higher budget allocations, and the government could unveil several new schemes.
Inflation: The biggest concern for the middle class
Inflation has emerged as the most pressing issue for the middle class. From petrol and diesel to essential food items, the prices of daily necessities have skyrocketed. Over the past few years, the significant rise in the costs of food, oil, gas, and other essentials has severely impacted middle-class households. This inflationary trend is not a temporary phase but a consistent challenge.
The increasing burden of inflation has also affected the standard of living for the middle class. Savings, once a common practice, have now become a struggle for many families who are finding it difficult to meet their daily needs. Even the salary increments over the years have failed to keep up with rising inflation, leading to a decline in the overall lifestyle of the common man.
Unemployment Rate Comparison: UPA vs. NDA
| Year | UPA (Unemployment Rate) | Year | NDA (Unemployment Rate) |
|---|---|---|---|
| 2004 | 8.36% | 2014 | 5.44% |
| 2005 | 5.00% | 2015 | 5.44% |
| 2006 | 5.32% | 2016 | 5.42% |
| 2007 | 5.28% | 2017 | 5.36% |
| 2008 | 5.41% | 2018 | 5.33% |
| 2009 | 5.44% | 2019 | 5.27% |
| 2010 | 5.55% | 2020 | 8.00% |
| 2011 | 5.43% | 2021 | 5.98% |
| 2012 | 5.41% | 2022 | 7.33% |
| 2013 | 5.42% | 2023 | 8.03% |
| Average | 5.6% | Average | 6.6% |
Source: World Bank Report
Budget 2025: Middle class expectations
Relief in income tax:Â The biggest hope for the middle class is that the government will make some changes in the income tax slab and increase the tax exemption limit. The tax slabs that are there till now are very narrow and the middle class needs a lot of relief on this. If the government increases the income tax slab a little more or increases the tax exemption limit, then it will definitely be a big relief for the middle class.
Relief from inflation:Â Bringing inflation under control is most important for the middle class. The government is expected to adopt such policies that will reduce the prices of food items, petroleum products and other essential goods. For this, the government will have to arrange for a better supply chain, so that prices remain stable and the middle class does not have to face problems in purchasing daily needs.
Relief on Housing and EMI:Â Another big concern of the middle class is their house and the EMI of the loan to be paid for it. The prices of houses are constantly increasing, and the interest rates on the loans available on it also remain high. Middle class families have to bear a heavy burden on this. This time it is expected from the government that it can give some relief in the interest rates on housing loans, so that it can be easier for them to buy a house.
Improvement in health and education sector:Â Health and education are also a big concern for the middle class. Expensive medical treatments and private school fees have put them under a lot of financial pressure. The government is expected to take concrete steps to control expenditure on health and education, such as increasing the scope of tax exemption on medical and education expenses or giving subsidies.
Jobs and employment opportunities:Â Employment opportunities are also a big concern for the middle class. The employment situation has not improved since Covid-19, and the job situation is still uncertain. There are expectations from the government that it will introduce some concrete schemes for employment generation. Apart from this, promoting small industries and MSME sector can create employment opportunities for the middle class.
Agriculture and rural economy:Â Many members of the middle class, despite living in urban areas, are connected to rural areas. Measures to strengthen agriculture and rural economy can also benefit these families. This time it is expected from the budget that the government will take steps towards reforms in the agriculture sector, which will increase the income of farmers and create new employment opportunities in rural areas.
Demand to give priority to elderly welfare
Before the presentation of the budget, an NGO ‘The Agewell Foundation’ has written a letter to Union Finance Minister Nirmala Sitharaman demanding priority for the welfare of the elderly. In a letter to Sitharaman, this government organization highlighted that by the year 2050, more than 32 crore people in India will be above 60 years of age, which is 20 percent of the country’s population.
In such a situation, the NGO has suggested in the letter that this budget should include medical consultation and diagnostic tests under the existing health care policies for people aged 60 years and above.
Budget 2025: Real estate sector’s expectations
Many different sections of the real estate sector are also expecting important reforms from the government. Experts and industry leaders have given many suggestions to improve the condition of the real estate industry.
1. Increase in tax deduction on home loan repayment- Nowadays, you get two types of tax deductions on taking a home loan. One is on the principal amount of the home loan under Section 80C, and the other is a deduction of up to Rs 2 lakh for the interest paid on the loan under Section 24(b). However, there are many other investment options under Section 80C like small savings schemes, insurance policies and pension plans, due to which many people are not able to get tax deduction on the entire principal amount of their home loan. Similarly, the limit of Rs 2 lakh under Section 24(b) is also inadequate at times, especially when the initial loan installments are high.
Therefore, the real estate sector is demanding that a separate section be created for tax deduction on home loans, in which a deduction of up to Rs 5 lakh can be given on both principal and interest. This will provide relief to those who are repaying home loans and this step can also prove beneficial for home buyers. In such a situation, this change can have a positive impact on the real estate sector and can boost demand.
2. Set-off of house property loss- Nowadays, if you have a house property and you incur a loss from it, then you can set-off it from your other income (such as salary or business), that is, you can deduct the loss from your income so that the tax can be reduced. But now this set-off can be done only up to Rs 2 lakh. Earlier this limit was higher, but in 2017 it was limited to Rs 2 lakh. The purpose of this was that people should not deduct too much on the interest received on other property.
The problem is that this rule is not only applicable to individual houses, but also to commercial properties (which are used for business). The real estate sector often suffers huge losses, especially when new properties are being built or given on rent. In this situation, the real estate industry is demanding that this limit of Rs 2 lakh be removed completely, or at least it should not be applied to commercial properties. This change can provide a lot of relief to developers and the real estate sector.
3. Changes in Section 54, 54B, 54D and 54F for long term capital gains- In 2017, the holding period of property for the financial year was reduced from 36 months to 24 months to give a boost to the real estate sector. But still some sections like Section 54, 54B, 54D and 54F require a holding period of 3 years for the property to be eligible for capital gains exemption.
It has become necessary for the real estate sector to amend these sections and reduce the holding period of the property from 3 to 2 years, as has been done for other properties. This will make investment in real estate more attractive for investors.
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