Finance Minister Nirmala Sitharaman Prepares for Ninth Consecutive Union Budget Presentation
Finance Minister Nirmala Sitharaman is poised to present her ninth consecutive Union Budget on February 1, with high expectations centered on comprehensive tax reforms, a significant revamp of the customs duty structure, and strategic measures to bolster economic growth amidst heightened geopolitical uncertainty. This budget is anticipated to mark a pivotal shift in fiscal strategy, moving from deficit management to a focused approach on debt reduction.
Income Tax Relief and Simplified Tax Regime Transition
Following last year's major relief measures, which included an increase in the income tax exemption limit to Rs 12 lakh and reductions in GST rates, individual taxpayers are eagerly hoping for further easing. Key expectations include an increase in the standard deduction to provide additional financial relief. With the new and simplified Income Tax Act, 2025, set to come into force from April 1, the industry is actively seeking clarity on transition provisions, rules, and frequently asked questions to ensure a smoother implementation process, as reported by news agency PTI.
There is also a strong expectation that the government may announce incentives, such as a higher standard deduction, to encourage more taxpayers to transition to the new tax regime. This regime offers lower tax rates but comes with fewer exemptions, making it an attractive option for many. Additionally, rationalization of Tax Deducted at Source (TDS) categories into fewer slabs is another critical demand from taxpayers and businesses alike.
Customs Reform and Enhancing Ease of Doing Business
A major focus area in the upcoming budget is likely to be the comprehensive overhaul of the customs duty regime, drawing inspiration from the successful rationalization seen in the Goods and Services Tax (GST). This overhaul could involve reducing the number of duty rates, simplifying procedural requirements, and potentially introducing an amnesty scheme. Such measures aim to unlock nearly Rs 1.53 lakh crore currently stuck in disputes, thereby improving liquidity and fostering a more business-friendly environment.
Fiscal Consolidation, Defence, and Development Initiatives
The budget is expected to outline clear steps to reduce India's debt-to-GDP ratio, with implementation slated to begin in 2026-27. This fiscal consolidation effort will be complemented by higher defence spending, reflecting the need to address rising global tensions and ensure national security. Other significant expectations include provisions for the 8th Pay Commission, increased devolution of taxes to states as recommended by the 16th Finance Commission, and higher allocations for Micro, Small, and Medium Enterprises (MSMEs).
Tariff-sensitive sectors such as gems and jewellery, garments, and leather are also likely to receive enhanced support. Furthermore, funding for critical minerals like lithium, cobalt, and rare earths is high on the agenda, alongside substantial outlays for Viksit Bharat employment and livelihood schemes, aimed at promoting sustainable economic development and job creation.
As Finance Minister Nirmala Sitharaman prepares to present this crucial budget, stakeholders across the nation are watching closely for policies that will shape India's economic trajectory in the coming years, balancing growth with fiscal responsibility in an uncertain global landscape.
