Union Budget 2025-26: Key Expectations As Government Strives For Economic Growth And Fiscal Prudence

The Union Budget for the fiscal year 2025-26 is set to be presented today, with the government expected to strike a balance between boosting economic growth and maintaining fiscal prudence. Taxpayers, businesses, and key industries are eagerly awaiting measures that address their pressing concerns, with a strong focus on driving consumption, incentivizing capital expenditure, and supporting critical sectors.

Tax Relief and Reforms: The Demand for More

Tax relief is among the most anticipated aspects of the budget. Taxpayers are hoping for changes in tax slabs, particularly under the new tax regime. One of the key demands is raising the exemption limits and standard deductions. Many expect the government to make annual income up to Rs 10 lakh tax-free.

Under the current system, the standard deduction is set at Rs 50,000 for the old tax regime and Rs 75,000 for the new one. Taxpayers are calling for an increase in this limit to provide greater relief.

Focus on Capital Expenditure And Fiscal Discipline

Businesses are pushing for a growth-oriented budget that maintains fiscal discipline. According to a survey by FICCI, 68 percent of businesses are advocating for at least a 15 percent increase in capital expenditure allocation to drive economic growth.

The government is expected to continue its fiscal consolidation efforts, reducing the fiscal deficit from 4.9 percent in FY25 to 4.8 percent, with an ultimate goal of 4.5 percent by FY26.

Industry-Specific Expectations: Real Estate, Healthcare, And More

Industry stakeholders from various sectors have outlined specific expectations for the budget. The real estate sector is pushing for tax rationalization, an increase in the home loan interest deduction limit under Section 24(b) from Rs 2 lakh to Rs 5 lakh, and relief in long-term capital gains (LTCG) tax.

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Meanwhile, the healthcare sector is seeking increased spending, aiming to reach 2.5 percent of GDP. There are also calls for lower GST on health insurance premiums, incentives for digital health solutions like telesurgery and electronic health records, and reduced import duties on medical equipment.

MSMEs, AI, EVs, And Renewable Energy: The Push For Innovation

MSMEs are advocating for better credit access and technology adoption incentives to spur sectoral growth. At the same time, new-age sectors such as artificial intelligence (AI), electric vehicles (EVs), and renewable energy are looking for policy incentives and financial support to drive innovation and industry adoption.

Tax Reforms And Simplification: A Call For Modernization

Another key area of focus is tax reforms. The government is expected to modernize the Direct Tax Code (DTC) to simplify the 63-year-old Income Tax Act, following the successful overhaul of indirect taxation with the Goods and Services Tax (GST).

Industry stakeholders are also seeking simplification of complex TDS/TCS provisions to reduce litigation and compliance burdens.

Economic Growth And Workforce Development

With India’s economic momentum gaining strength, 60 percent of businesses are projecting GDP growth between 6.5 percent and 7 percent for FY25. There is an increasing emphasis on strengthening collaboration between educational institutions and industries, ensuring that the workforce is job-ready, particularly in IT, healthcare, and manufacturing sectors.

Infrastructure And Export Competitiveness

Infrastructure development remains a major priority. The government is expected to continue investing in roads, railways, and other critical infrastructure. Furthermore, businesses are calling for logistics efficiency improvements and an extension of interest equalization schemes to boost India’s competitiveness in global trade.

As the budget is set to be revealed, industry leaders and experts remain hopeful that the government’s decisions will set the course for sustained economic growth, improved business conditions, and greater support for innovation across key sectors.