Budget Expectation
India’s Finance Minister Nirmala Sitharaman will present the Union Budget on February 2025 in which it is expected that financial relief will be provided to the middle-class taxpayers and retail loan borrowers and economic growth will increase. Top industry leaders have shared their expectations in this crucial financial plan.
The country’s largest financial consulting company – EY has advised that the minimum exemption limit should be increased from Rs 3 lakh to Rs 5 lakh. This suggestion coupled with lower tax rates will be very important for the middle-class.
At the same time, highlighting that more than Rs 31 lakh crore have been lost in income disputes by 2023-24, there is a need to urgently resolve pending cases at the level of income tax commission (appeal) and to enhance alternative dispute resolution options including advance value determination understandings and safe port provisions.
The real estate industry and its stakeholders are keen on measures that can boost growth, address ongoing challenges and ensure long term stability.
Proposed Real Estate Tax Reforms
- Increase in tax deduction on home loan interest
- Tax incentives for real estate investment trust (REIT) to attract retail and institutional investors, strengthen commercial real estate sector
- Improvement in land acquisition policies and implementation of integrated, efficient evacuation process
- Tax exemption for owners, tenants and living spaces More emphasis on housing
- Expansion of eased benefits to enhance commercial real estate environment
A thorough review of the Direct Tax Code may take time, but we may see the first steps towards its implementation in this budget. One also expects cuts in key income taxes, especially for the lower-income groups, to provide much-needed relief and boost consumer demand. It is important to simplify tax compliance, especially for the second generation.
Organizing TDS taxes into fewer categories and eliminating complexities will reduce administrative burden, allowing businesses to direct their efforts towards growth and innovation.
Support for Sustainable Housing and Financial Inclusion
- Continued support for large RN-linked schemes such as the Pradhan Mantri Awas Yojana (PMAY), which plays a key role in improving housing affordability and supporting first-time homebuyers.
- Expect innovative, sustainable RN initiatives alongside environmental goals, such as the launch of the first-ever Green Home Loan.
- Focus on growing the digital RN ecosystem, pushing the boundaries of technology-driven solutions in financial services.
- Expect new initiatives that combine financial inclusion with sustainability objectives to encourage responsible and environmentally friendly investments.
Overseas Tax Payment Challenges
- Currently, payments in India can be made through NAFT/RTGS, net banking, debit card, UPI or bank account, but only with an active Indian bank account.
- Taxpayers, including NRIs, without an Indian bank account or online payment facilities face significant challenges.
- Tax refunds are not credited to foreign bank accounts.
- Measures should be introduced to facilitate tax payments from foreign bank accounts and direct credit of tax refunds to foreign accounts.
