Tomorrow is a big day! The Union Budget for 2025-26 is set to be announced. Expectations are high, especially for the middle class, hoping for tax slab reforms. As a stock market analyst, I’ll be watching closely. Which sectors benefit? How will it impact industries, companies, and stocks? What to expect from 2025-26 and what worked, and what didn’t? To make comparisons easier, I’m revisiting the Union Budget 2024-25.
Since the budget is extensive, this blog captures key developments from the Union Budget 2024-25. That way, tomorrow, I can focus on what truly matters. Let’s dive in.
Budget Priorities
The Budget focuses on 9 key priorities.
Union Budget 2024-25 Highlights
The Union Budget 2024-25 was presented by Union Finance Minister Smt. Nirmala Sitharaman in Parliament. Here are the key details:
-Total receipts (excluding borrowings): ₹32.07 lakh crore
-Total expenditure: ₹48.21 lakh crore
-Net tax receipts: ₹25.83 lakh crore
-Fiscal deficit: 4.9% of GDP. The government aims to reduce this to below 4.5% in the coming year.
-Inflation: Inflation remains stable and is moving towards the 4% target. Core inflation (excluding food and fuel) stands at 3.1%.
Key focus areas: Employment, Skill development, MSMEs, Middle class
Key Allocations:
-₹1.52 lakh crore allocated for agriculture and allied sectors.
-A new skill development scheme to benefit 20 lakh youth over the next five years.
-A ₹21,400 crore investment for a new 2400 MW power plant at Pirpainti.
Union Budget 2024-25: Macroeconomic Factors
The Union Budget 2024-25 projected 10.5% nominal GDP growth, showing strong economic momentum. Inflation stayed near 3.1%, moving toward the 4% target. The government reduced the fiscal deficit to 4.9% of GDP from 5.6%in the previous year and cut the revenue deficit to 1.8%, improving financial stability.
It allocated ₹48.21 lakh crore for total spending and targeted ₹25.83 lakh crore in net tax receipts. Gross market borrowings stood at ₹14.01 lakh crore, reflecting funding needs. The RBI maintained the repo rate at 6.5% to balance inflation and economic growth. Key focus areas included MSMEs, the middle class, and infrastructure, highlighting the government’s priorities for economic development.
Union Budget 2024-25
| Macroeconomic Factor | Union Budget 2024-25 | Union Budget 2025-26 (To be updated) | Impact on Economy & Markets |
| GDP Growth Projection | Nominal GDP growth estimated at 10.5% for 2024-25. | Higher growth → Positive for markets, investments | |
| Inflation Outlook | Core inflation currently at 3.1%, moving towards the 4% target. | High inflation → Pressure on rates, Low inflation → Stability | |
| Fiscal Deficit Target | Fiscal deficit targeted at 4.9% of GDP, down from 5.6% in 2023-24. | Lower deficit → Positive for credit rating, Higher → More borrowing | |
| Revenue Deficit | Targeted at 1.8% of GDP, reduced from 2.6% in 2023-24. | Decreasing revenue deficit→ better revenue management. | |
| Total Expenditure | Estimated at ₹48.21 lakh crore for 2024-25. (up 8.5%) | Reflects the government's commitment. | |
| Net Tax Receipts | Projected at ₹25.83 lakh crore. (up 15%) | Higher tax receipts →fund public services and infrastructure. | |
| Gross Market Borrowings | Estimated at ₹14.01 lakh crore. | →Government's borrowing needs, affecting liquidity and interest rates. | |
| Interest Rate Stance | As of December 2024, the RBI has maintained the repo rate at 6.5% for the eleventh consecutive meeting. | Higher rates → Expensive borrowing, Lower rates → Growth push | |
| Sectoral Allocations | Emphasis on MSMEs, middle class, and infrastructure. | More allocation → Sectoral growth & stock market impact |
(Source: prsindia.org, indiabudget.gov.in)
Tax Proposals
Income Tax Slab
The new income tax regime proposed changes to the tax slabs. Here’s a summary of the changes for 2024-25 and the expected 2025-26 revisions:
For individuals earning up to Rs 3 lakh, no tax will apply in both 2023-24 and 2024-25. The 5% tax rate will now apply to incomes between Rs 3 lakh and Rs 7 lakh, compared to Rs 3 lakh to Rs 6 lakh in 2023-24. The 10% tax rate will apply to Rs 7 lakh to Rs 10 lakh, up from Rs 6 lakh to Rs 9 lakh. The 15% tax rate will apply to incomes between Rs 10 lakh and Rs 12 lakh, compared to Rs 9 lakh to Rs 12 lakh in 2023-24. The 20% tax rate remains for incomes between Rs 12 lakh and Rs 15 lakh, while the 30% tax rate continues to apply to earnings above Rs 15 lakh.
Additional changes include an increase in the standard deduction for salaried individuals and pensioners from Rs 50,000 to Rs 75,000. The deduction from the family pension will rise from Rs 15,000 to Rs 25,000. The pension contribution will also be tax-deductible for both the employee and employer up to 14% of the salary, up from the previous 10%. (Source: prsindia.org, indiabudget.gov.in)
| Tax Rate | Current Income Slab 2023-24 | Proposed Income Slab 2024-25 | Expected Income Slab 2025-26 |
|---|---|---|---|
| Nil | Up to Rs 3 lakh | Up to Rs 3 lakh | |
| 5% | Rs 3 lakh to Rs 6 lakh | Rs 3 lakh to Rs 7 lakh | |
| 10% | Rs 6 lakh to Rs 9 lakh | Rs 7 lakh to Rs 10 lakh | |
| 15% | Rs 9 lakh to Rs 12 lakh | Rs 10 lakh to Rs 12 lakh | |
| 20% | Rs 12 lakh to Rs 15 lakh | Rs 12 lakh to Rs 15 lakh | |
| 30% | Above Rs 15 lakh | Above Rs 15 lakh |
Capital Gain Tax
The Union Budget 2024-25 proposes several changes in capital gains taxation. For Long-Term Capital Gains (LTCG), the rate will increase from 10% on listed assets to 12.5% across all asset categories. The indexation benefit for property, gold, and unlisted assets is being removed, which will impact tax planning for these assets.
In terms of Short-Term Capital Gains (STCG), the tax rate on listed equity shares, mutual funds, and REITs/INVITs will rise from 15% to 20%. This aligns the rate across all categories of assets, increasing the burden for investors.
The Exemption Limit for LTCG will rise from Rs 1 lakh to Rs 1.25 lakh for listed assets. This provides some relief to investors in these assets, increasing the exemption threshold.
The Securities Transaction Tax (STT) will also see an increase. The rate on options will go up from 0.0625% to 0.1%, and for futures, it will rise from 0.0125% to 0.02%. This may slightly impact trading costs in the financial markets. (Source: prsindia.org, indiabudget.gov.in)
| Tax Category | Current Rate (2023-24) | Proposed Rate (2024-25) | Expected Rate (2025-26) |
|---|---|---|---|
| Long-Term Capital Gains (LTCG) | 10% for listed equity shares, mutual funds, REITs/INVITs; 20% with indexation for other assets | 12.5% across all asset categories | |
| Short-Term Capital Gains (STCG) | 15% for listed equity shares, mutual funds, REITs/INVITs | 20% across all categories | |
| Exemption Limit for LTCG | Rs 1 lakh for listed assets | Rs 1.25 lakh for listed assets | |
| Securities Transaction Tax (STT) | 0.0625% on options 0.0125% on futures | 0.1% on options 0.02% on futures |
I will also focus on sector allocation, policy changes, and schemes as well to know which sector is poised for growth in 2025-26.
Conclusion
In conclusion, India’s goal of becoming a Viksit Bharat is within reach through inclusive growth. The Union Budget 2024-25 laid a strong foundation by prioritizing key areas such as employment, skill development, agriculture, and the middle class. With targeted investments in infrastructure and youth skilling, the government has set the stage for long-term economic progress.
Looking ahead to the Union Budget 2025-26, it is expected that the government will continue to focus on these priority areas while addressing evolving challenges. We can anticipate further emphasis on boosting economic resilience, enhancing productivity, and refining tax structures to support growth.
