Budget 24-25 should focus on tax breaks to boost consumption: India Inc

New Delhi: Industry players have suggested that the Union Budget for fiscal 2025 should focus on providing relief to taxpayers, especially the lower-income ones, to boost consumption.

The industry also called on the Finance Minister to reduce corporate tax, phase out tax exemptions and broaden the tax base to stimulate economic growth.

“Rationalise and simplify the tax system to improve compliance and promote investment. Consider measures such as reducing corporate tax rates, phasing out tax exemptions and broadening the tax base to make the tax system more efficient and fair,” Assocham said.

Rating agency ICRA said the government is likely to set a fiscal deficit target of 4.9-5 per cent for fiscal 2025, down from 5.1 per cent estimated in the February 1 interim budget, without compromising the capital expenditure target of Rs 11.1 lakh crore.

“While favourable developments on the revenue front herald positive fiscal momentum in fiscal 2025, ICRA believes fiscal consolidation will prove to be quite a challenge beyond the end of the current fiscal year as well,” the rating agency said.

Mayank Gupta, co-founder and COO of Zopper Insurtech, said the budget is expected to focus on policies to promote economic growth and provide relief, especially to lower-income earners, to boost consumption.

“From an insurance perspective, we suggest amending Section 80C of the Income Tax Act to allow a higher limit on insurance premium payments, thereby encouraging more people to buy insurance products. Further, there should also be a limit on deduction for term life insurance under the new tax regime,” he said.

Anish Mashruwala, partner at JSA Advocates and Solicitors, said the NBFC sector is expecting some ease in doing business given the plethora of regulatory frameworks.

“Of course, there is a balance to be struck in terms of oversight and I hope the government will consider this carefully,” Mashruwala said.

Rumki Majumdar, an economist at Deloitte India, suggested that the government should expand the scope of PLI schemes, especially for sectors that can create more employment, such as textiles, handicrafts and leather.

Majumdar added that these programmes should continue in sectors that have seen success, such as electronics, automotive and semiconductors.

Responding to the Finance Minister’s expectations, Vishal Goel, Managing Director, RX Propellant, said that the life sciences sector has huge potential and is attracting global players who are not only looking to leverage the power of contract manufacturing but also create Global Capability Centres (GCCs).

“We are optimistic that the upcoming budget announcement will prioritise the life sciences sector, increasing investment flows and driving innovation and success in India,” Goel said.

Pankaj Sharma, CEO, Religare Finvest, expects the measures to reduce the cost of financing through interest subsidies, ease access to credit, especially for those just starting out in credit, through appropriate policy measures and comprehensive tax breaks for the SME sector.

“Investment in digital infrastructure and skill development is crucial to equip SMEs with the latest technologies and increase productivity,” Sharma said.

Assocham has also proposed structural reforms in the agriculture sector that aim to increase productivity, market access and income opportunities for farmers.

It also suggested promoting contract farming, investing in agricultural infrastructure, facilitating value chain integration and encouraging diversification into high-value crops.