2 weeks Ago By Moneycontrol
By Suresh Soni, CEO at Baroda BNP Pariba Mutual Fund The most significant announcement in the Budget 2025 presented by the Union Finance Minister on February 1 was the introduction of the new Income Tax Bill. There have been significant changes in the direct tax provisions. The biggest and bold change is related to personal income tax i.
e, no income tax payable for total incomes up to Rs 12 lakh and upward revision in the slabs of income tax. Both these measures could provide significant relief to the bulk of the tax payers - especially since the top tax rate kicks in at an annual income of Rs 30 lakh. The rationalization of TDS / TCS - both rates and thresholds, is also a welcome step for the individual tax payer.
Specifically for mutual funds, the TDS threshold for income distributed increases from Rs 5,000 to Rs 10,000. The doubling of the threshold for TDS on interest income from Bank deposits for Senior citizens could also be a relief. The rationalization of Indirect taxes with the removal of 7 tariff rates and now only 8 tariff rates remaining is an encouraging step towards simplification as well as potentially enhanced revenue generation through better compliance.
The Budget speech also announced certain reform measures in the tax administration processes and procedures, tying into the Ease of Doing Business orientation of the Government. The establishment of a Nuclear Energy Mission and the target of 100 GW of nuclear electricity generation by 2047 would give a boost to the clean energy and energy security goals of the Government while supporting the growth and development push for the next few decades. The slew of incentives in terms of reduction in duties for EV manufacturing is also another big boost to multiple sectors of the economy.
Click Here To Read All Budget Related News The rationalization and, to some extent, relaxation of tax provisions around relocation of funds from other jurisdictions to GIFT City would further boost the viability and attraction of GIFT City as an offshore fund jurisdiction. The inclusion of retail schemes and ETFs in the relocation regime under IFSCA is also beneficial to the setting up of funds in this jurisdiction. The Government has stayed on the path of fiscal prudence.
Both the revised fiscal deficit for FY25 at 4.8% and the Budget estimate of 4.4% for FY26 is a commendable step in the right direction.
The Capital Expenditure for FY26 at Rs 11.2 lakh crore will be about Rs 1 lakh crore higher than the revised capital expenditure estimates for FY25 (which were impacted to some extent by the 2024 Lok Sabha Elections ). The Government continues to provide support through its capital expenditure and it is now it is upto the private sector to step up its own investments - given the consumption boost expected from the income tax relief for the middle class.
The Government’s borrowing numbers are almost similar to last year’s number’s with just a 1% decrease in net borrowings. The Gross borrowings are expected to be Rs 14.8 lakh crore and the net borrowings are expected to be Rs 11.
4 lakh crore. This is broadly in line with the expectations of the debt markets. Overall, from the market perspective, it is a positive budget which seeks to boost consumption and inclusive growth while maintaining fiscal discipline.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.
com advises users to check with certified experts before taking any investment decisions..
