8th Pay Commission, income tax cuts: Union Budget 2025 faces rising expectations from India Inc., trade unions

Speculations around the 8th Pay Commission intensified after central trade unions, including the Bharatiya Mazdoor Sangh (BMS), called for its formation during the customary pre-Budget meeting on Monday with Union finance minister Nirmala Sitharaman.

Pawan Kumar, Bharatiya Mazdoor Sangh Organising Secretary (Northern Zone), said that he demanded an immediate constitution of the next pay panel, which reviews and recommends changes to the salaries, pensions, and benefits of central government employees.

The government employee unions, represented by the staff side of the National Council of Joint Consultative Machinery (JCM), have already been advocating for a higher fitment factor–a multiplier applied to the existing basic pay to calculate revised salaries and pensions– to address inflation and rising costs of living.

Shiv Gopal Mishra, secretary (staff side) of NC-JCM, said he “can’t say for sure” if the government would announce the 8th Pay Commission in the upcoming budget, reported NDTV Profit.

S B Yadav, NC-JCM member, said the forum has received no indication from the government over its potential announcement in the upcoming Budget.

During month-long pre-budget consultations, the Industry bodies and trade unions also urged the government to reduce the tax burden on the middle class to spur consumption.

While the Confederation of Indian Industry (CII) proposed a reduction in marginal tax rates for personal income up to ₹20 lakh per annum, BMS leader Pawan Kumar suggested increasing the threshold for Income Tax exemption to ₹10 lakh.

Some trade unions also want the government to impose an additional 2% tax on the super-rich and use the amount collected to fund social security for informal workers.

The finance ministry on Monday said that Sitharaman expressed gratitude to the experts and representatives for sharing valuable suggestions. She assured them that their inputs would be carefully examined and considered while preparing the Union Budget.

The citizens can also share their suggestions and ideas for the Union Budget 2025-26 on the MyGov platform, starting January 10, 2025. The finance ministry encouraged them to actively participate in the annual initiative aimed at making the Budget-making process more inclusive.

The Union Budget 2025-26 is set to be presented on February 1.

This would be the eighth straight Budget of Sitharaman and the second full budget of the Modi 3.0 government.