Budget 2025 expectations: Income tax relief tops the wishlist of industry bodies

As the countdown for Union Budget 2025 begins, industry bodies are expecting huge personal tax relief for individual taxpayers from Finance Minister Nirmala Sitharaman.

Reducing the tax burden

Industry bodies anticipate that the budget will alleviate the tax burden on salaried and middle-class taxpayers, thereby boosting consumption and household savings. Similarly, the Confederation of Indian Industry (CII) has said that Budget 2025 should reduce marginal tax rates on income up to ₹20 lakh per annum, according to PTI.

The CII believes that a reduction in the tax burden would trigger a "virtuous cycle of consumption, higher growth, and higher tax revenue."

Simplifying the tax structure

Further, the PHD Chamber of Commerce and Industry (PHDCCI) has also suggested that the budget should reduce tax rates for individuals and provide a simplified tax structure.

"A simplified tax structure can reduce compliance costs and increase disposable income, boosting consumer spending. This increased demand encourages business expansion, driving economic growth. Additionally, the reduction in tax burdens can help mitigate inflationary pressures too," PHDCCI president Hemant Jain said after meeting the finance minister recently.

Abolishing STT

The PHDCCI also recommended that the government should abolish the Securities Transaction Tax (STT) as long-term capital gains (LTCG) tax on shares is now on par with other assets.

In Budget 2024, the finance minister had increased LTCG on equity shares from 10% to 12.5%.

Simplifying TDS/TCS structure

Meanwhile, the Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the government to simplify the tax regime. It expects the budget to rationalise the multiple TDS/TCS rates by converging them into a simple two- or three-tier rate structure. This will avoid classification disputes and prevent blockage of working capital in the industry.

FICCI said the budget should stop the practice of imposing TDS/TCS on transactions that are subject to GST since the relevant information is already available through GST filings.

In a post on X (formerly Twitter) on January 1, 2025, former Infosys CFO, TV Mohandas Pai suggested the government should expand the tax slabs by providing for zero tax on income up to ₹5 lakh, 10% tax on income up to ₹5-10 lakh, 20% tax on income up to ₹10-20 lakh and maximum 30% on income above ₹20 lakh.

Further, he said the surcharge and cess should kick in only for income above ₹50 lakh. For seniors above 60 years, tax should start only at ₹7.5 lakh, and seniors above 70 should have no tax till ₹10 lakh income.

The finance minister will present the Union Budget 2025-26 in the Lok Sabha on February 1, 2025.