Personal Finance News
5 min read | Updated on January 27, 2025, 11:30 IST
SUMMARY
Budget 2025 expectations from FM Nirmala Sitharaman: SBI Research has proposed the government may consider introducing a universal income transfer scheme as political parties in several states have gone into a competitive mode to woo women voters by introducing direct cash transfer schemes.
Reduce tax rate to 15% for income between ₹10-15 lakh, says SBI Research | Image source: Shutterstock
SBI Research has proposed the government may consider introducing a universal income transfer scheme as political parties in several states have gone into a competitive mode to woo women voters by introducing direct cash transfer schemes.
"Of late, there is a Tsunami of women-centric schemes unleashed by multiple states offering direct benefit transfers (some badly guised as pure electoral realpolitik, we believe) that can bleed select states’ finances going forward as the wedge between revenue receipts and such expenditures may vault to 3-11% of the states revenue receipts," SBI Research said.
"With income transfer to women likely to be promised competitively by states in future, even the Union may be tempted to follow suit.. It would be worth taking course to adopt a universal income transfer scheme (matching grant from center to states) towards substantially reducing several market disturbing subsidies," it added.
The report has proposed to provide separate deductions in the new tax regime for social security, which will help revive the insurance sector.
As per the Insurance Regulatory and Development Authority of India (IRDAI), insurance penetration in India dropped to 3.7% in FY24 from 4% in FY23 and 4.2% in FY22. This decline is mainly due to a decline in life insurance penetration, raising concerns over the IRDAI's mission of "Insurance for all by 2047"
SBI Research expects that the government will focus on the following points to revive the insurance sector:
The report proposes various measures to revamp the health sector. It has suggested a uniform GST rate of 5% to 12% on medical devices, from the current GST rates range from 5% to 18%.
"This uniform tax structure could simplify compliance, improve operational efficiency, and lower costs in the sector," it said.
Further, the report said the government should target increasing healthcare spending to 5% of the GDP from 1.95% in FY24.
"A more aggressive target of 5% could be required to address the growing needs of India’s ageing and expanding population, it said while proposing to allocate proceeds from healthcare cess and the proposed 35% GST slab on tobacco and sugar products to strengthen public health programmes.
SBI Research has also proposed a roadmap for GST 2.0, with the rationalisation of tax rates. It has suggested to start with the inclusion of electricity tariff, then aviation turbine fuel, and finally petrol/diesel in GST. Further, the government may also consider exempting /lowering health insurance products from GST at least for all retail and health-focused products.
SBI Research has also suggested bringing clarity to the definition of input service distributor and removing GST TDS on banking services.
"Interchange fees paid through settlement agencies like NPCI, Master and VISA. Transaction charges are settled on real-time basis and the invoice wise details are received subsequently. Banks are required to pay the GST TDS and subsequently claim refund of the same from the member Banks. Considering practical difficulties faced in complying with TDS provisions, GST TDS should not apply on banking services," the report said.
About The Author
Next Story