Union Budget 2025: Here's What Middle Class And Lower Income Group Expecting From Nirmala Sitharaman

The Modi government is gearing up to present its second full budget for the third term, and India's middle class is eagerly anticipating it. This budget could bring significant changes, especially for middle and lower-income groups. Key reforms might focus on making insurance more affordable and simplifying personal tax laws to ease financial burdens.

Dhirendra Mahyavanshi, co-founder of Turtlemint, suggests that the government should bolster the insurance sector. He believes that revisiting the 18% GST on health insurance policies and offering tax relief for annuity and pension products could enhance financial inclusion. "Prioritising accessibility in rural areas would enable underserved populations to benefit from essential coverage," he stated.

Financial Literacy and Retirement Planning

Financial literacy, retirement planning, and transparency in financial products are crucial this year. Viplav Majumdar from Planyourworld.com emphasises the importance of accessible financial education. "The government should come up with a policy for promotion of financial education," he said, highlighting its role in helping people manage money effectively and reduce reliance on intermediaries.

Majumdar also advocates for increased tax incentives for retirement savings instruments. Expanding schemes like the National Pension System (NPS) could be beneficial. Simplifying investment processes and capping hidden charges in products like unit-linked insurance plans can empower individuals to retain more earnings.

Income Tax Reliefs Anticipated

Bajaj Broking anticipates tax relief measures for lower- and middle-income households in Budget 2025. These measures could boost discretionary spending. The government might raise the basic exemption limit under the new tax regime from Rs 3 lakh to Rs 5 lakh, reducing the tax burden on lower-income groups.

Girish Kumar from Share India Securities notes that taxpayers hope for increased deductions under Section 80D for health insurance, Section 24(b) for home loan interest, and Section 80C for investments. Such adjustments aim to enhance disposable income and stimulate consumption.

Asit C. Mehta of Investment Intermediates Ltd mentions expectations of raising the standard deduction from Rs 75,000 to Rs 1.25 lakh in the new tax regime. Simplifying this regime further could provide much-needed relief to the middle class.

Simplification of Tax Processes

Rakesh Nangia from Nangia & Co LLP stresses the need for simplifying income tax return forms and rationalising capital gains tax rates. He points out that salaried individuals face inflation challenges while filing ITR forms. "Personal income, inflation and compliance income tax slabs need to be rationalised," he told PTI.

Nangia suggests increasing the basic exemption limit to Rs 10 lakh to alleviate burdens on salaried individuals. Enhancing standard deductions could leave more cash in people's pockets, potentially boosting consumption.