New Delhi: The steps articulated in the Union Budget are crucial in shaping India's economic resilience and growth potential in the medium to long term, according to industry reports.
The Union Budget 2025-26 displays a balanced approach to sustaining economic growth while reinforcing fiscal prudence. Finance Minister Nirmala Sitharaman has chosen to stimulate consumption while keeping the focus intact on capex and taking rapid strides towards fiscal consolidation, according to the report by CareEdge Ratings.
"Measures to improve the ease of doing business through deregulation, supporting MSMEs, investments, and exports outline a clear strategy for achieving Viksit Bharat in 2047," the report mentioned.
Key tax reforms, including the rationalisation of personal income tax slabs, and the TDS and TCS provisions, aim to simplify compliance and enhance disposable income, fostering consumer confidence. "No personal income tax for income up to Rs 12 lakhs should provide a big fillip to consumer sentiments and spending," the report added.
Increasing the FDI limit in the insurance sector to 100 per cent is also a step in the right direction. The announcement to establish a High-Level Committee for regulatory reforms reflects a keenness to have a principle-based, light-touch regulatory framework.
The budget’s emphasis on sectors including tourism, healthcare, and manufacturing will catalyse job creation. The continuity in fiscal consolidation, with a budgeted fiscal deficit target of 4.4 per cent for FY26, will help the country move towards debt sustainability. These measures are poised to stabilise the macroeconomic environment, fostering private sector participation and investment.
Prime Minister Dhan-Dhaanya Krishi Yojana will enhance productivity, promote sustainable agriculture, improve storage, irrigation, and credit access across 100 districts, benefiting 1.7 crore farmers in partnership with states.
India’s Union Budget aligns with the expectations of steady fiscal consolidation, reinforcing a positive outlook on the country’s sovereign credit ratings.
The central government revised its fiscal deficit estimate to 4.8 per cent of GDP for the year ending March 31, 2025, slightly lower than the earlier projection of 4.9 per cent in the Union Budget presented on February 1.
For fiscal 2026, the government has set an even lower deficit target of 4.4 per cent aligning with a commitment to financial discipline and sustainable growth. Despite adjustments in income tax thresholds and a gradual normalisation of economic growth, India is expected to achieve these fiscal targets, the S&P Global Ratings report said.
Economic growth is projected to remain strong, with real GDP expected to expand by 6.7 per cent in fiscal 2025 and 6.8 per cent in fiscal 2026. Capital investment remains a priority, with the government allocating 3.1 per cent of GDP for infrastructure and development projects.
NRI tax regime gets tougherNew Delhi: Union Budget has introduced a new twist in the narrative for Non-Resident Indians (NRIs). A more stringent tax regime now looms, demanding meticulous reporting and tighter compliance, especially for students and young professionals abroad. These reforms, positioned as part of India’s broader alignment with international tax norms, introduce layers of financial complexity for those balancing obligations between their host country and India. Previously, NRIs were taxed on Indian-sourced income if they spent over 182 days in India within a financial year. Budget 2020 had already reduced this to 120 days for high-income individuals. Budget 2025 hints at further tightening, making it harder for students and professionals to maintain NRI status if they hold substantial financial ties to India. For students in the US, UK, Canada, or Australia on post-study work visas, these regulatory shifts translate into heightened tax obligations and potential double taxation risks if finances aren’t structured carefully. Indian tax authorities will likely demand detailed disclosures on overseas earnings, investments, and bank accounts. Inaccurate reporting could lead to penalties or legal action under anti-tax evasion laws. Students or professionals sending money to India for family support, investments, or savings might face stricter tax scrutiny. |
