Union Budget 2025 | Capital gains tax rationalization one of the key areas: Sofiya Syed, Direct Tax Division, Dewan P N Chopra & Co

'Given the current economic priorities, such as boosting consumption, job creation, and handling fiscal deficits, tax rationalization could be linked with broader reforms,' Syed said.

The Union Budget for the upcoming financial year is all set to be presented on February 1, 2025, by Finance Minister Nirmala Sitharaman. According to reports, the Narendra Modi government may consider slashing income tax for individuals earning up to Rs 15 lakhs per annum and extend the tax relief bracket in a bid to provide relief to the middle class and boost consumption.

Ahead of the Budget, Sofiya Syed, Direct Tax Division, Dewan P N Chopra & Co said, "As we approach the Union Budget 2025, capital gains tax rationalization is one of the key areas that everyone has been focusing on. Some of the key demands for the rationalization of capital gains tax include lowering tax rates on long-term capital gains, revising the thresholds for LTCG tax, enhancing indexation benefits, increasing threshold limits of deductions like 54, 54F, etc., and other similar measures. The government has often balanced between making changes to encourage investment and maintaining revenue targets. The FM is likely to weigh the potential revenue impact of any changes and whether it aligns with broader economic goals."

Syed added, "Given the current economic priorities, such as boosting consumption, job creation, and handling fiscal deficits, tax rationalization could be linked with broader reforms. The FM's stance on capital gains tax rationalization will likely depend on a careful assessment of how much the government can afford in terms of tax cuts while still balancing its budgetary goals. While it's uncertain if the FM will concede fully to the demands of capital gains tax rationalization, the market continues to expect some changes that could benefit long-term investors."

Union Budget 2025 | Nirmala Sitharaman, who continues to be Finance Minister, will present her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', reports suggest there might be a tax relief for those making up to Rs 15 lakh per year. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.