1. Tax Reforms and Disposable Income

One of the most talked-about changes in the new budget is the income tax reform. The introduction of a ₹12 lakh exemption under the new tax regime means that more citizens will have higher disposable income. With more money in hand, people are likely to increase their spending, which in turn boosts GST collections and invigorates the economy. For instance, when consumers have extra funds, they’re more inclined to invest in household appliances, vehicles, or even enter the property market—all of which drive economic growth.

Moreover, increased disposable income can have a cascading effect on various sectors. More spending not only stimulates businesses but also contributes to a stronger stock market. However, it’s important to be mindful of potential inflationary pressures; as demand rises, prices might follow suit. Striking a balance here is key to sustaining long-term growth.

2. Fiscal Discipline: A Reduced Fiscal Deficit

The government’s aim to reduce the fiscal deficit from 4.8% to 4.4% of GDP is a signal of fiscal prudence. Lower fiscal deficits mean that the government borrows less, which helps in several ways:

• Lower Interest Rates: With reduced competition for funds, banks and financial institutions can offer loans at lower interest rates, making it easier for businesses and consumers to access credit.

• Stronger Banking System: When businesses have access to affordable credit, they are more likely to meet their financial obligations, reducing the risk of non-performing assets (NPAs) in the banking sector.
• Investor Confidence: A disciplined fiscal approach tends to boost the confidence of both domestic and international investors, potentially leading to stronger market performance and improved credit ratings.

3. The Impact of a 20% Increase in Capital Expenditure

A significant highlight of this budget is the 20% increase in capital expenditure. This boost in capex is expected to have multiple benefits:

• Job Creation: Infrastructure projects typically create a multitude of direct and indirect employment opportunities, from construction and engineering roles to ancillary services.
• Improved Infrastructure: Better roads, bridges, and public transport systems mean faster movement of goods and people, which is crucial for economic efficiency.
• Enhanced Connectivity: Improved infrastructure connects rural areas with urban centers, reducing migration pressure on cities and stimulating balanced regional development.
• Foreign Investment: Modern, efficient infrastructure is a magnet for global investors, which can further enhance economic growth.

4. FDI in Insurance: Opening Doors for Global Expertise

Another pivotal change is the increase of FDI in the insurance sector from 75% to 100%. This move is intended to attract more foreign capital and expertise, leading to:

• Enhanced Insurance Products: Global players can bring advanced technologies and innovative policies, improving customer experience.
• Increased Competition: While this may put pressure on traditional domestic insurers, it will ultimately drive improvements in service quality and efficiency.
• Market Expansion: With more investment, the insurance sector is poised to grow, which benefits consumers through better and more affordable products.

5. Green Initiatives and Their Impact on the Common Man

The budget’s commitment to green initiatives is both timely and crucial. With a 53% increase in funding for renewable energy projects, the government is taking a firm step towards sustainable growth. Here’s how these initiatives benefit the everyday citizen:

• Reduced Energy Costs: Investments in renewable energy sources like solar and wind can lead to lower electricity costs over time.
• Better Air Quality: A shift away from fossil fuels means a reduction in air pollution, resulting in improved health outcomes.
• New Job Opportunities: The green sector is expected to create numerous jobs—from manufacturing and installation to maintenance of renewable energy systems.
• Long-term Environmental Benefits: A cleaner environment not only improves quality of life but also ensures that future generations inherit a sustainable planet.

6. The Digital Economy: Bridging the Gap

Digital transformation is another cornerstone of the budget, with significant investments in AI, digital payments, and digital infrastructure. These measures are designed to make everyday life easier and more efficient:

• Enhanced Access to Services: Digital platforms make it easier to access banking, healthcare, and educational services, especially in remote areas.
• Boost to Entrepreneurship: With improved digital infrastructure and government support, startups and small businesses have a better environment to thrive.
• Economic Inclusion: The push towards a digital economy means that more people can participate in and benefit from economic growth, reducing barriers to entry in many sectors.

7. Bringing It All Together: A Balanced Vision for the Future

In summary, the Union Budget 2025-26 represents a balanced mix of fiscal prudence, strategic investments, and forward-looking initiatives. Whether it’s the increased tax exemption that puts more money in people’s pockets, the capex hike that promises better infrastructure and job creation, or the green and digital initiatives that aim to improve quality of life—each component is designed to create a more robust and inclusive economy.

For someone like me, just starting out in the field of financial analysis and research, the budget is not only an educational tool but also a source of inspiration. It shows that even complex policies have tangible impacts on our daily lives and offers a window into how the nation’s growth can be driven by smart, well-planned strategies.

Railway Budget:

In the Union Budget 2025-26, the Indian Railways has been allocated a capital expenditure of ₹2.52 lakh crore, maintaining the same level as the previous fiscal year.

This substantial investment underscores the government’s commitment to modernizing railway infrastructure, enhancing safety measures, and improving passenger amenities.

The budget outlines plans for the introduction of 200 new Vande Bharat trains, 100 Amrit Bharat trains, and 50 Namo Bharat trains, aiming to expand and upgrade the current fleet.

Additionally, ₹1.16 lakh crore has been earmarked specifically for safety-related activities, including the construction of 1,000 new flyovers and underpasses to enhance safety and connectivity across the rail network.

These initiatives are expected to significantly improve the efficiency, safety, and overall experience of railway travel in India.

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Tax shall become payable in advance during any financial year in respect of the Income earned by  an assessee  which would be chargeable to tax for the Assessment Year immediately following that financial year. Advance tax is payable during the financial yearin every case where the amount of such taxpayable by the assessee during the year is Rs. 10,000 or more.

However, an individual resident in India of the age of 60 years or more at any time during the year who does not have any income from PGBP, is not liable to pay advance tax.

Instalments of advance tax and due dates [Section 211]

Advance tax payment schedule for corporates and non- corporates (other than an assessee computing profits on presumptive basis u/s 44AD or section 44ADA)- Four Instalments

Advance tax payment by assesses computing profits on presumptive basis u/s 44ADAD(1) or 44ADA(1)

An eligible assessee, opting for computation of profits or gains of business or profession on presumptive basis in respect of eligible business referred to in section 44AD(1) or in respect of eligible profession referredto in section 44ADA(1), shall be required to pay advance tax of the whole amount on or before 15^thMarch of the financial year.

However, any amount paid by way of advance tax on or before 31^st March shall be treated as advance tax paid during the F.Y. ending on that day.

Interest for defaults in payment of advance tax (Section 234B)

1.  Interest u/s 234B is attracted for non- Payment of advance tax or payment of advance tax of an amount less than 90% of assessed tax.

2. The interest liability would be 1% per month or part of the month from 1^st April following the F.Y.  upto the date of determination of total income u/s 143(1).

3. Such interest is calculated on the amount of difference between the assessed tax and the advance tax and the advance tax paid.

4. “Assessed tax” means the tax on total income determined u/s 143(1) less TDS & TCS, any relief of tax allowed u/s 89, any tax credit allowed to be set off in accordance with the provisions of section 115JD.

5. Where self-assessment tax is paid by the assessee u/s 140A or otherwise, interest shall be calculated upto the date of payment of such tax and reduced by the interest, if any, paid u/s 140A towards the interest chargeable under this section.

Interest for deferment of advance tax(Section 234C)

a. Manner of computation of interest u/s 234C for deferment of advance tax by assessee, being an individual:

In case an assessee, other than an assessee who declares profits and gains in accordance with the provisions of section 44AD(1) or section 44ADA(1), who is liable to pay advance tax u/s 208 has failed to pay such tax or the advance  tax paid by such assessee on its current income on or before the dates specified in column (1) below is less than the specified percentage (given in column (2) below) of tax due on returned income, then simple interest @ 1% per month for the period specified in column (4) on the amount of shortfall, as per column(3) is leviable u/s 234C.

Note– However, if the advance tax paid by the assessee on the current income, on or before 15^th June or 15^th September, is not less than 12% or 36% of the tax due on the returned income, respectively, then, the assessee shall not be liable to pay any interest on the amount of the shortfall on those dates.

Tax due on returned income= Tax chargeable on TI declared in the return of income(-) TDS (-) TCS (-) any relief of tax allowed u/s 89 (-0 any tax credit allowed to be set off in accordance with section 115JD.

b. Computation of interest u/s 234C in case of an individual who declares profits and gains in accordance with the provisions of section 44AD(1) or AAADA(1):

In case an assessee, who declares profits and gains in accordance with the provisions of section 44AD(1) or 44ADA(1), who is liable to pay advance tax u/s 208 has-

• Failed to pay such tax or
• The advance tax paid by the individual on his current income on or before 15^th March is less than the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of 1% on the amount of the shortfall from tha tax due on the returned income.

c. Non – applicability of interest u/s 234C in certain cases:

Interest u/s 234C shall not be leviable in respect of any shortfall in payment of tax due on returned income, where such shortfall is on account of under-estimate or failure to estimate-

i. the amount of capital gains;

ii. income of nature of winnings from lotteries, crossword puzzles etc;

iii. income being  “PGBP” in cases where the income accrues or arises under the said head for the first time.

iv. the amount of dividend income other than deemed dividend referred u/s 2(22)(e). However, the assessee should have paid the whole of the amount of tax payable in respect of such income referred to in (i), (ii), (iii) and (iv) as the case may be, had such income been part of the TI, as part of the remaining instalment of advance tax which are due or where no such instalments are due, by 31^st March of the financial year.

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Certain changes are made to the provisions this fiscal. However, the impetus to save has been removed from the tax provisions. List of deductons not permissible under new resume are given below.

Since propensity to save for future is now non existant, it makes a significant economic difference to the economy at macro level. Since ages, Life Insurance has been marketed as a tax incentive. Inflow of Insurnce premium from the public at large fuels a host of develpmental activites of the economy. With the tax incentive removed, the pipeline is bound to narrow down and consequently the resources for several of the welfare measures get impacted.

At the micro level, the person loses the impetus to save. Therefore the saving habbit gets impacted. And the said amount gets in to other sources but not savings. Might be people spend money on better eating joints, clothes, etc.

Host of deductions u/s 80 are withdrawn such as those under sections 80C, 80CCC, employee contribution u/s 80CCD, 80D, 80DD, 80DDB, 80E, 80EEA, 80G, 80TTA, 80TTB except those under 80CCD(2) and 80JJAA

Incentive for medical insurance is withdrawn. Tax deduction for chldren education, repayment of housing loan insurance premium paid, etc covered u/s 80C are no more eligible fordeduction.

Erstwhile deduction for interest on housing loan, subject, how ever, to limits are no more available. Setting off the loan under the head house property will not be eligible for set off against other heads, much less crrying it forward. The deductions withdrawn far outweigh the tax concessions offered.

In due course, the option might as well disappear and the new regime stays.

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As per Income Tax Act, any person over 60 yrs of age is considered to be a senior citizen. It is essential that the person completes 60 years of age at any time during the year. For example, any person born on or before31. March 1963 can claim the benefits for the financil year 2022-23 corresponding th the Assessment year 2023/24.

They have been offered certain exclusive benefite under the Act.

1. Advance Tax:
   Such of those senior citizans having incomes under salary (pension) House property (rental income) other sources (Interests on Fixed deposits, etc) are exempted from the quarterly advance tax. Interestingly, if the person has income under the head profits and gains business or profession, he cannot avail this facility.
2. Enhanced exemption limits:
   Senior citizens enjoy a higher basic exemption limit of Rs.3,00,000 as against Rs.2,50,000 by normal citizens Tax rates remain the same after that level .
3. Increased exemption of interests earned:
   Normal cizens can claim an exemption u/s 80 TTA upto Rs.10,000 only on savings bank accounts and not on interest fron Fixed deposits. Senior citizens can claim exemption upto Rs.50,000 including inerest earned on fixed deposits.
4. Beneft of medical expenses
   The limit of S.80 D for senior citizens is Rs.50,000. This may be for buying medical insurance for self or spouse, or dependants, or for meeting normal medical expenses.
5. Exemption from filing the return of income
   If a senior citizen has only pension and interest on Fixed deposits, he need not even file the return of income in case the pension received and the fixed deposit are at one place.
6. Super senior citizens
   Any person over 80 years of age is called as a super senior citizen. All the above exemptions are available to such super senior citizens also. Additionally, the basic exemption limit for such persona is enhanced to Rs.5,00,000

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A professional does not charge his fees as a percentage of the outcome. Ever heard of a doctor charging fees differently if the baby is a male or female?

The Government is fully armed with softwares to identify any excess claims. Now that PAN and Aadhar are linked, any savings can easily be traced by the Income Tax department. All transacion are linked to PAN. For lat over a decade, banks insist on KYC even to open a savings bank account, leave alone investments

If a person takes up any eligible savings such as Insurance premium, Purchase of SSC etc., one has to furnish the details of PAN and Aadhar as a matter of KYC. When premium is paid, the payment is from a bank which is already paired with the PAN which was furnished at the time of opening the bank account.

When a person claims deductions under S 80, the PAN is cross matched with the Insurance policies, Housing loans, etc to validate the claim. Any false claims are immediately thrown up and investigated.

Similarly claiming deduction for House rent allowance is cross checked with the house owner to check if the same income if disclosed by the owner

Genuine claims are appreciated and false claims are rejected.

Income tax department has made enquiries and gathered that it is those so self styledconsultants who lure innocent persons to make false claims and knock off a percentage of the refund.

The department has identified the consultants with the IP address of the consultants who filed hundreds of returns and made refund claims. Those consultants have been arrested and being legally proceeded against.

The Government has announced an opportunity to all thiose who claimed false deductions to file a revised return with correct claims. The last date forrectifications is 31.12.2023

Please keep in mind that the consultants are punished alright but the person who validted the return is also at fault for claaiming a wrong deduction and the depertment closes in on to them sooner or later.

Plan your taxes peroperly. Seek consultancy from professionals and not these half baked self styled consultants.

Government has many options to save. Save wisely, and do not get caught napping.

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