Government Expects A Big Bump In Corporate Income Tax In The Last Quarter Of FY 25
FinTech BizNews Service
Mumbai, February 3, 2025: Which sectors will be beneficiaries of the union budget for the FY2025-26, presented by Union Minister of Finance and Corporate Affairs, Smt Nirmala Sitharaman in the Parliament on Saturday 1st Feb, 2025?
Vaibhav Agrawal, CIO – Alternates (Public equity), Motilal Oswal Asset Management Company (MOAMC) believes: "The budget indeed made a fine balance between fiscal consolidation and stimulating economic growth. With a fiscal deficit target of 4.8% for FY 25, and 4.4% for FY 26, the government clearly paved the way for disciplined fiscal spending ahead of even the most aggressive fiscal deficit target by analysts. While the consensus economic growth target for FY 26 was at 10.5%, the government has estimated this to be at 10.1%, clearly walking the conservative path. Even primary deficit is now close to pre-covid levels, with the government indicating its range of debt to GDP anchors. This would provide a clearer pathway for money markets and the central bank.
The changes in personal income tax have been targeted at boosting consumption from middle class households. These changes, in which the government has estimated foregoing almost Rs. 1 trillion in tax income would largely benefit middle-income households with an annual income of between of Rs. 10-50 lakh. The government expects a big bump in corporate income tax in the last quarter of FY 25. Furthermore, personal income taxes would have increased from merely 1% in 2001 to about 4% of GDP in 2026 because of larger number of people in the tax net and substantial increase in capital gains taxes.
Capex for FY 26 would largely be spent amongst railways, roads, defense and power. Specific segments of defense and power have seen higher increase than other categories. In the backdrop of this, we expect that discretionary consumption, transmission capex linked sectors, capital markets and companies lending to small ticket consumers would be the beneficiaries of this year’s budget policy."
