Barclays Expects Tax Cuts in Budget 2025: Key Expectations Revealed

With Budget 2025 soon to be in view, international banks and local players are waiting on the pins and needles expecting the reforms and measures the Finance Minister Nirmala Sitharaman is to implement. Among the key players, Barclays has released its expectations for the Budget 2025 and has highlighted the issues of tax reduction and the related fiscal measures to increase the economic growth and stimulate the higher level of the consumers’ expenditures and attraction of the investments.

The Push for Tax Cuts: Barclays’ Key Recommendation
According to Barclays, in the measured years the government is expected to pursuit personal income tax and corporate tax cuts. As per the financial giant, lowering tax rates can help put more disposable income in the hands of consumer besides bolstering investment by companies, which pretty much defines the need to sustain India’s growth rate.

Individual income tax relief has been one of the stream of incentives that the middle class has been calling for over time. If the government were to update income tax slabs or enhance standard deductions, many a taxpayer would relieve and indulge in consumption. Likewise, reduced corporate taxation could spur the private sector investment and thus aid the government realize its ‘Make in India’ as well as employment objectives.

Balancing Growth with Fiscal Responsibility
Barclays relies on the tax cuts’ message at the same time understanding that the government has its burden of maintaining fiscal discipline. A problem still persistents in India’s fiscal policy is fiscal deficit; therefore any substantial tax cuts has to be sustainable to prevent revenue shortfalls.

According to Barclays, while expecting the government to finalise measures to reclaim taxes in the coming year, there will be measures to initiate tax reforms and ensure that the compliance rate improves, GST revenues get optimized, and more individuals and businesses register for digital taxation services.

Boosting Infrastructure and Capital Spending
Besides tax reforms, Barclays further noted that continuous funding towards infrastructure spending in Budget 2025. Highways, Railways, Renewable energy and Urban infrastructure continue to be priorities for the Government to create employment and for sustainable economic development.

An added boost to the National Infrastructure Pipeline (NIP) and Gati Shakti plans are expected to mobilise private and foreign investments into the Indian infrastructure marketplace. According to Barclays, more capital expenditure in these sectors could fast-track India’s path to achieve a $5 trillion economy.

Sector-Specific Recommendations
Barclays also emphasizes the importance of call for specific sectors which are as follows manufacturing, agriculture and small and medium enterprises (SMEs) . Some of its key recommendations include:

Manufacturing: Expanding and adding more amount of incentives for the PLI schemes especially in sectors which are in the growth phase such as electronics, renewable energy and EV industries.
Agriculture: Now increasing the subsidy granted for sustainable farming and implementing new technologies for agriculture improvement.
SMEs: Continuing programmes’ facilities such as Emergency Credit Line Guarantee Scheme (ECLGS) and providing tax support to MSMEs.
Establishment of Department for Digital Economy and Startups
With India aggressively embracing the digital world, Barclays believes that Budget 2025 will unveil steps toward digitisation agenda. Favourable measures for startups, measures that will support development of digital networks and specific changes of legislation encouraging fintech experiments are also expected.

the extant taxation proposes that start-ups which are important in new product development and as employment generators, could enjoy longer tax holidays, less rigid compliance requirements and more funding options.

Green Growth Agenda
Budget 2025 is expected to attract much attention on sustainability and climate resiliency by Barclays. This would mean supporting higher subsidies in renewable energy projects, strengthening incentives for the EV segment, imposing more stringent carbon emission norms, which are planned to fit India’s net zero target of 2070.

What Barclays Expects from FM Nirmala Sitharaman in Budget 2025
Barclays’ key expectations from Budget 2025 can be summarized as:

Tax Reforms: Cut down of the personal and corporate income tax to foster demand and investment.
Fiscal Prudence: Corporate spending within a particular area and striving to achieve more synthesizing Free cash flow growth and managerial responsibility.
Infrastructure Focus: Enhanced capital expenditure on transportation, energy, and urban development.
Sectoral Support: Specific polices in agriculture, MSMEs, and the manufacturing sector.
Digital Push: The New Measures will strengthen start-ups, digital ecosystem and Fintech solutions.
Green Investments: Incentives for renewable energy, EVs, and sustainable development.