As India approaches the Financial Bill 2025, industry leaders and financial experts have begun sharing their expectations on what the Government’s fiscal policy might bring for businesses, the economy, and citizens. From tax reforms to the push for sustainable growth, there is growing anticipation for measures that will shape the country’s financial landscape in the year 2025-26. Here is a look at some of the key pre-budget insights from experts.
1. REAL ESTATE AND INFRASTRUCTURE
Harsh Parikh, Partner, Khaitan & Co
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“This year’s budget has the potential to ensure the real estate rally continues for a longer time. Increasing the home loan interest rates deduction from the present Rs. 2 lakhs will go a long way in motivating home buyers to avail this benefit in tax and in turn ensure more sales of real estate assets.”
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“Strong Policy and incentives to develop senior living homes and student housing will open floodgates for foreign investments in these areas of real estate”
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“Clarification that long-term leases of 60 years or 90 years would be excluded from the purview of GST, will benefit the commercial and office sectors.”
2. TELECOM AND SATELLITE BROADBAND
Harsh Walia, Partner, Khaitan & Co
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“By adopting a fair and transparent spectrum allocation framework, India can attract international investments, reduce deployment costs, and establish itself as a frontrunner in the fast-evolving satellite broadband ecosystem. Budget 2025 offers a unique chance to set the stage for transformative growth in this critical sector.”
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“The Department of Telecommunications’ recent notification of the Right of Way Rules, 20241 marks a pivotal step towards expediting telecom infrastructure deployment, with several states already adopting the new framework. These rules introduce a streamlined approval process and enhanced transparency. Building on this momentum, Budget 2025 has the opportunity to further catalyse growth by offering financial incentives and tax benefits for telecom infrastructure investments. With the Government’s push for automatic permissions for initiatives like BharatNet, investors are well-positioned to tap into an expanding digital ecosystem, particularly in rural and underserved regions.”
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“As AI revolutionizes the telecom sector by boosting network efficiency, enhancing customer experiences, and fostering innovative business models, Budget 2025 is poised to accelerate this transformation. The government is expected to announce targeted incentives and funding to advance AI adoption while prioritizing robust data privacy and security frameworks. The recent upgrade of TRAI’s DND app highlights the growing emphasis on consumer protection in the digital era. Budget 2025 is likely to strike a balance between promoting innovation and ensuring safety, reinforcing India’s ambition to become a global hub for AI through ethical and secure deployment in the telecom sector.”
3. INDIRECT TAX
Brijesh Kothary, Partner, Khaitan & Co
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“A key challenge faced by the industry from an indirect tax perspective is the delay in obtaining registration and processing refunds under the GST regime. These delays negatively impact the ease of doing business.”
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“Simplifying the eligibility criteria for input tax credits (ITC) and reducing the restrictions on its availment would help reduce disputes over ITC claims and ease liquidity pressures on businesses, especially MSMEs, and also enhance their cash flow.”
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“Offering indirect tax exemptions or rebates for businesses investing in infrastructure and research & development sectors can drive economic growth. Lower Customs duty and GST rates on capital goods can incentivize industries to invest in new technologies and expand their production capacities.”
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“Rationalising the customs duties on essential raw materials can lower production costs for industries, particularly in sectors like electronics, manufacturing, and automotive. This can help enhance competitiveness, promote manufacturing, and reduce reliance on imports.”
4. SOVEREIGN WEALTH FUND
Vinita Krishnan, Partner, Khaitan & Co
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“India has experienced a notable increase in investments from sovereign wealth funds (SWFs). To maintain this positive trend and further infrastructure development, it is crucial to extend the tax exemption sunset clause for SWFs beyond 31-03-2025. Moreover, the Finance (No. 2) Act, 20242, deems gains from unlisted bonds and debentures as short-term capital gains taxable at the rate of 30%, regardless of the holding period – this may impact investments from SWFs and pension funds that rely on long-term capital gains exemptions. Courts have historically held that deeming fictions should be interpreted strictly for their intended purposes. Hence, a clarification on the exemption status for gains from unlisted bonds and debentures held for a period beyond 24 months would be beneficial.”
5. TAX-NEUTRAL STATUS FOR INTRA-GROUP REORGANIZATIONS
Vinita Krishnan, Partner, Khaitan & Co
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“Globally, tax-neutral status for intra-group reorganizations is common. In India, while the transferor entity is exempt from taxes in overseas mergers involving foreign shares with underlying Indian assets (i.e. famous indirect transfer tax provision introduced after the Vodafone case), shareholders are not. This results in taxation without real income. To promote efficient restructuring, India should exempt shareholders from such taxes.”
6. FOREIGN DIRECT INVESTMENT
Moin Ladha, Partner, Khaitan & Co
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“With the Union Budget 2025 fast approaching, the industry as a whole is hopeful for some interesting changes to the regulatory landscape, particularly changes to foreign investment policy, streamlined compliance, and key policy changes in certain sectors. One such key change that the Budget 2025 may bring with it is the introduction of 100% foreign direct investment (FDI) in the insurance sector, raising it from its present 74%. This significant shift in policy may also allow foreign insurers to operate independently in India. To diversify the capital flow of the sector, Finance Minister Nirmala Sitharaman is likely to announce allowance of multiple insurance services to be provided by a single entity.”
7. EDUCATION AND SKILL DEVELOPMENT
Monika Srivastava, Partner, Khaitan & Co
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Internationalisation of education: “Continued focus on internationalisation through foreign universities setting up a campus in India — some incentives, especially land-related subsidies and tax relief could go a long way in accelerating new and more applications from interested foreign universities. In some ways, this is already happening. Uttar Pradesh government, for example, recently introduced capital subsidies and stamp duty exemptions for foreign universities setting up campuses in the state.”
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Skilling: “Focus on enhancing employability through emphasis on skilling, continued professional education and vocational training especially in sectors such as manufacturing, EVs, tech and AI would continue. This will likely have a direct and positive impact on ed-tech companies and other industry players who are keenly exploring new growth opportunities including those looking to collaborate with the government for the development of such training programmes.”
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Focus on digital infrastructure (Ed-Tech): “The digital revolution and India’s efforts towards global positioning coupled with the drive to accomplish NEP 2020’s goals as we make it to the 5-year anniversary of NEP means we can expect more focus on enhancing digital infrastructure. This will be important for edtech companies who are hopeful for a revitalisation in 2025.”
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Allocation towards R&D (Higher ed): “Allocation of funds towards university-led R&D especially on areas which converge with key focus sectors for the government including semiconductors, EVs and space technology could be vital. With government leading from the front, private capital will be sure to follow. Government’s regulatory reforms trajectory in the last 5-7 years demonstrates a clear agenda to enable Indian universities to become world-class universities. The key step towards achieving this goal would be to make these universities hubs of cutting-edge research, contributing to industry demands and economic development, which in turn requires increased spending on R&D both from the government and from private sources.”
8. OVER REGULATION
Divaspati Singh, Partner, Khaitan & Co
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“While there are many specific asks being made by the alternatives industry, one key issue which is plaguing domestic asset managers and global managers alike is ‘over-regulation’. For any industry to develop, there are two essential attributes, (a) conducive policy, and (b) stable regulatory regime. Whether it is the FPI regime which is plagued by the onerous requirements of the granular disclosures, or the AIF Regime which has been saddled by a slew of significant regulatory changes, there seems to be a strong negative bias which seems to have been created in the regulator’s mindset about the entire alternatives industry. Under such perception and mindset of the regulator, no industry can prosper, let alone sustain. The ask would be to do a complete reassessment of the AIF Regulations and as against regulating funds, to regulate the fund managers as is done globally and set overarching guidelines instead of micro-regulating specific aspects of administration and governance.”
