Union Budget 2025: Key Takeaways & Insights with Dhirendra Kumar

No mention of the old tax regime, but under the new regime, the tax slabs have been revised. Can you please explain what difference this makes to a common taxpayer?

You have more money if you earn Rs 12 lakh now. Based on my basic calculation, even assuming you are making Rs 12 lakh a year and aren't liable for any tax. Your earlier tax liability was Rs 78,750, which means you will have that extra amount with you.

Likewise, at every stage, it translates into a similar benefit. If you earn Rs 15 lakh a year, your previous liability was Rs 1,35,000. That has now reduced to Rs 93,750 - about Rs 41,000 more. On Rs 20 lakh, it's similar - around Rs 98,000 to Rs 99,000. And for Rs 25 lakh, the tax liability was Rs 4,27,000, which is now reduced to Rs 3,07,000.

Now, it is up to you whether you want to spend it or invest it. You might have had a long-standing desire to spend on something but use it as an opportunity to invest. It is a way for individuals to take their finances into their own hands. The government has given you these benefits. But now all the tax benefits you used to receive are gone. In this new tax regime, there are no concessions or incentives. You are saving money, and it is up to you to save, invest, or consume.

It is about time people became more serious about investing. For many, tax-saving investments were triggered by the tax season approaching. Earlier, the need to save taxes often triggered investments. Now, with no such compulsion, it is crucial to take charge of your own financial planning. There is no government-driven "save tax and invest" incentive anymore - that's gone forever.

Suggested read: Budget 2025: Taxpayers to save Rs 35,000-Rs 1.1 lakh after tax slab revision

How does Budget 2025 benefit senior citizens through TDS reforms?

There are two key benefits here.

1. Earlier, interest income up to Rs 50,000 was exempt from TDS. Now, that exemption has been increased to Rs 1 lakh. In reality, TDS deducted is tax paid even if you are not liable unless you file a return and claim a refund.

2. For all the retirees who have rental income, this is very beneficial. Earlier, the TDS deduction was applicable for rental income of up to Rs 2.4 lakh per year. Now that has been increased to Rs 6 lakh per year. This is because rental is one of the principal revenue streams for retirees.

Suggested read: Union Budget 2025 and you: How it impacts your finances next financial year

What is the revamped Central KYC Registry announced in the budget?

This has been a work in progress for a while. The initiative started about five to seven years ago, but KYC remains a major pain point for savers and investors.

For any significant expenditure, you can usually go ahead without much hassle. For instance, if you want to buy Rs 5 lakh worth of jewellery, you may only be required to provide your PAN - that's about it. But if you want to invest over Rs 50,000, the whole KYC process gets triggered, which creates friction and delays the investment process further.

And that's not all. Suppose you have the money to get started; this becomes a huge barrier for someone to get on board. Currently, a KYC is done through multiple mechanisms. Banks do their own, investment firms do theirs - they are held accountable for doing it rigorously. And each time you interact with a new financial entity, you must go through the process again.

Only SEBI has streamlined this somewhat by allowing investors to complete KYC once with any SEBI-regulated entity or KRA (KYC Registration Agency). However, the new Central KYC Registry aims to make this process seamless across financial institutions.

Ideally, if you want to invest, once your Aadhaar and PAN are linked and verified, you should be ready to do so without having to redo KYC repeatedly.

This will eliminate the barrier to starting investments, which is one of the biggest hurdles today. As a result, it will enable a lot of people because there are a lot of intermediaries in this process. Now, if you go to a bank, RIA, or fund house, they'll be able to onboard you easily. They'll check your credentials, and you'll be good to go.

KYC is supposed to be done once, but people often transfer or change residences. So, how do you update your address and other details easily? Given India's progress in the digital space, this change was long overdue. But it's happening now, and it's a great step forward.

Which sectors show an improved outlook post-Budget 2025?

It's difficult to say definitively, but the government has allocated funds and provided incentives to certain sectors.

• Renewable energy
  
• Electronics and semiconductors
  
• Electric vehicles (EVs)
  
• Textiles: India is aiming to reclaim its position as a leading apparel exporter, with an ambitious $20 billion target.
  
• Infrastructure, which has been at the forefront for some time now

However, mutual fund investors shouldn't worry too much about specific sectors. Government spending doesn't always translate into immediate stock market gains in a defined time frame. Instead, mutual fund investors should focus on staying diversified and letting fund managers handle sector allocations.

The market will immediately benefit from positive sentiments. Many taxpayers will now have anywhere between Rs 70,000 to a few lakh rupees extra in their hands, which can drive higher spending. Also, there'll be a boost in consumer confidence.

I don't know which companies will perform well from the sectors that have been given specific provisions under the Budget 2025.

More broadly, the government has set ambitious growth targets, which could be a turning point for the markets.

Also read: Budget 2025 tax cut sparks rally in Zomato, DMart, other consumer stocks

This article was originally published on February 01, 2025.