Union Budget 2025: Tax Relief to Boost Borrower Confidence and Homeownership

The Union Budget 2025, presented on February 1, introduced a significant overhaul in the income tax structure, offering major relief to the middle class. Nirmala Sitharaman, the finance minister, announced that individuals earning up to ₹12 lakh annually will be exempt from income tax under the new tax regime. Additionally, the nil tax limit for salaried employees extends to ₹12.75 lakh per annum, factoring in a standard deduction of ₹75,000.

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Industry Expert Insights on Budget Impact

Amit Prakash Singh, Co-Founder & Chief Business Officer of Urban Money, shared his insights on the impact of the Budget.

“The recent Budget’s zero-tax provision on incomes up to ₹12 lakh offers a significant advantage for borrowers and individuals seeking loans. Increasing disposable income alleviates financial pressure, making it easier to manage repayment obligations. The enhanced savings capacity can also contribute to larger down payments, reducing reliance on bigger loans and mitigating long-term financial strain.”

Singh further emphasised how these tax reforms could positively impact existing borrowers, making it easier for them to allocate funds for prepayments and debt reduction. However, he pointed out that increasing loan deduction limits, particularly for home loans, would have further strengthened credit accessibility, making financing more affordable and boosting borrower confidence.

Impact on Disposable Income and Economic Growth

The Union Budget 2025 introduces key financial measures to strengthen economic stability and boost investment. Here are some of the critical areas of focus:

Increased Disposable Income: Higher tax exemptions allow individuals to save more, increasing spending power.
Boosting Consumption, Savings, and Investment: With more money, people are expected to spend and invest more, driving economic activity.
Fiscal Deficit Target at 4.4%: The government remains committed to fiscal discipline while promoting growth.
₹11 Lakh Crore in Capital Expenditure: A significant investment to enhance infrastructure and public development projects.
Support for MSMEs: Measures to strengthen small and medium enterprises, fostering job creation and business growth.
Infrastructure Development: Increased roads, transportation, and urban planning funding to support long-term economic expansion.
Export Incentives: Encouraging businesses to expand global trade, boosting India’s competitiveness.
Positive Impact on Real Estate: Higher disposable income enables homebuyers to invest in property, indirectly benefiting the housing sector.
Eased Financial Pressure: Economic measures help improve affordability for homebuyers and borrowers, making homeownership more accessible.

Read – Union Budget 2025: The Complete Recap

Potential Boost for Homeownership

The budget’s tax relief measures provide individuals with more financial flexibility, potentially making homeownership more accessible. With increased savings, homebuyers may find it easier to afford higher down payments, reducing their overall loan burden and long-term interest payments.

For existing borrowers, the additional disposable income creates an opportunity to make prepayments, reducing their overall interest outgo and loan tenure. The focus on ease of doing business, economic stability, and investment is expected to boost consumer sentiment and encourage home purchases.

Final Thoughts: A Positive Step, But More Could Be Done

While the budget did not introduce specific tax incentives for home loans, the overall positive economic measures and financial relief for the middle class could drive greater participation in the housing market. Expanding tax benefits on home loan deductions in the future could further enhance affordability and accessibility in the real estate sector.

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