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BUSINESS & TRADE FEBRUARY 14, 2025 | The Indian Eye 32

Income-tax relief and high consumption to give

a major boost to growth and GST collection

The real estate sector stands to benefit from the increased capital expenditure on

infrastructure, particularly through initiatives such Urban Challenge Fund

OUR BUREAU
New Delhi

he government’s indirect tax collection is ex-
pected to increase by 8.3 pc in the financial
Tyear 2025-26 (FY26), according to a report
by ICICI Bank. The report also noted that this
growth is higher than the 7.1 per cent increase seen
in FY25 and is mainly driven by rise in GST reve-
nue from strong urban consumption.
It said “The increase is driven by higher goods
and services tax collections which in-turn is ex-
plained by boost to urban consumption”.
With the economy improving, corporate tax
collections are also expected to grow at a much
faster pace. The report estimated corporate tax
collection to rise by 10.4 per cent in FY26, com-
pared to a 7.6 per cent increase in FY25.
On the expenditure side, the government’s
overall spending is projected to grow by 7.4 per
cent in FY26, slightly higher than the 6.1 per cent
increase in FY25. This suggests the government is
planning to spend more in the next financial year
to support economic growth. Union Ministers JP Nadda, Jyotiraditya Scindia and others congratulate Finance Minister Nirmala Sitharaman
The report highlights that capital expenditure
(capex), which is used for infrastructure develop- on Union Budget 2025 (ANI)
ment, is expected to grow by 10.1 per cent in FY26.
However, as a percentage of GDP, capex is pro- The report suggested that India’s tax revenue on overall growth is encouraging, we look forward
jected to remain flat at 3.1 per cent in both FY25 and government spending will continue to grow in to further initiatives that will accelerate affordable
and FY26. the coming financial year. Higher GST collections, housing development, ensuring inclusive progress
Within capex, the allocation for roads and rail- strong corporate tax growth, and controlled fiscal for the country.”
ways is remained unchanged, while spending on deficit are key indicators of a stable economic out- The real estate sector stands to benefit from
housing and defence has been increased. look for FY26. the increased capital expenditure on infrastruc-
The government’s fiscal deficit, which rep- The Union Budget 2025 has set the stage for ture, particularly through initiatives such as the
resents the gap between government revenue col- sustained economic momentum, with significant Rs.1 lakh crore Urban Challenge Fund and Rs. 1.5
lection and expenditure, has been revised down- allocations for infrastructure, tax reforms, and lakh crore interest-free loans to states. These mea-
wards to 4.8 per cent of GDP in FY25, compared urban transformation. For the real estate sector, sures are expected to accelerate urban transforma-
to 4.9 per cent projected earlier. it brings both opportunities and areas for further tion, boost connectivity, and generate employment,
In absolute terms, the fiscal deficit is estimat- contemplation. While the government’s thrust on thereby indirectly fueling real estate demand.
ed to be Rs 15.6 lakh crore in FY25 Revised Esti- capital expenditure, tax reliefs, and liquidity en- The Rs. 15,000 crore allocation for SWAMIH
mates (RE), compared to Rs 16.1 lakh crore in the hancement has instilled confidence, industry lead- Fund 2 is another critical move aimed at address-
Budget Estimates (BE) for the same year. ers are keen to see how these measures translate ing the stalled housing projects across India. This
This shows that the government is making ef- into on-ground impact. will not only ensure the completion of delayed
forts to manage its finances efficiently while main- The budget underscores the government’s projects but also restore confidence among home-
taining a balance between spending and revenue dual focus on economic expansion and fiscal pru- buyers and developers. Manit Sethi believes this
generation. dence. According to Manoj Gaur, CMD, Gaurs is a much-needed intervention, “The Rs. 15,000
One of the biggest positive for India is a mod- Group & Chairman, CREDAI National, “Budget crore SWAMIH Fund 2 is another transformative
erate current account deficit. This is on the back 2025 underlines the Central government’s com- step in addressing India’s housing shortage. Be-
of much more resilient services exports and remit- mitment to economic expansion, infrastructure sides, allowing taxpayers to claim the annual value
tances even as trade deficit has been expanding. advancement, and financial stability, thereby fos- of two self-occupied properties, instead of just one,
India’s trade deficit is seen expanding from USD tering a conducive environment for real estate is a major relief for property owners.”
245bn in FY24 to USD 277bn in FY25, but the growth. Measures supporting start-ups and job The coming months will be crucial in deter-
pass-through into current account is only USD 9bn. creation, coupled with much-needed reductions in mining how these budgetary measures translate
The same has been possible since remittances and income tax slabs, are set to enhance liquidity and into real growth, shaping India’s real estate land-
services exports are seeing meaningful increase. stimulate demand in the sector. While the focus scape in the years to come.

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