Budget affect your lifestyle: Finance Minister Nirmala Sitharaman will present the 2025 Budget in Parliament on Feb 1. All eyes are on the budget. Amid rising costs of living and economic pressure, people in many sectors, especially in many sectors, including taxpayers, are hoping for relief from the budget.
What is the budget?
The budget is the process in which the government accounts for the entire year in Parliament, which has three main things – about income, expenditure and borrowing. That is, how much money the government had to mobilise last year, where it was spent and how much it had to borrow.
The budget comes before the end of one fiscal year and before the start of another. It also indicates how much earnings will be estimated in the current financial year, where and how much money will be spent. How much the government may have to borrow.
Let’s understand the impact of budget on income here
Direct effect
- Changes in income tax revenue: Changes in tax slabs or rates directly affect your take-home paycheque.
- Modification of deductions/discounts: If these change, your ability to spend and save the income is affected.
- Capital gains tax change: The change affects the return on investments such as stocks, real estate, and bonds.
- Business taxes/surcharges: These changes have an impact on net income, especially in high-income groups.
Indirect effect
- Infrastructure spending: An increase in government spending on infrastructure creates employment opportunities. Income has also increased in sectors such as construction and allied industries.
- Interest rate changes: Fluctuations affect borrowing costs (such as EMIs) and return on savings, affect disposable income
- Sector-specific incentives: This can lead to high pay and job opportunities in the targeted industries.
- Social welfare schemes: Vulnerable groups are provided with additional income or support, thereby increasing their financial stabilisation.
Potential impact on the general public
- Inflation: Budget decisions can increase or decrease inflation, which affects the household budget of the common man.
- Consumption: If people have more money to spend, consumption will increase, which will stimulate economic activities.
- Savings: Tax exemptions or other incentives can boost savings.
- Investments: Budgeting can encourage or discourage investors from investing in the stock market, real estate, etc.
Impact on your lifestyle
- Spending ability: Budgeting can directly affect your ability to spend.
- Saving and investing: Budgeting can motivate or discourage you from saving and investing.
- Lifestyle changes: Budget-led economic changes can motivate you to make lifestyle changes.