Why are shares of finance companies up, how will they benefit from Budget 2025? | Ankit Agrawal

Summary

The video discusses the significant changes in tax slabs announced in the 2025 budget, where the tax-free limit has been increased to 12 lakh. The impact of this change is expected to drive consumer spending, particularly in consumer finance sectors, boosting shares of finance companies like Bajaj Finance and L&T Finance. The video explores how the reform in tax policies will lead to increased demand for consumer goods and EMI services. It also highlights key reforms in the financial sector, such as easing compliance and promoting digital infrastructure, aiming to strengthen the sector and attract both domestic and international investments.

Takeaways

• 😀 The 2025 budget has increased the tax-free limit from 7 lakh to 12 lakh, which is the main point of discussion.
• 😀 People earning up to ₹12 lakh per year will not need to pay any taxes, which is a significant benefit for many taxpayers.
• 😀 The changes in tax slabs are expected to benefit about 1 crore taxpayers, with savings ranging from ₹22,500 to ₹80,000 annually.
• 😀 As a result of these tax reforms, consumer spending is expected to rise, driving increased demand for consumer goods like electronics, vehicles, and more.
• 😀 The demand for consumer finance, particularly for EMIs, will also see an increase as people will have more disposable income after tax savings.
• 😀 Financial companies like Bajaj Finance and L&T Finance are benefiting from the increased demand for financing options, reflected in a surge in their stock prices.
• 😀 Many consumers may now choose EMI options to buy high-ticket items like televisions or phones, as zero-cost EMIs become more common.
• 😀 Nirmala Sitharaman announced major reforms in the financial sector, aiming to simplify compliance, expand services, and strengthen the regulatory environment.
• 😀 The budget also includes provisions to promote digital infrastructure for global trade finance and the development of AI in the BFSI sector.
• 😀 A new 'Investment Friendly Index of States' will be created to encourage competition between states, highlighting the best regions for investment.
• 😀 A mechanism to monitor the impact of financial regulations and reforms will be established, including the decriminalization of certain offenses in the financial sector.

Q & A

What is the key change in the tax slabs announced in Budget 2025?

The key change in the tax slabs is the increase in the tax-free limit from ₹7 lakh to ₹12 lakh. This means individuals earning up to ₹12 lakh annually will not have to pay any tax.

How will the tax-free income limit benefit salaried individuals?

Salaried individuals will benefit from a tax exemption up to ₹15 lakh. This change is expected to result in savings of up to ₹1,00,000 annually for those in the higher income brackets.

How many taxpayers are expected to benefit from the tax changes?

Around 1 crore taxpayers are expected to benefit from the tax changes, with savings ranging from ₹22,500 to ₹80,000 annually, depending on their income.

What impact will the tax slab changes have on consumer spending?

The tax slab changes will increase disposable income for consumers, leading to higher spending on goods such as consumer durables (TVs, refrigerators, etc.), two-wheelers, and cars.

Why are financial companies, like Bajaj Finance and L&T Finance, seeing a rise in stock prices?

Financial companies are seeing a rise in stock prices because the increase in consumer spending due to higher disposable income is driving greater demand for EMI financing, a service provided by these companies.

What role do finance companies play in consumer spending after the budget announcement?

Finance companies offer easy financing options, like EMIs, allowing consumers to purchase expensive items without paying upfront. As consumer demand increases, these companies are likely to see growth in their businesses.

What major reforms were announced in the financial sector in Budget 2025?

The financial sector reforms include simplifying compliance, expanding services, strengthening the regulatory environment, and promoting both domestic and international investments. Additionally, the government plans to de-criminalize certain financial provisions.

How does the government plan to integrate AI into the financial sector?

The government plans to allocate ₹100 crore to establish an AI Center of Excellence in the BFSI (Banking, Financial Services, and Insurance) sector, aimed at integrating AI technologies to improve operations.

What is the 'Investment-Friendly Index' that the government plans to introduce?

The 'Investment-Friendly Index' will rank Indian states based on their attractiveness for investments. This index will encourage states to improve their investment climate and foster competition, benefiting investors.

How will the financial sector reforms affect the regulatory environment?

The reforms aim to strengthen the regulatory environment by making compliance easier, promoting digitization, and introducing high-level committees to fast-track non-financial sector regulations, enhancing ease of doing business.