Budget 2024: India’s 'Viksit Bharat' Vision Prioritizes Poor, Women, Youth, and Farmers

The government has crafted Budget 2024 around four central pillars: Poor, Women, Youth, and Farmers. The focus is on enhancing employment opportunities, improving skilling programs, supporting MSMEs, and benefiting the middle class.

With a substantial central outlay of approximately Rs 2 lakh crores over the next five years, this budget aims to build a foundation for Tax Deducted at Source (TDS)

Roadmap to 'Viksit Bharat'

In alignment with the strategy outlined in the interim budget, this budget presents a comprehensive roadmap towards 'Viksit Bharat'. It emphasizes nine key priorities, including agriculture, employment and skilling, manufacturing, and infrastructure. Efforts are underway to address these areas, setting the stage for significant development and growth.

FDI Liberalization and Simplification

A notable proposal includes the simplification of Foreign Direct Investment (FDI) rules. While detailed changes will be announced separately, the government is considering liberalizing the FDI regime for multi-brand retail, aiming to encourage more foreign investment and enhance market dynamics.

Personal Tax Adjustments

On the personal tax front, changes to the new tax regime are expected to provide relief to salaried employees, potentially saving up to Rs 17,500 in income tax. This adjustment is anticipated to increase disposable income for individuals, which is likely to be welcomed by taxpayers.

Corporate Tax Measures

For corporations, Budget 2024 introduces several key measures. These include the abolition of angel tax, the withdrawal of the equalization levy, and a reduction in tax rates for foreign companies from 40% to 35%.

Additionally, there will be simplifications and reductions in Tax Deducted at Source (TDS) rates and a streamlining of re-assessment proceedings. These measures align with the government’s goal to simplify the tax system, provide tax certainty, and minimize litigation.

Increased Capital Gains Taxes

Conversely, there are increases in capital gains tax rates: Short-Term Capital Gains (STCG) will rise from 15% to 20%, and Long-Term Capital Gains (LTCG) will increase from 10% to 12.5%.

The Securities Transaction Tax (STT) on options will be adjusted to 0.1% from 0.0625%, and on futures from 0.0125% to 0.02%. Furthermore, the taxation of share buybacks will now be treated similarly to dividend distributions. While the hike in STT rates was somewhat anticipated, the substantial increase in capital gains tax could impact investor sentiment in the short term.

Indirect Tax Reforms

On the indirect tax front, there is a reduction in Basic Customs Duty (BCD) on mobile phones, printed circuit board assemblies (PCBA), and chargers from 20% to 15%. This reduction is expected to lower mobile phone prices, making them more affordable.

Additionally, the BCD on gold and silver bars, as well as gold and silver dorés, has been reduced from 10% to 5%, likely boosting consumer spending due to decreased costs. The budget also includes rationalization of BCD rates for the leather and textile industries, aimed at providing further support to these sectors.

Conclusion

Although there are no major tax reforms, the budget's focus on rural development, manufacturing, and skilling initiatives is expected to positively impact these sectors and support sustainable growth in the coming years.