India Union Budget 2024-25

Finance Minister Nirmala Sitharaman presented the Union Budget 2024-25 today, marking the first budget of the government's third term. The budget underscores the strength and resilience of the Indian economy amidst geopolitical challenges. The Finance Minister highlighted nine priority areas to advance 'Viksit Bharat', encompassing agriculture, employment, human resource development, manufacturing, urban development, energy security, infrastructure innovation, research, and next generation reforms.

The budget emphasised 'employment' and 'Ease of Doing Business' in India, with initiatives such as a comprehensive review of the Income-tax Act, an amnesty scheme for income tax, limited reassessment reopening, and incentives for employers to create jobs. It also proposed a simplified framework for Foreign Direct Investment and Overseas Investment, promoting foreign investments and the use of the Indian Rupee for overseas transactions.

Key tax reforms include rationalising capital gains tax, reassessment timelines, and TDS/TCS framework, abolishing Angel tax and Equalisation levy, introducing a specific tax regime for domestic cruises, increasing the standard deduction and tax slabs, and raising the limit for tax-free long-term capital gains. The corporate tax rate for foreign companies has been reduced to 35 per cent to attract foreign capital.

The 2024 Vivad se Vishwas Scheme will be introduced to resolve pending direct tax disputes. To reduce litigation and ensure certainty in international taxation, the scope of safe harbour rules will be expanded, and the transfer pricing assessment procedure will be streamlined. However, the budget did not address the implementation of the Organisation for Economic Co-operation and Development (OECD’s) Global Minimum Tax in India.

Aligning with the long-term objective of ‘Make in India’, the key indirect tax proposals strive to further simplify and rationalise the GST rate structure along with an endeavour to expand to remaining sectors. Such proposals include retrospective relaxation of timeline for availing ITC pertaining to FY 2017-18 to FY 2020-21, common time limits for issuing notices and orders under Section 73 and 74, introduction of amnesty scheme granting conditional waiver of interest and penalty in respect of demands up to FY 2019-20, clarity on co-insurance/ re-insurance to be a No supply transaction and other trade facilitation measures.

Customs proposals are focused towards rationalising the customs duty structure and trade facilitation measures including digitisation of records. Major sectors where the rates are proposed to be rationalised include Mobile phones and its parts, Marine products, Electronics, Telecom, Medical devices, Leather and textiles, Aviation etc.

There have been no proposals with regards to introduction of new Production Linked Incentives (PLI) scheme. However, as a part of Prime Minister’s package for employment and skilling, schemes have been announced which shall incentivise employment generation. The scheme will offer incentives like salary subsidy and provident fund reimbursement and will be available for employees and the companies, depending on the scheme.

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