5 top expectations from the Indian Union Budget 2024-25

The Indian Union Budget 2024-25 will be tabled on 23 July 2024, and the business world is very excited about it. Entrepreneurs, investors, professionals and the people who work in the economy are all keeping a close eye out for signs that will show us how the economy will do this year. Without a doubt, the expectations are for growth, with India positioning itself as one of the fastest-growing economies, and the capital markets are the testimonial for that.?

This list has five top expectations that could improve India's fiscal system and assist its economic growth:

1. Setting up a framework for Global Minimum Tax: A Global Minimum Tax Framework is one of the changes that worldwide multinationals are most looking forward to. This action fits the OECD's Base Erosion and Profit Shifting (BEPS) plan. It will ensure that everywhere an MNE does business, they pay the same minimum amount of tax. Setting up this system will not only stop people from not paying their taxes, but it will also make it fair for businesses to compete. A minimum global effective tax rate of 15% is expected to be on the card in this budget.?

2. Measures towards increasing the tax base and disposable income: It's important to get more people to pay their taxes and undertake tax compliance, which acts as a record with the Government of the best practices followed by the income earners by declaring their income levels. Here are the steps that should be taken to make this happen:

(a) Reduction and rationalisation of the individual tax rates: Adding more sense to individual tax rates can help them be more fair and simpler to understand. If the government changes tax rates and makes taxes easier for middle-income workers, spending and investment will increase. This will lead to economic growth.

(b) Increase in the long-term capital gain limit and strengthen the capital markets: More people will want to invest in the stock market if the amount of long-term capital gains that are not taxed when selling traded equity shares and units is raised atleast by double. Buyers from inside and outside the country will be attracted by this move. This will make the market more liquid and strengthen the capital markets.

(c) Increase in the limits of standard deduction: The individual taxpayer will be very thankful if the standard deduction goes from INR 50,000 to INR 150,000. This change will give people more money to spend and circulate in the economy. This could also act as an incentive in good faith and a gesture of gratitude towards the citizens of the country for electing a stable government.?

3. Make the opportunities for ISCS-GIFT City stronger: The GIFT City-IFSC has a great chance of becoming a major finance and capital market hub for the whole world. A stronger set of rules that makes it easier for foreign companies to go public will make it a more important international financial hub. With the current market dynamics, this is an opportunity with the Government to elevate India to the next level by building a top-notch capital market ecosystem.?

4. Building regulations to ease reverse mergers and then listing in India: It would be easier for Indian companies with head offices in different parts of the world to go through corporate restructuring if the rules on reverse mergers were made easy. This will incentivise all the foreign headquartered Indian businesses to return to India to further strengthen the capital base through listing in Indian stock exchanges. Examples - Razorpay, Meesho etc.

5. Capitalise on Make in India: The manufacturing tax of 15% saw a sunset in FY 2023-24. It would be great to see further extension of the manufacturing incentive with a clear deployment path and easy compliance to boost manufacturing in India. In addition to this the government should also focus on creation of intellectual properties (IP) and appropriate IP regulations in India to strengthen the confidence of the global houses in this field.?

In Conclusion:

While there could be 50 more expectations that a business owner or an individual can have, the above are the top 5 priority areas that a Government should consider for boosting the business environment and economy further. When you are leading the marathon or race, the moment is not to look back and rest but to push harder to ensure that the focus is on the goal and reaching the target. Together we can make a stronger nation. Jai Hind!