Budget 2024: The interim budget will be presented by Finance Minister Nirmala Sitharaman on Thursday, February 1. In Budget 2024, it is anticipated that SMEs will receive targeted relief, a progressive tax structure will be supported, digital transactions will be encouraged, and the GST structure will be examined. Proposals have also been made for tax incentives to encourage sustainable practices and strategic investments in social sectors.
Challenges of ‘One Nation, One Tax’
‘One Nation, One Tax’ is a pipe dream that has been derailed by India’s convoluted GST system with its several rate slabs. “Streamlining rates and procedures could unclog the wheels of compliance and boost tax revenue – paving the path to an efficient unified regime. The upcoming budget must frontally address procedural headaches to realise a simplified GST’s full potential,” said Ashish Aggarwal, Director, Acube Ventures.
In order to unify India’s disjointed market, the GST was intended to be a historic tax reform. “However, complex filings and frequent rate changes have harmed compliance. The budget must spur fresh thinking to resolve issues like inverted duty structures, while pushing export and job growth. With targeted changes, a simplified GST can yet become the tax law that unites India’s market,” said Agam Gupta. Executive Director at Share India Fincap Pvt. Ltd.
Budget as a Springboard for Long-Term Policy Initiatives
The upcoming budget will probably act as a springboard for any long-term policy initiatives that the newly elected administration may take up after the elections. “This may include an emphasis on fostering public-private partnerships for financing, which could potentially catalyse private sector investments in sustainable projects, aligning with India’s pledge to attain net-zero emissions by the year 2030,” said Saurabh Srivastava, Co-founder, of India Angel Network
With all of the good things this administration has done to encourage entrepreneurship, India now has the third largest startup ecosystem globally.
Startup Responsibilities and Potential Solutions
The ecosystem believes that the remaining responsibilities will also get handled, given the remarkable potential of startups to create jobs while addressing India’s numerous difficulties in affordable healthcare, education, the environment, etc.
“These include the same tax treatment for LTCG and STCG for listed and unlisted equities, taxation of ESOPs on sale and not on exercise, an enabling framework with possible incentives (like tax credits given by the US, Singapore and Israel) to increase the flow of domestic and foreign capital to startups and help increase the number of SEBI registered India focussed AIFs by removing their current disadvantage re GST payments vs overseas VC/PE funds,” said Saurabh Srivastava.
Expectations for Budget 2024
Kuljeet Singh, Director of Finance at GI Group Holding, stated, “Our expectations for Budget 2024 are based on the pursuit of tax parity, fostering a resilient fiscal environment.”
“Key measures may include advocating for a progressive tax structure, incentivizing compliance, and providing targeted relief for Small and Medium Enterprises (SMEs) to enhance economic inclusivity. We propose promoting digital transactions through incentives and calling for a comprehensive review of the Goods and Services Tax (GST) structure for simplification. Recognizing environmental responsibility, we suggest tax incentives for sustainable practices,” said Kuljeet Singh.
Positive Outlook for Continued Favorable Policies
Ramanathan RV, co-founder of Hyperface, stated, “We look forward to continued favourable policies this year, following the positive push for fintechs in the previous budget.” “The fintech industry, in particular, stands to gain significantly from increased subsidies and support, providing a crucial boost for startups like ours and fostering overall growth and innovation in the country,” said Ramanathan RV.
He went on, “We are optimistic that the budget will help fintech startups even more by expanding tax benefits, promoting fresh concepts, and addressing important areas like regulatory backing, incentives for financial inclusion, and digital advancement.”
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