Expect not hard-hitting, but chest-thumping set of announcements, ET LegalWorld | Court Practice News


Finance minister Nirmala Sitharaman will have to manage the tight-rope with the Budget 2024. The first one, delivered on 1st February 2024 will be a vote-on-account presented to the parliament. The second lead budget of 2024 will be presented by the government after the 2024 General elections.

The vote-on-account certainly is unexpected to contain “spectacular announcements” what with the FM herself clarifying that at a recent public interaction. However, if one were to analyze a similar vote-on-account budget delivered in 2019, a number of proposals were laid back then by former FM and the current commerce minister Shri Piyush Goyal. Some of the hard-hitting schemes from the interim budget of 2019 were the government’s schemes farm schemes (Outlay of Rs 75,000 crores, besides Pradhan Mantri Kisan Samman Nidhi, Pradhan Mantri Matsya Sampada Yojana,), labor policy (PM-Shramyogi Maandhan Scheme), and schemes aimed at direct taxation for the common-man (Income tax exemption of up to Rs 5 lakhs). Budget2019 saw total expenditure increase by 13% even as fiscal deficit was restricted to 3.4% of GDP. For corporates, the corporation tax of 25% saw ceiling limit increase from Rs 250 crores to Rs 400 crores.

While it is common-sense to expect populist measures in an election year, delivering one may not be for the faint-hearted. At one end, the election commission may not allow the government’s announcements of poll-sops keeping in mind the close-timing of the elections. More importantly, the FM herself may not want to affect the macro-economic structure – increase in fiscal-deficit owing to post-covid and growth-measures undertaken in the last four years. Also, Covid-19 dented India’s tax-to-GDP ratio from 11% in FY19 to 10.2% in FY20 (a higher ratio percolates into better earnings for the government exchequer). While the probability of massive reforms is hence limited, there may be temptations of a pro-farmer/common-man/youth-centric budget for a resounding election victory. Despite a vote-on-account budget, a few taxation reforms may sweeten the mood for the common man – the major headline items could be further simplification of Section80C and 80D, as well as ceiling improvement in the new tax regime. In Budget2023, the finance minister set the new-tax regime as a default mode for salaried individuals. However, tax ceiling of Rs 1.5 lakhs as part of the Section 80C deductions in the old tax regime have been consistent since 2014-15 . The benefits in the new tax regime means that individuals with up to Rs 7 lakhs annual salary need not pay any tax. Increasing the ceiling on section 80C and 80D could infuse nifty benefits, as well as provide much-needed cover from insurance premiums which have soared in the post-pandemic era. On the indirect taxation front, a volley of tweaks could be expected. Corporate India has been demanding simplification of capital gains taxation for some time now. In the current scheme of things, LTCG on most assets is taxed at 20% barring equities and equity-oriented funds which is taxed at 10% on sale of Rs one lakhs and above. Simplification in the indexation benefits and streamlining of asset classes could be one way to motivate the investor community in 2024. For corporate however, the major headline items could be simplification of customs policies which could go in tandem with schemes such as MSME promotion and PLI (production linked incentives) schemes.

Additionally, headline items are likely to focus on policies which could ease doing business in the country. Besides promoting additional benefits with Vivaad Se Vishwaas scheme, a notable focus may be expected in easing the burden on NCLT courts. According to a parliamentary question, 21,205 cases with a realizable value of Rs 2.44 lakh crore was pending in NCLT courts as on 31st Jan 2023. Poor strength besides a lengthy time are some of the reasons for the delay. A vote-on-account budget may not infuse much in this area but a temporary relief until the lead budget could be focused.

The AI-era may have boosted productivity but this growth has come at the risk of job-loss as universal trends have shown. The current government is hence likely to favor jobs and sectors creating new employment opportunities. Prime minister Narendra Modi has already clarified on India’s stance – AI for all; the need for ethical and responsible use-cases; and consistent upskilling and reskilling. AI which may be a focal point of this budget may also be induced to connect with India’s young community.

Akshat Khetan is a distinguished corporate and legal advisor. He is an expert in M&A, corporate restructuring, and turnaround specialist.

  • Published On Jan 12, 2024 at 11:46 AM IST

Join the community of 2M+ industry professionals

Subscribe to our newsletter to get latest insights & analysis.

Download ETLegalWorld App

  • Get Realtime updates
  • Save your favourite articles


Scan to download App



Leave a Reply

Your email address will not be published. Required fields are marked *

Next Post

Israel to defend itself against Gaza genocide case at UN top court, ET LegalWorld | Court Practice News

Fri Jan 12 , 2024
Israel will on Friday hit back at what it describes as “atrocious” allegations it is committing “genocide” in Gaza, in a closely watched landmark case before the UN’s top court. South Africa has launched an emergency case at the International Court of Justice arguing that Israel stands in breach of […]

You May Like

Breaking News