On 01-02-204, the Union Minister for Finance and Corporate Affairs Nirmala Sitharaman presented the Interim Union Budget 2024-25 in Parliament. The key highlights of the Budget are as follows:
PM Awas Yojana (Grameen)
The target of three crore houses under PM Awas Yojana (Grameen) will be achieved soon. Two crore houses to be taken up in the next five years.
“As anticipated, the initiatives announced under Budget 2024 will strengthen the real estate sector and aid in the industry achieving sustainable growth. The strategic increased allocation for Pradhan Mantri Awas Yojana (PMAY) will only promote and encourage inclusive and equitable growth in the industry. A careful thought has been considered for the ever-growing economically weaker section of the society and the commitments will only support the growing demand for housing in rural areas. The allocation of a considerable amount of Rs 11.11 lakh crores for upgrading the infrastructure of the nation will play a pivotal role in the overall upliftment and revitalization of the entire real estate landscape of the nation”– Bhoumick Vaidya, Partner, Shardul Amarchand Mangaldas & Co.
“Pradhan Mantri Awas Yojana (Grameen) has made remarkable strides, nearing the 3 crore house target. This achievement signifies significant progress in enhancing rural housing and improving living conditions for millions. The commitment to an additional 2 crore houses over the next 5 years highlights a sustained dedication to rural housing development. The Housing for Middle Class scheme is a commendable initiative that empowers the middle class to fulfill their dream of home ownership. This step is anticipated to boost economic growth, providing a sense of stability and prosperity within the middle-income segment. Together, these efforts contribute positively to both rural and middle-class communities, assuring a more inclusive and prosperous society”– Ashoo Gupta, Partner, Shardul Amarchand Mangaldas & Co.
Rooftop solarization
1 crore households will obtain 300 units free electricity every month through rooftop solarization.
“The focus on rooftop solarization to ensure free electricity of up to 300 units for 1 crore households is a very innovative and significant step. It will serve as an example and pave the path for crores of Indian households to emulate this in future thus strengthening our resolve and enhancing our pace to achieve our net-zero targets by 2070. The overall focus on resource efficiency and sustainable development as our strategy for ‘Amrit Kaal’ is a welcome step which will be aptly supported through initiatives like biodegradable plastics, development of electric vehicle infrastructure and developing climate resilience through a robust blue economy.”- Nawneet Vibhaw, Partner, Environmental Law, Shardul Amarchand Mangaldas & Co.
Ayushman Bharat
Healthcare cover under Ayushman Bharat scheme to be extended to all ASHA workers, Anganwadi Workers and Helpers.
Research and Innovation for catalyzing growth, employment and development
A corpus of Rs.1 lakh crore to be established with a fifty-year interest free loan to provide long-term financing or refinancing with long tenors and low or nil interest rates. A new scheme to be launched for strengthening deep-tech technologies for defence purposes and expediting ‘atmanirbharta’.
Infrastructure sector
Capital expenditure outlay for Infrastructure development and employment generation to be increased by 11.1 per cent to Rs.11,11,111 crore, that will be 3.4 per cent of the GDP.
“Heartening to see the focus and impetus by the central government towards infrastructure development and the commitment to transform the country to a ‘Viksit Bharat’ on the backbone of infrastructure development. This would provide the much needed guidance to municipal and state level planners to take the country and infrastructure development forward.”– Jatin Aneja, National Practice Head Infrastructure, Energy and Project Finance, Shardul Amarchand Mangaldas & Co.
Railways
3 major economic railway corridor programmes identified under the PM Gati Shakti to be implemented to improve logistics efficiency and reduce cost
Energy, mineral and cement corridors
Port connectivity corridors
High traffic density corridors
Forty thousand normal rail bogies to be converted to Vande Bharat standards.
Green Energy
Coal gasification and liquefaction capacity of 100 MT to be set up by 2030.
Phased mandatory blending of compressed biogas (CBG) in compressed natural gas (CNG) for transport and piped natural gas (PNG) for domestic purposes to be mandated.
“Resource efficiency and sustainable development are key to our economic development and strategy for ‘Amrit Kaal’. The focus of the interim budget on rooftop solarization, biodegradable plastics, development of electric vehicle infrastructure and developing climate resilience through a robust blue economy are all steps in the right direction to achieve ‘net-zero’ by 2070” – Nawneet Vibhaw, Partner, Environmental Law, Shardul Amarchand Mangaldas & Co.
Tourism sector
Framework for rating of the tourist centres based on quality of facilities and services to be established.
Long-term interest free loans to be provided to States for financing such development on matching basis.
“We are working to make India a ‘Viksit Bharat’ by 2047”
-Finance Minister
Budget Estimates 2024-25
Total receipts other than borrowings and the total expenditure are estimated at Rs.30.80 and Rs.47.66 lakh crore respectively.
Tax receipts are estimated at Rs.26.02 lakh crore.
The scheme of fifty-year interest free loan for capital expenditure to states to be continued this year with total outlay of Rs.1.3 lakh crore.
Fiscal deficit in 2024-25 is estimated to be 5.1 per cent of GDP
Gross and net market borrowings through dated securities during 2024-25 are estimated at Rs.14.13 and Rs.11.75 lakh crore respectively.
“As expected, the Government has exercised policy restraint under the interim budget with no tax proposals being announced. The extension of the sunset dates for the tax holiday for starts ups, tax benefits to sovereign wealth funds and aircraft leasing business in IFSC’s is indeed welcome and offers tax certainty. The Finance Minister has maintained fiscal discipline by not announcing any tax rate cuts to provide fiscal stimulus despite this being an election year. This will indeed secure fiscal consolidation and macroeconomic stability for the Indian economy”– Gouri Puri, Partner, Shardul Amarchand Mangaldas & Co.
Direct taxes
Same tax rates for direct taxes are retained.
The Outstanding direct tax demands upto Rs 25000 pertaining to the period upto FY 2009-10 withdrawn. The Outstanding direct tax demands upto Rs 10000 for financial years 2010-11 to 2014-15 are also withdrawn to benefit one crore taxpayers.
The Tax benefits to Start-Ups, investments made by Sovereign wealth funds or pension funds extended to 31-03-2025. The Tax exemption on certain income of IFSC units extended by a year to 31-03-2025 from 31-03-2024.
“On the direct tax front, extension of the sunset clause for IFSC and start-ups was expected and delivered by the finance minister. I don’t understand the rationale of not extending the sunset clause (March 31, 2024) for new manufacturing units under section 115BAB. This seems contrary to the policy of the Government to promote manufacturing in India under the PLI scheme. I do hope that this is an error of omission, and we will see a notification to extend this benefit soon”– Sanjiv Malhotra, Senior Advisor, Shardul Amarchand Mangaldas & Co.
Indirect taxes
Same tax rates for indirect taxes and import duties are retained.
On Tax Disputes, Sanjiv Malhotra, Senior Advisor, Shardul Amarchand Mangaldas & Co. said that “Timelines for transfer pricing assessments, proceedings before dispute resolution panel and tax tribunals have been extended to March 31, 2025. This is a pragmatic step because it is better to give adequate time to the relevant authorities to examine the pending matters in-depth. The current workload on tax disputes is extremely high and lack of time, does impact the quality of orders being passed. Also, the proposal to withdraw low value tax matters (upto INR 25,000) for pertaining to FY 2010 and matters with tax demand upto INR 10,000 for FY 2011 to FY 2015, should help authorities create more bandwidth and focus on matters involving material tax amounts.”
On Personal Tax, Sanjiv Malhotra, Senior Advisor, Shardul Amarchand Mangaldas & Co. said that “There is no change in the tax rates, which is consistent to the stated policy of the Government of having a stable tax regime. The salaried class will expect more concessions in the full budget later this year”
He further said that “Sometimes less is more and that what sums up this year’s interim budget. The overall feedback on the budget is positive. This is largely due to the fact that the general expectations were low as this was a vote-on-account and not a full budget. I do expect that the big bang announcements are being kept for July 2024, when the full budget will be announced. The big news for global investor community is the target FY 2024-25 fiscal deficit number of 5.1 percent of GDP and 4.5% for FY 2025-26. This beats the general expectation that FY 2024-25 would have been pegged around 5.3% of GDP. Robust tax collections and enhanced tax compliances are the key contributors to the optimism of the Government to commit to an aggressive fiscal deficit target. Just like in 2019, this year also the Government has stuck to maintaining fiscal discipline and not get carried away with populist spending, despite it being an election year”.
Laying of White Paper
Nirmala Sitharaman announced that the Government will come out with a white paper, on where we were then till 2014 and where we are now, only to draw lessons from earlier mismanagement.
On Technology, Hemant Krishna, Partner – Shardul Amarchand Mangaldas & Co. said that “By nature, deep-tech defence start-ups are R&D focused and need patient capital. The growth cycles of these companies are misaligned with the mainstream financing options currently on offer. Therefore, this announcement will certainly boost the sentiment in this sector. Capital outlay and the right kind of support for this sector now will lighten our massive defence import bills 7-8 years from now. Equally important though is a clear path for these start-ups to integrate with our defence supply chain. Indigenisation in defence is a long game, but one that is worth playing.”
