<p>Interim Budget: What are the expectations on the tax front</p><p><br></p>
Interim Budget: What are the expectations on the tax front

As the anticipation builds around the upcoming Interim Budget for the fiscal year 2024-25 (April to March), tax experts have converged on several recommendations for critical fiscal measures. A significant suggestion is to extend the concessional corporate tax rate of 15% for new manufacturing companies by another one to two years.

The current provision grants a concessional corporate tax rate of 15% to newly established domestic manufacturing firms, contingent upon commencing operations by the conclusion of March 2024. Initially introduced in the Budget for the fiscal year 2019-20, this initiative aimed to attract investments and stimulate growth within the manufacturing sector.

Experts underscore the tangible success of this concessional rate. Notably, it highlights a significant uptick in foreign direct investment into the Indian manufacturing sector as a direct outcome of this policy. Proposing an extension of the sunset clause by an additional two years, experts emphasise the measure’s substantial role in advancing economic objectives and attracting foreign investments.

While recent years have witnessed the rationalization of the corporate tax structure, experts want further simplification and policy actions from Finance Minister Nirmala Sitharaman to enhance the ease of doing business for corporations. The consensus among these experts suggests a collective belief in the necessity of ongoing reforms to bolster the business environment.

<p><strong>Personal tax</strong><br></p>
Personal tax

Personal tax

On the personal tax front, expectations are set on the rationalization of the capital gains tax structure across various financial instruments. Recommendations include the standardization of holding periods, uniform tax rates across diverse asset classes, and an increase in the tax-free long-term capital gains ceiling. Tax experts say that these measures would contribute to a more equitable tax regime, aligning with the government’s recognition of the need for systemic tweaks to ensure fairness across different investment categories.

As the budget date approaches, industry watchers are keenly observing the government’s stance on these pivotal fiscal discipline measures. The broader financial landscape is awaiting further clarity on the proposed amendments and adjustments in the upcoming budget, with a keen eye on how these changes might shape the economic trajectory in the coming fiscal year.

  • Published On Jan 25, 2024 at 08:51 AM IST

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