Possible changes in capital gains tax, tight F&O regulations, Eye in the budget.
Finance Minister Nirmala Sitharaman will present the Union Budget for 2024-25 to Parliament on Tuesday, marking the beginning of Prime Minister Narendra Modi’s third term. Nirmala Sitharaman submitted an interim budget on February 1st of this year to address the budgetary needs of the transition phase. With the Union Budget 2024 approaching, Indian financial markets, corporations, and entrepreneurs have varying expectations of the government. Many people have made requests and presentations to the government as part of the pre-budget consultations.
While discussing the impending Budget 2024, Prashant Bothra, CEO and Founder of Fhero Accounting Solutions, discussed potential regulatory changes. He expects adjustments to the Securities Transaction Tax (STT), taxes on long-term and short-term capital gains (LTCG and STCG), and intraday trades.
A capital gain is defined as any profit or gain realized from the sale of a ‘capital asset’. “We also foresee tighter rules on futures and options (F&O), possibly abolishing some derivative products, to prevent speculative trading. We also want the government to explore increasing the LTCG holding period for listed equity shares from one to two or three years to encourage longer-term investments,” Bothra said.
Ankur Saraswat, a Research Analyst at Trustline Securities Limited, stated that for agrochemicals, introducing Production-Linked Incentive (PLI) benefits and cutting GST rates can encourage local production while also lowering farmer costs. “The IT sector demands digitalization and technological advancement, but the healthcare sector need more spending on technology integration.
The specialty chemicals industry advocates for speedier capital expenditure approvals and R&D incentives. Finally, the steel sector expects lower raw material taxes and increased import levies on Chinese steel to boost competitiveness. “These measures are intended to boost growth and sustainability across sectors,” Saraswat remarked. Over the last few decades, the MSME sector has evolved as a thriving and dynamic component of the Indian economy.
This sector makes a substantial contribution to the country’s economic and social growth by promoting entrepreneurship and creating job opportunities. Regarding building a more advantageous financial environment for MSMEs, Bothra of Fhero Accounting Solutions adds, “Improving MSME competitiveness through ease of doing business is critical.
We anticipate measures to reduce regulatory requirements, paperwork, and streamline approval processes. In line with the Viksit Bharat goal, he continues, “The upcoming budget is expected to provide a concrete action plan to support MSMEs.” Furthermore, lowering or eliminating the Angel Tax is critical for better funding methods, allowing more investments in MSMEs and fueling growth.
We also anticipate considerable budget commitments for upskilling and reskilling programs in automation, AI, and data analytics to promote workforce growth and job creation for MSMEs.” Ankur Saraswat of Trustline Securities stated that the forthcoming budget is expected to have a big influence on Indian startup funding.
“Key areas such as digital infrastructure, Al, and cybersecurity are expected to receive increased funding, establishing India as a global tech hub. Supporting SMEs and skill development, as well as supporting public-private collaborations, will spur innovation and growth. Increased domestic capital allocation and tax incentives for investors and promoters will improve the startup ecosystem.