An infrastructure gap is “plaguing” the Indian economy and there is a need to fill this gap, Former NITI Aayog Vice Chairman Rajiv Kumar said ahead of tomorrow’s Interim Budget presentation by Finance Minister Niramala Sitharaman, as per a PTI report. Kumar added that the government will need to continue focusing on capital expenditure in the budget as the investment from private firms is “still weak”.

The interim Budget announcement related to the extension of tax benefits to startups by one more year till March 2025 underlines the government's commitment towards creating a conducive environment for startup development and sustainable investments, the industry said on Thursday, terming it a progressive and encouraging move. "...the extension of tax benefits until March 2025 for startups, sovereign wealth, and pension funds signify a government committed to supporting growth and resilience. The prolonged tax benefits indicate a steady commitment to creating a conducive environment for startup development and sustainable investments," MobiKwik Founder and CEO Bipin Preet Singh said.

Finance Minister Nirmala Sitharaman has increased the outlay on semiconductors & display manufacturing under the 'Modified Programmed for Development of Semiconductors and Display Manufacturing Ecosystem in India' by 130 percent to Rs 6,903 crore in the Union Budget 2024. Under this scheme, capex on land, buildings, plants, equipment, cleanrooms, transfer of technology, and R&D are covered for support for a period of over six years. The total PLI allocation under the MEITY (Ministry of Electronics and Information Technology) has also been raised by 33 percent to Rs 6,200 crore, covering a variety of schemes in the ESDM (Electronic System Design and Manufacturing) segment. The Meity launched an IT hardware 2.0 PLI last year for which the budget allocation was raised by Rs 50 Crore to Rs 750 Crore.

Finance Minister Nirmala Sitharaman spoke on the importance of technology and related requirements for people and businesses, at the Interim Budget 2024. During the budget session, Sitharaman stressed on the need for the Indian data landscape for creating new economic opportunities and facilitating provision of high-quality services at affordable prices for all, and how opportunities for the country are expanding at a global level.

The FMCG sector, facing challenges of inflation and rural economic slowdown, welcomed the Central government's initiatives to foster inclusive and sustainable growth, especially measures focusing on the rural economy, expecting a boost in consumer demand. Companies like Dabur, Marico, and Godrej Consumer Products anticipate increased consumption due to these budgetary initiatives. Saugata Gupta, MD & CEO, Marico Ltd said that the substantial increase in capital expenditure allocation to an impressive Rs 11.11 lakh crore underscores a continued commitment to strengthen the country’s infrastructure, generate long-term employment opportunities, and drive overall economic growth.

India will cut its fertilizer subsidy in the new fiscal year from April 1 as global prices weaken and the government looks to prune its budget deficit. The South Asian nation will slash the allocation to 1.64 trillion rupees ($19.8 billion) in 2024-25, Finance Minister Nirmala Sitharaman said in her interim budget speech in parliament Thursday. That compares with a revised subsidy of 1.89 trillion rupees for the current fiscal year. The reduced spend will help India trim its budget deficit, but could pose challenges for the government trying to manage food inflation. India uses the subsidy to reimburse companies for selling fertilizer to farmers at below-market prices. If cultivators have to bear higher costs, they might trim the use of crop nutrients, putting the country’s food security at risk.

As widely expected, the Budget 2024 failed to make any big-bang announcements for the real estate sector, but it put its focus on long-term social and infrastructure development. According to realty experts, the 11.1% increase in infrastructure outlay, which is 3.4% of GDP, will further enhance the railway, roads and logistics infrastructure of the country. The three new economic railway corridors identified under the PM Gati Shakti program are massive projects with the potential to grow economic hubs and boost development of the Tier-2 and Tier-3 cities along their alignment.

Unveiling the focus on the nation’s infrastructure, Finance Minister Nirmala Sitharaman highlighted key initiatives and emphasised a notable increase of 11.1 per cent in the budget outlay. Building on the massive tripling of the capital expenditure outlay in the past 4 years, the outlay for the next year is being increased by 11.1 per cent to 11,11,111 crore. Notably, this would be 3.4 per cent of India’s GDP.

Finance minister Nirmala Sitharaman on Monday moved an amendment to the Finance Bill in Rajya Sabha to correct the figures with regard to rate of Security Transaction Tax (STT) to be levied on sale of options as well as futures. The amended Finance Bill 2023 by correcting STT rate has been returned to Lok Sabha, sources said.

Amendments to the Finance Bill 2023 were passed by the government last week, with the removal of the long-term capital gains (LTCG) tax benefit from debt MFs being a major highlight. This change could impact flows into mid-to longer-duration schemes, which currently have around Rs 6 trn in AUM. Additionally, the funding of corporate bonds by debt MFs could also see some negative impact, as they currently account for around 10-11% of total corporate bond funding. While this change is expected to have a negative impact on NBFCs, it should be manageable. Bonds represent only 36% of NBFCs’ borrowings, and the exposure of debt MFs to NBFC bonds has decreased following the IL&FS crisis. Currently, debt MFs fund only around 15% of NBFC bonds. However, certain NBFCs such as Chola Investment & Finance (CIFC) and Mahindra Finance (MMFS) have higher borrowings from MFs, although this includes commercial papers as well.

The Finance Ministry has clarified that it has raised Securities Transaction Tax on the sale of options to 0.062% from 0.05%, ET Now reported citing sources. This a 25% increase. An earlier version of Finance Bill passed in Lok Sabha today had incorrectly said that options sale STT was raied to Rs 2100 from Rs 1700 per Rs 1 crore turnover. This led to confusion in the market as traders discovered the existing STT is already levied at a higher rate of Rs 5000 per Rs 1 crore. On the options side, the STT is charged on the premium and not the strike price. On the sale of futures contracts, the STT has been hiked to Rs 1,250 on Rs 1 crore of turnover against the earlier levy of Rs 1,000.

Credit card payments for foreign travel will be brought under the purview of the Liberalised Remittance Scheme (LRS) of the Reserve Bank, to ensure that such expenses do not escape TCS (Tax Collection at Source). While moving the Finance Bill 2023 for consideration and passage in the Lok Sabha on Friday, Finance Minister Nirmala Sitharaman said the Reserve Bank has been asked to look into ways to bring credit card payments on foreign tours under the LRS. “It has been represented that payments for foreign tours through a credit card are not being captured under the Liberalised Remittance Scheme (LRS) and such payments escape tax collection at source (TCS),” she said.

Taxpayers earning just a little above the Rs 7 lakh income tax rebate limit in the new concessional regime could be in for a relief. The income tax authorities are understood to be looking at whether such taxpayers whose taxable income is just a tad over the Rs 7 lakh limit can also get the tax benefit. According to sources, a marginal relief to such individual taxpayers could be in the works in the amendments to the Finance Bill, 2023 by proposing a small deduction so that they can also avail the income tax rebate and remain below the taxable limit.

Lok Sabha on Friday passed the Finance Bill 2023 with 64 official amendments, including the one that seeks withdrawal of long-term tax benefits on certain categories of debt mutual funds and another for setting up the GST Appelate Tribunal. The Finance Bill that gives effect to tax proposals for fiscal year starting April 1 was passed without a discussion amidst ruckus by opposition members demanding a JPC (Joint Parliamentary Committee) probe into the allegations against the Adani group of companies. While moving the bill for passage and consideration, finance minister Nirmala Sitharaman also announced the setting up of a committee under finance secretary to look into pension issues of government employees.

The industry has suggested that the Vivad se Vishwas scheme announced in the Budget for MSMEs should be made attractive in terms of reimbursements and interest rates, a senior government official said on Tuesday. They also demanded a robust grievance redressal system on digital portals and a mechanism to resolve disputes before the initiation of an arbitration process. These issues were raised during a post-Budget webinar on 'Ease of doing business using technology, especially for small businesses', organised by the Department for Promotion of Industry and Internal Trade (DPIIT). To give relief to MSMEs, Finance Minister Nirmala Sitharaman in the 2023-24 Budget announced the 'Vivad se Vishwas-I' scheme. Under the scheme, in case of failure by MSMEs to execute contracts during the Covid period, 95 per cent of the forfeited amount relating to bid or performance security will be returned to them by government and government undertakings.

Industry has hailed Finance Minister Nirmala Sitharaman’s measures in Budget 2023 to expedite payments by private companies to MSMEs, but the silence on defaulting government departments has raised concerns. Considering that various government departments do bulk purchases from MSMEs, the finance ministry should bring all the government departments also under this rule, said industry stakeholders. The budget proposed an amendment to Section 43B of the Income Tax Act. It ensures that the buyers can claim deduction in income tax only on payments made to a MSME supplier. In short, a company can’t claim the expense under the act until the payment has actually been made to the seller. The proposal was made to resolve the long-standing delayed payments’ problem of MSMEs and provide them a much-needed liquidity boost.

The automotive sector in India is shifting towards ‘sustainable mobility’, as we speak. The recent Union Budget announcements specific to the automotive sector have the potential to ensure that the change is fast and tectonics.

The Budget 2023, on the policy front clearly identified ‘infrastructure and investment’ as one of the key priorities ie ‘Saptarishi’ or the guiding light in India’s journey to becoming an empowered inclusive economy. This apart, infrastructure and investment also complement the other key priorities, making it an all-pervasive factor in India’s growth story. The intent to ramp up investment cycle and private investments was clearly articulate by the Finance Minister. Towards this, a steep increase in the capital investment outlay of INR10 lakh crore is very encouraging and will promote investment cycle. The Harmonized Master List of Infrastructure is also proposed to be reviewed for recommending classification and financing framework. This could also open new opportunities for private sector investments. On the tax front, there is one tax proposal which may have an impact on investor sentiments, which is the proposal to tax distributions by business trusts to its unitholders which are shown as repayment of debt. Business trusts are regarded as pass-through for tax purposes in respect of interest and dividend. For REITs, rental income is also treated as pass-through. This income is therefore taxed in the hands of investors or unitholders of the Business Trust in the same and like manner. Income which is taxed in the hands of the business trust is exempt in the hands of unitholders. So, a question arises is what does the amendment seek to tax?

The big capex push in Budget 2023 is aimed at helping each state have sufficient funds to meet their own goals in their own way, FM Nirmala Sitharaman said in an interview to ET Now today. This is not just the Centre's budget — the top priority this year is for every state to have that cushion, the FM said. Sitharaman compared this year's budget exercise to a string that has the right degree of tautness — not too loose, not too tense, but just right.

The Central government will likely raise its budgetary capital expenditure to about Rs 9 trillion in the next fiscal from the Rs 7.5-trillion allocation for FY23, official sources indicated to FE. It aims to enhance capex meaningfully for the fourth straight year in the upcoming Budget for FY24, as it believes a sustained push to productive spending will spur economic growth, more so when a favourable base effect wanes.