Industry expectations from the Union Budget 2024 

With the Union Budget 2024 just around the corner, we talk with a selection of industry experts from across the sepctrum to understand what they expect from the Union Budget. 

Nishant Sinsinwar, Founder of Homiie Studio & Projects Makers 
“The real estate sector is looking forward to proactive measures in the 2024 budget that can foster growth and sustainability. We hope to see a reduction in GST rates for construction materials, which would help lower the overall cost of building and, consequently, property prices. Furthermore, introducing a single-window clearance system for project approvals can drastically reduce project delays and boost investor confidence. Additionally, we advocate for policies that promote affordable housing, such as increasing the allocation of government-owned lands for affordable housing projects and reviving tax incentives for developers focusing on this segment. By implementing these measures, the government can help bridge the housing gap and support the sector’s recovery post-pandemic.” 

Sunil David, Chair, Intelligent Networks, IET Future Tech Panel 
Infrastructure Development Pace: The pace of rural telecom infrastructure development needs to be accelerated to address connectivity gaps and bridge the digital divide. 

Skill Development Gap: The transition to advanced technologies like 5G requires upskilling and reskilling the workforce to meet the evolving demands of the sector. 

Regulatory Reforms Progress: The extent of progress made in simplifying regulations and licensing procedures remains unclear, and further efforts may be needed to improve the ease of doing business in the sector. 

Nirav Choksi, CEO and Co-Founder of CredAble 
“We believe India’s forthcoming Union Budget will prioritise sustaining growth over the medium term, encouraging capital investments, and achieving fiscal consolidation. 

India’s journey to become a US$5 trillion economy will be marked by digital advancements, a resilient MSME sector, and a thriving trade ecosystem. Proactive trade agreements coupled with extensions of the concessional corporate tax rate for new manufacturing units are expected to attract investments, unlock new market opportunities, and empower businesses to navigate global challenges. 

Strategic reforms to address tax challenges, ensure the ease of paying taxes, and improve the overall compliance framework are essential for fostering a conducive business environment for startups in the country. 

We look forward to measures that support responsible innovation in financial services, foster partnerships, enhance the digital lending ecosystem, and catalyze innovation in the FinTech sector to deepen last-mile financial inclusion. 

Overall, we are optimistic about transformative reforms like improved credit access, clarity regarding the 45-day payment rule for MSMEs, and lower interest rates, which will in turn enhance the competitiveness of MSMEs on a global scale and significantly contribute to India’s trajectory towards becoming an economic superpower.” 

Anil Joshi, Managing Partner, Unicorn India Ventures 
“The venture capital industry is very young and has certain expectations from the Honourable Financial Minister. Removal of Angel Tax has been a long standing demand of the industry. Stakeholders of the ecosystem have made representation to the Govt with an aim to find a solution for the same. In most cases, the investments at early stages are made to young companies and with limited resources. It becomes tedious and non productive for everyone, more so it also discourages potential investors to invest because of fear of coming under tax authorities scrutiny. It’s a long pending demand and we wish Hon. FM takes it up in the upcoming Budget. The solution will encourage many potential tax payers to open up to the investment of this asset class. 

Additionally some of the demands are long pending like favourable consideration to GST on management fee and adjustment of management fee toward expenses while calculating income or gains. The industry also demands in the current budget bringing long term gain at par with listed entities. The VC community would prefer speedier approval on overseas investment as the current process takes too long.” 

Manoj Agarwal, Co- founder and Managing Partner, Seafund 
“I have high hopes for the upcoming budget to strengthen the deep tech ecosystem in India. The government has made encouraging statements about supporting this sector, and I believe it is crucial to provide more backing at the seed stage. Deep tech startups often require significant research and development, which may not attract early-stage investment from the private sector. A dedicated fund of funds to support investors who are willing to take the plunge into deep tech is vital. 

Additionally, simplifying the taxation framework for startups, ESOPs,and investors is essential. In many European countries, investors receive tax benefits for investing in startups, either directly or through funds. Similar provisions in India could stimulate more domestic investment. Moreover, we need to address the issue of ‘reverse flipping’ for businesses built in India but headquartered abroad. Facilitating an efficient and tax-effective way for these businesses to return to India could significantly benefit our economy and the government’s revenue in the long run. As we address these concerns, a simplified GST tax regime for the funds and doing away with angel tax will free up a lot of domestic capital towards early-stage funding, which is needed today more than ever as we see funding winter thawing at a snail’s pace.” 

Editor’s Take – Individual taxpayers eagerly await Tax Relief 

As the nation eagerly awaits the unveiling of Union Budget 2024, individual taxpayers have their fingers crossed, hoping for some much-needed relief from the finance minister, Nirmala Sitharaman. In recent years, the steady rise in personal income tax collections has surpassed even the mop-up from corporate taxes, leaving many citizens feeling the pinch.  

You can expect to pay approx. 33% by way of direct taxes if you fall in India’s highest tax slab. Pile on another 20% or so by way of indirect taxes, and it becomes clear; India’s taxation regime is one of the most oppressive in the world. These taxation figures would be on par with the Nordic countries, except they have free healthcare, better infrastructure, and a more comprehensive social security net that covers all.  
  
Clearly, personal tax income collections are in the lens of the policymakers, as it now outpaces corporate collections. In the fiscal year 2023-24, net personal income tax receipts amounted to a staggering ₹10.44 lakh crore, while net corporate tax collections stood at ₹9.11 lakh crore. A similar trend was observed in 2022-23, with individual taxpayers contributing ₹8.33 lakh crore and corporations shelling out ₹8.26 lakh crore. 

Limited tax deductions and a (perhaps deliberately) confusing tax regime, with its marginal reliefs, have left the personal tax payer bearing a disproportionate burden. As the Union Budget approaches, their expectations revolve around more investor-friendly deductions and a rise in deduction limits (the last time this happened was in 2014), and a tax structure that encourages investments rather than promoting alternate tax regimes.