Budget 2024 Must Focus on Tax Relief to Stimulate Consumption: India Inc
By: Admin July 09, 2024 Categories: Income Tax News | News
The Union Budget 2024 should prioritize tax relief, especially for lower-income taxpayers, to stimulate consumption, industry experts suggest.
Finance Minister Nirmala Sitharaman is set to present the full Budget for fiscal 2024-25 on July 23, marking the first major policy document of the new government.
Industry players are also urging the finance minister to lower corporate tax, phase out tax exemptions, and broaden the tax base to boost economic growth.
“Rationalize and simplify the tax system to improve compliance and promote investment. Consider measures such as reducing corporate tax rates, phasing out tax exemptions, and broadening the tax base to make the tax regime more efficient and equitable,” said Assocham.
Rating agency ICRA predicts the government will aim for a fiscal deficit target of 4.9-5% for FY25, compared to the 5.1% estimated in the Interim Budget on February 1, without compromising the capital expenditure target of ₹11.1 lakh crore.
“While favorable developments on the revenue front are positive for fiscal dynamics in FY2025, ICRA believes fiscal consolidation will be challenging beyond the current fiscal,” the rating agency stated.
An industry expert emphasized the need for policies that promote economic growth and offer relief, particularly for lower income brackets, to stimulate consumption.
“Regarding insurance, we suggest amending section 80C of the Income Tax Act to allow a greater limit on insurance premium payments, encouraging more individuals to buy insurance products. Additionally, there should be a deduction allowance for term life insurance under the new tax regime,” he said.
Another industry expert highlighted the need for easing regulatory compliances for the NBFC sector to facilitate easier business operations.
“A balance must be struck in terms of oversight, and hopefully, the government will consider this,” he added.
A tax expert suggested expanding the scope of PLI schemes, especially for job-creating sectors like textiles, handicrafts, and leather. Successful sectors like electronics, auto, and semiconductors should continue to receive support.
In terms of expectations from the finance minister, an expert highlighted the potential of the life sciences sector to attract global players for contract manufacturing and establishing global capability centers (GCCs).
“We are optimistic that the upcoming budget will prioritize the life sciences sector, enhancing investment flows and fueling innovation in India,” he said.
Another expert expects measures to reduce financing costs through interest rate subsidies, ease access to credit for new entrepreneurs, and provide comprehensive tax relief for the MSME sector.
“Investment in digital infrastructure and skill development is crucial to empower MSMEs with the latest technology and boost productivity,” he noted.
Assocham also recommended structural reforms in the agriculture sector to enhance productivity, market access, and income opportunities for farmers. They suggested promoting contract farming, investing in agri-infrastructure, facilitating value chain integration, and encouraging diversification into high-value crops.
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