While presenting the interim budget on February 1, 2024, Finance Minister Nirmala Sitharaman had stated that, “In the full budget in July, our Government will present a detailed roadmap for our pursuit of ‘Viksit Bharat’.” If India does aim to become a developed country by 2047 as per Prime Minister Narendra Modi’s vision of Viksit Bharat, the Union Budget 2024 which will be presented on July 23 must prioritise the education of children, who are the future of the country. Read on to find out what experts from the education sector shared with us at Higher Education Plus about their expectations from the Union Budget 2024.
Budget 2024 introduces measures that are likely to have a mixed but generally positive impact on the Indian economy. The increase in disposable income for taxpayers and incentives for long-term investments are expected to drive consumption and investment, leading to economic growth.
While the increased tax rates on capital gains might initially slow down market activity, they are designed to encourage a more stable and sustainable investment environment.
The focus on clarity and compliance in tax regulations is likely to enhance fiscal health and economic stability. By raising the standard deduction in the new tax regime from Rs 50,000 to Rs 75,000 and revising tax slabs, the budget aims to increase disposable income for taxpayers, potentially boosting consumer spending and driving economic activity.
The revised capital gains tax structure, with long-term capital gains (LTCG) tax increased from 10% to 12.5% and short-term capital gains (STCG) tax on certain assets from 15% to 20%, is expected to encourage long-term investments over short-term trading, fostering stability in the financial markets.
Additionally, the clarification and simplification of capital gains tax provisions are likely to reduce uncertainty, enhance compliance, and potentially increase tax revenues. The introduction of the NPS Vatsalya Scheme encourages long-term savings for children’s future needs, promoting a culture of savings and financial planning, which contributes to economic stability. By incentivizing long-term investments and balancing revenue growth, the budget aims to attract more stable investments in Indian markets, fostering economic growth.
While there may be a short-term negative reaction in financial markets due to increased tax rates on capital gains, the long-term outlook remains positive as investors adjust to the new norms. Clarity on gift tax, particularly the taxation of gifts by companies, reduces ambiguity and potential tax evasion, enhancing transparency and compliance. Increased disposable income is expected to benefit the consumer goods and retail sectors, driving growth in these areas.
Additionally, the anticipated hike in deductions for repaying home loans could stimulate demand in the real estate sector, further driving growth in housing and construction industries. Overall, Budget 2024 introduces measures likely to have a mixed but generally positive impact on the Indian economy.
The focus on increasing disposable income, encouraging long-term investments, and enhancing tax compliance and clarity is expected to drive consumption and investment, leading to economic growth.
The increased tax rates on capital gains, while potentially slowing down market activity initially, are designed to create a more stable and sustainable investment environment. The emphasis on clarity and compliance in tax regulations is likely to enhance fiscal health and economic stability, contributing to a robust economic framework. The budget’s measures aim to balance the need for increased tax revenues with the goal of stimulating economic growth, using higher taxes on capital gains and certain financial assets to boost government revenues for public expenditure and infrastructure development.
This approach is expected to drive overall economic growth, with positive implications for various sectors, including consumer goods, retail, real estate, and housing. By fostering a culture of long-term savings and financial planning, Budget 2024 sets the stage for a more stable and prosperous economic future for India.
Dr Rajat Gera, Professor, Cluster Dean, Management, Economics, Commerce, Liberal studies, Director School of Management, OMBR, CMR University, Bangalore
