As the eagerly awaited Budget announcement on February 1, 2024, approaches, all eyes are on the economic landscape, especially with the impending general elections in May. This Budget is set to be an Interim Budget, paving the way for a new fiscal plan in July. The expectations have started coming in from the market. Here our top picks for the close-
Elimination/Reduction of Security Transaction Tax (STT):
The potential removal of STT is seen as a move that could attract more investors to engage in the domestic equity markets.
Relief from Double Taxation on Dividends:
Current taxation on dividends in the hands of shareholders is viewed as double taxation since the company already pays taxes on its profits.
Separate Tax Deduction for Life Insurance Premium:
ICRA recommends a separate tax deduction for life insurance premiums, rather than grouping it under Section 80C. This could enhance the penetration of insurance products and potentially lead to a reconsideration of the 18 percent GST on health insurance policies.
The markets are eagerly awaiting a comprehensive policy on cryptocurrency regulation. A comprehensive regulatory framework from the government could encourage increased participation in the crypto market.
Energy Transition Fund:
In line with global energy transition trends, a significant capital outlay is expected to be earmarked for energy transition and net-zero objectives. The focus will shift towards new-age fuels such as green hydrogen, ethanol, and other biofuels.
Simplification of Capital Gains Structure:
There is a call for simplifying the capital gains taxation structure by introducing a uniform holding period for both domestic equities and mutual funds. This move aims to encourage higher compliance while acknowledging the higher risks associated with equity investments.
What are your recommendations? Let us know!