Union Budget 2024

The recent budget announcements signify a strong commitment to developing the entire Indian aviation ecosystem to cater to the growing market. By extending the time periods for export of good imported for repairs at India MROs and vice- versa, it eases the woes of airline operators in India and improves attractiveness of MROs set up in India. Also the focus on building new airports and positioning India as a global tourist destination, will stimulate investments and job creation in India.

Ashish Chhawchharia, Partner and Aviation Industry Leader, Grant Thornton Bharat

The government's initiative under the PM Aawas Yojana, with an allocation of INR 10 lakh crore and incentives for youth skilling, is expected to significantly boost the fast moving electric goods market.

Naveen Malpani, Partner, Consumer and Retail Leader, Grant Thornton Bharat

Digital public infrastructure for agriculture should draw new-age businesses to explore this option. Agritech could present an appealing opportunity for deal-making.

Vishal Agarwal, Partner, Tax, Grant Thornton Bharat

With an aim to bolster the Indian start-up eco-system, the entrepreneurial spirit and support innovation, the Budget 2024 abolishes the Angel tax. Such a move is likely to create a more supportive environment for private equity investments, aligning with the government's focus on providing tax certainty. Draconian Angel Tax saw a sparked debate last year, specifically for non-resident and private equity investors looking to invest in India. Angel tax is an anti-abuse provision wherein Indian closely held companies were subject to tax on the excess of the issue price received over the fair market value of the shares.

Priyanka Duggal, Partner, Tax, Grant Thornton Bharat

Until last year, Indian closely held companies were subject to Angel Tax only on shares issued to resident investors, however Budget 2023 introduced the same for shares issued to non-residents as well followed by specific guidance and rules on computation mechanisms. Since then, foreign Private equity investors have been facing double whammy for compliance with angel tax and foreign exchange regulations. While certain exemptions were provided on the levy including those for specified funds, start-ups, etc, angel tax did place a significant burden on Indian corporates looking to attract investments as well as need for structuring the investments owing to multiple uncertainties. Notably, FDI and PE/VC inflows in India saw a mild decline last year and hence sun-set clause for angel tax provisions are likely to support boosting investor confidence.

Priyanka Duggal, Partner, Tax, Grant Thornton Bharat

The Budget provides ample opportunities for private equity investors. Notable decrease in reassessment period to 5 years and the elimination of angel tax are two significant benefits. While there is concern over the rise in tax rates on capital gains and the absence of a clear plan to remove TCS, there may be some disappointment. Nevertheless, the move to simplify FDI policy and regulations, specifically to encourage foreign investments, shows promise. Moreover, there are various measures aimed at stimulating domestic demand through employment schemes and cash transfers, which are anticipated to result in enhanced economic growth and create a positive investment atmosphere.

Vishal Agarwal, Partner, Tax, Grant Thornton Bharat

Variable capital companies as new vehicles for establishing funds in India could enhance planning, streamline structures, and improve understanding of legal implications. This development reflects the growing maturity of the fund management industry in India.

Vishal Agarwal, Partner, Tax, Grant Thornton Bharat

A significant revision to the Internship Scheme now allows top 500 companies to allocate 10% of internship costs through Corporate Social Responsibility (CSR) funds. This innovative approach enables corporations to play a key role in developing 1 crore young talents over next 5 years by bridging the skills gap, and enhancing employability. By leveraging CSR funds, companies can make a positive impact on students' professional journeys while fulfilling their social responsibility commitments. This initiative aligns with national objectives, driving sustainable growth, reducing unemployment, and harmonising industry needs with educational outcomes. This change is expected to have a profound impact on the lives of young professionals and the future of our workforce.

Prasenjit Sarkar, Director, Regulatory and CFO Services, Grant Thornton Bharat

Supporting 60 MSME clusters with energy audits through an incentive or subsidised scheme will identify areas for improvement and enhance energy efficiency, helping the country meet its net-zero goals. Adding 100 more clusters under this scheme will significantly advance this objective.

Amit Kumar, Partner and Energy & Renewables Industry Leader, Grant Thornton Bharat

Accelerating EV adoption will be an important agenda through FAME III and Budget 2024. We observed good traction in the e2w segment with the sales crossing a million units while FAME II was on and the government should look at furthering the attention to e2w, since it contributes to the largest volume of sales of vehicles in India and EV volumes have been down since the slashing of subsidy and end of FAME II. The incentive to Government or State owned corporation-owned buses should be extended to Privately owned buses also as they significantly help in intercity commute and are used favourably by the passengers. Passenger cars have been outside of the FAME program and the expectation is there to have this segment covered albeit with a cap on the cost of the vehicle. One should also add to say that all this without support for investments in Infra for EV like charging stations and battery technology may not mean much. There has been a fair amount of shift in consumer interest to EV and one expects the current government to continue with their goal to achieving green mobility.

Sridhar V, Partner, Deals Consulting, Grant Thornton Bharat

The abolishing of angel tax is expected to encourage more investors to support emerging EV technologies, fostering a robust ecosystem for sustainable transportation solutions. This will accelerate the development of green mobility solutions and boost the EV startup ecosystem. With over 60 Indian EV startups focusing on sustainable mobility, energy infrastructure, commercial mobility, and battery management systems, this development will further enhance growth. The overall PE investments in the Auto & EV industry in the first half of 2024 reached USD 628 million, highlighting the sector's strong investment appeal. The announcement will also positively impact the FMCG and logistics sectors, closely supported by the EV industry.

Saket Mehra, Partner and Auto & EV Industry Leader, Grant Thornton Bharat

Digital Public Infrastructure in agriculture will provide more farmer data, enabling fintechs to access mainstream credit information. This will improve credit quality and increase financial inclusion for farmers. Regulatory forbearance will allow banks to extend credit to stressed MSMEs in the SMA category, where vulnerabilities are caused due to factos beyond the control of MSMEs. Enhanced regulatory focus will ensure benefits reach deserving entities. The government has broadened the market for receivables discounting for MSMEs by lowering the threshold for more receivable buyers on the TREDS platform. Enhanced liquidity will help MSMEs manage their working capital better, enabling them to fund their growth aspirations.

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Vivek Iyer, Partner and Financial Services Ecosystem Leader, Grant Thornton Bharat

Public Sector Banks will develop independent credit scoring models based on MSMEs' digital footprint, leading to improved data quality and governance. We also expect increased regulatory scrutiny of these alternate credit scoring models.

Vivek Iyer, Partner and Financial Services Ecosystem Leader, Grant Thornton Bharat

Following sound macroeconomic principles, the government has revised its fiscal deficit target from 5.1% of GDP announced the Interim Budget to 4.9% in today’s final announcement. This proactive measure aims to reduce the excess expenditure incurred in response to the pandemic. This move will enhance confidence among global investors and is expected to further stimulate fund inflows, particularly in the fixed income markets

Rishi Shah, Partner, Grant Thornton Bharat

The Union Budget 2024 proposes market-based financing for private sector involvement in infrastructure projects. This is expected to attract new entrants into the NBFC-IFC space and lead to increased deal activity over the next 18-24 months.

Vivek Iyer, Partner and Financial Services Ecosystem Leader, Grant Thornton Bharat

Simplifying FDI rules and focusing on using the rupee as the investment currency indicates the government’s aim to mitigate exchange rate risks and minimise foreign exchange volatility.

Vivek Iyer, Partner and Financial Services Ecosystem Leader, Grant Thornton Bharat

The Finance Minister in her speech announced further simplification and rationalisation of the GST regime, including its extension to other sectors in the near future. This suggests the government's intent to rationalise GST rates and possibly include petroleum products, a long-standing request from the industry.

Krishan Arora, Partner, Tax, Grant Thornton Bharat

Increasing the strength of Tribunals in the country and announcement of Integrated Technology Platform for the IBC ecosystem in the budget today will foster even better outcomes for what has been one of the landmark economic reforms in India.

Ashish Chhawchharia, Partner and Leader - Debt & Special Situations, Grant Thornton Bharat

The budget's emphasis on the industrial ecosystem, including expanding industrial clusters, promoting skills and internships, increasing SIDBI branches, and facilitating rental housing and dormitories through PPPs, is commendable. To achieve the desired impact, a convergent approach is essential. Aligning these efforts will drive sustainable growth, enhance employment opportunities, and strengthen the MSME sector in India.

Ramendra Verma, Partner and Government Ecosystem Leader, Grant Thornton Bharat

The inclusion of Viability Gap Funding (VGF) in infrastructure development is a crucial step. While great progress has been observed in the development of roads, careful planning and execution of other projects are essential. With a strategic approach, these projects can drive significant economic growth.

Ramendra Verma, Partner and Government Ecosystem Leader, Grant Thornton Bharat

The allocation of INR 15,000 crore for Amaravati’s development through Infrastructure Development Authorities (IDAs) is a major step forward. This funding can transform Amaravati into a modern, sustainable city, driving economic growth and infrastructure development. The emphasis on future-oriented planning is commendable, and ​it will be interesting to say to see the tangible progress resulting from this budget.​

Ramendra Verma​, Partner and Government Ecosystem Leader​, Grant Thornton Bharat

Redeveloping cities through a well-developed framework of enabling policies, market mechanisms, and regulations is expected to boost both urban and peri-urban areas. This approach will integrate peri-urban areas smoothly into the urban landscape.

Padma Priya J​, Partner and Urban Infrastructure Industry Leader​, Grant Thornton Bharat

Customs duty reforms will continue to encourage domestic manufacturing, local value addition, and boost exports. Further rationalisation of customs duty rates would significantly support these objectives.

P.S Krishnan, Partner, Tax, Grant Thornton Bharat

With an aim to boost the confidence of middle class taxpayers, several announcements are made specially for the taxpayers opting for the new tax regime — from reducing the tax slab rates for individuals resulting in saving of up to Rs 10,400 on taxable income above Rs 15 lakh. Increasing the standard deduction on salary from Rs 50,000 to Rs 75,000 and as well as Increasing the threshold for deduction on employer contribution to New Pension Scheme from 10% to 14% of salary.

Akhil Chandna, Partner, Tax, Grant Thornton Bharat

Reviewing existing customs duty rates and furthering exemptions or reductions of BCD across various sectors underscores the government's vision for 'Make in India.' Sectors like leather, critical minerals, and telecom (mobile phones) will benefit from duty exemptions or reductions, highlighting the need for growth and penetration in these areas.

Sohrab Bararia, Partner, Tax, Grant Thornton Bharat

The limit of exemption of capital gains on certain financial assets has been increased to INR 1.25 lakh per year, but the savings would be offset by the increase in rate of tax on short-term and long-term gains, resulting in higher tax flows for such taxpayers. Overall, it's a pragmatic move with a lot to offer for the crucial middle-class taxpaying constituency.

Akhil Chandna, Partner, Tax, Grant Thornton Bharat

The withdrawal of the 2% equalization levy was a surprising move as there is no immediate action on the part of the government to introduce domestic legislation on pillar one. Many businesses expected the government to introduce domestic legislation required under the proposed global tax deal.

Riaz Thingna, Partner, Tax, Grant Thornton Bharat

The proposal to impose TCS on luxury goods aims to track high-value spending, assuming it's from post-tax income. Despite a small tax base, India has a substantial consumption of luxury items. A similar move was made with the Finance Act 2020, which introduced 1% TCS on art sales over INR 50 lakh. Other covered transactions include overseas tour packages, jewellery or bullion sale over INR 2 lakh, purchase of motor vehicles over INR 10 lakh, and remittances under the Liberalised Remittance Scheme. It will be interesting to see which luxury items will be subjected to TCS.

Pallavi Joshi Bakhru, Partner and Leader – Family Offices, Grant Thornton Bharat

The government's proposal to increase BCD on PCBA for telecom equipment while reducing BCD on mobile phones, accessories, and chargers can be seen as a step towards achieving 'AtmaNirbhar Bharat' (self-reliant India) goals. This would provide a boost to domestic manufacturing, increase competitiveness, create jobs, and make mobile phones more affordable, resulting in increased digital penetration. The increased BCD on PCBA will incentivize domestic production, create a level playing field, and attract foreign investment.

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Nittin Arora, Partner and Telecom Industry Leader, Grant Thornton Bharat

The 'look east' announcements for development of infrastructure in areas such as expressways, industrial corridors, water, and power are anticipated to promote balanced regional development. Incentives for capital investments in eastern cities will encourage private sector involvement.

Padma Priya, Partner and Urban Infrastructure Industry Leader, Grant Thornton Bharat

The Indian real estate sector is growing rapidly, projected to reach USD 1 trillion by 2030, driven by urbanisation, population growth, government initiatives, and the rise of asset tokenisation. Challenges include regulatory hurdles and financial strain. The REIT market, though nascent, is expanding with regulatory support and stable income prospects. Key trends include a shift towards organised players, focus on affordable housing, technological adoption, sustainable development, and tokenisation of real-world assets enhancing liquidity and investment access.

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Shabala Shinde, Partner and Real Estate & REITs Industry Leader, Grant Thornton Bharat

The government’s initiative to build working hostels and crèches to support women’s employment is a significant step towards a more inclusive workforce. This policy will drive demand for mixed-use and community-centric real estate projects. Integrating these facilities within residential and commercial complexes will empower women, boost labour force participation, and foster economic growth.

Shabala Shinde, Partner and Real Estate & REITs Industry Leader, Grant Thornton Bharat

Customs reforms will continue to encourage domestic manufacturing, local value addition, and boost exports. The customs duty structure needs to be rationalised to support these objectives.

P S Krishnan, Partner, Tax, Grant Thornton Bharat

Abolishing the angel tax on all asset classes significantly boosts the startup ecosystem, attracting diverse investments and fostering innovation. This will support the startup and investor ecosystem sustain its momentum and encourage long-term growth.

Dharmender Jhamb, Partner and Fintech Industry Leader, Grant Thornton Bharat