[Opinion] Union Budget 2024 | Expectations

Manthan Kamdar – [2024] 158 taxmann.com 504 (Article)

Lok Sabha elections are due in India in early 2024, the government shall be announcing an interim budget instead of full-fledged budget, which shall function as a transitional financial plan for the remaining months of government in power. Once the new government is elected, they shall present the full budget in June 2024. Interim Budget 2024 is scheduled to be presented by our Finance Minister Mrs. Nirmala Sitharaman on 1 February 2024 in the lower house of India’s bicameral Parliament.

Let us discuss some of the alterations and additions which are expected by the taxpayers of India from the forthcoming Interim Budget:

• Long Term Capital Gain – Ceiling: The current threshold for computing tax on Long Term Capital Gain on sale of equity shares/equity oriented mutual funds/units of a business trust is INR 1,00,000/-. It is expected that the ceiling limit should be increased to INR 2,00,000/-. This has been the need of the hour in the country since long time. This shall provide incentive to the taxpayers and also enhance the equity investments by investors in India.
• Transparency in Asset Classification for Capital Gain: There are lot of complications in the current capital gains tax regime, which poses a challenge to the taxpayers. There are several instances to bear in mind, such as class of asset, period of holding, evaluating tax rates, and residential status. It is expected by the government to streamline the classification of equity and debt instruments, unify tax treatment for listed and unlisted securities, and simplify indexation provisions. Further, there are numerous sections incorporated in the Act to provide relief from Capital Gains tax if the taxpayer invests proceed of sale consideration/tax in prescribed investments. It is suggested that a simplified investment regime maybe provided to enable the taxpayer claim relief from Capital Gain tax regime.
• Transparency in Withholding Tax Sections: At present there are more than 30 Sections, which are dealing with the distinct categories of payments to residents/non-residents where withholding tax rate varies from 0.1% to 40%. In specific Sections, there are various rates at which taxes should be withheld depending upon the status of beneficiaries or on the nature of payments, which creates confusion for taxpayers. It is suggested that the government shall announce simplified withholding tax regime which is a long-standing demand by the taxpayers.

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