While providing primacy to growth with inclusion, the Budget attempts to infuse a new momentum to the economy and strengthen India’s resilient ecosystem so that the country emerges as a growth engine of the world.

An overarching theme

An important focus of the Budget is simplification and rationalisation of the tax structure. The document has spelled out the contours to achieve this, while trying to minimise disputes and expand the tax net. ‘Ease of doing business’ is an overarching theme behind the Budget tax proposals.

In the interest of moving towards a common understanding on the OECD BEPS (Base Erosion and Profit Shifting) Action Plan, the government has withdrawn the equalisation levy of 2% on e-commerce transactions. This demonstrates the government’s participation in the initiative to create an international framework to combat tax avoidance. The proposals to expand the scope of safe harbour rules, streamline transfer pricing assessment procedure, and reduce the corporate tax rate on foreign companies from 40% to 35%, as suggested by CII, are expected to promote ease of international taxation, improve investor sentiment, and further attract foreign investments in the economy.

The angel tax has outlived its utility and has rightly been abolished. This move will ensure the orderly growth of the Indian startup ecosystem, resolve the problem of dip in funding, and give confidence to investors and entrepreneurs to invest and build from India, as suggested by CII to the government before the Budget.

CII has been advocating the rationalisation and simplification of the Withholding Tax regime under the Income Tax Act. Decriminalisation of some TDS (tax deducted at source) offences; the SOPs (standard operating procedures) and compounding guidelines for TDS defaults; and rejig in the existing TDS rates under certain categories are welcome moves in this direction, thereby enhancing ease of doing business.

The changes in the capital gains tax regime have been brought in the interest of rationalisation. So far as the removal of indexation benefit in the calculation of long-term capital gains tax is concerned, industry would look forward to seeing this move help the agenda of tax certainty and simplification.

Raising the standard deduction and increasing the tax slabs under the new regime, while increasing the deduction for family pension and the new pension scheme are positive steps towards providing tax relief to middle-class individuals, thereby pushing consumption and demand in the economy.

As a push towards the government’s agenda for simplification and rationalisation, the new scheme of block assessment for search cases and reducing the time limit for which reassessment can be done are pertinent. The proposal to introduce the ‘Vivad se Vishwas Scheme, 2024’ for settlement of pending appeals would go a long way in reducing litigation and releasing amounts stuck under tax disputes. Digitisation of major taxpayer services is a welcome move, in light of the increased need for digitisation and ease of doing business.

Customs duty rates

On the customs front, the government continues to focus on promoting domestic manufacturing and helping India get onto the global value chain, thereby boosting exports. Continuation of rationalisation of customs duty rates and simplification of compliance would enhance ease of doing business, removal of duty inversion, and reduction of disputes.

CII applauds the government for accepting industry’s call for waiver of interest and penalty on late payment of GST (Goods and Services Tax) and exclusion of cash balance lying in the cash register of the taxpayers for calculation of interest.

The Budget ticks all the boxes for boosting competitiveness, growth, and promoting tax reforms. Overall, the Budget has delivered beyond expectations, while keeping an eye on much-warranted realism.

Chandrajit Banerjee, Director General, CII