New Delhi: In the Interim Budget presented ahead of the Lok Sabha elections, Finance Minister Nirmala Sitharaman, on Thursday, left direct and indirect taxes untouched but proposed to boost capital expenditure (capex) by 11.1 per cent and lower the fiscal deficit to 5.1 per cent in 2024-25 from 5.8 per cent in the current financial year.
In her shortest speech so far, Sitharaman said, “As for tax proposals, in keeping with the convention, I do not propose to make any changes relating to taxation and propose to retain the same tax rates for direct taxes and indirect taxes including import duties.”
This was Sitharaman’s sixth consecutive budget. The finance minister wrapped up her speech in 60 minutes.
While there is no change in tax rates and slabs, the finance minister announced the extension of certain tax benefits to start-ups and investments made by sovereign wealth or pension funds as well as tax exemption on certain incomes of some IFSC units, by one year till March 2025.
She also announced that petty tax disputes would be withdrawn, a move that will benefit around 1 crore taxpayers.
“There are a large number of petty, non-verified, non-reconciled or disputed direct tax demands, many of them dating as far back as the year 1962, which continue to remain on the books, causing anxiety to honest tax payers and hindering refunds of subsequent years. I propose to withdraw such outstanding direct tax demands up to twenty-five thousand rupees pertaining to the period up to financial year 2009-10 and up to ten-thousand rupees for financial years 2010-11 to 2014-15,” she said.
The finance minister proposed to increase capital expenditure by 11.1 per cent to Rs 11.11 lakh crore for 2024-25, which would be 3.4 per cent of GDP.
The central government’s fiscal deficit in the current financial year is expected to remain at 5.8 per cent, which is lower than the budgetary estimate of 5.9 per cent. The finance minister proposed to bring down the fiscal deficit to 5.1 per cent in the financial year 2024-25.
“We continue on the path of fiscal consolidation, as announced in my Budget Speech for 2021-22, to reduce the fiscal deficit below 4.5 per cent by 2025-26,” she said.
“The hallmark of this interim Budget is its fiscal rectitude. The fact that the Government has prioritised fiscal consolidation over populism on the eve of general elections is commendable,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
This is very good news for the economy and consequently for the market. The boost to housing is another important proposal from the market perspective since this will benefit industries like cement, steel and all construction related segments, he added.
Published 01 February 2024, 07:12 IST