INDIA: The Union Budget 2024-25 focuses on low and stable inflation, with efforts towards achieving a 4 percent target. The budget includes a package of 5 schemes and initiatives with an outlay of 2 lakh crore to facilitate employment, skilling, and other opportunities for 4.1 crore youth in 5 years. There is a strong emphasis on employment, skilling, MSMEs, and the middle class. Additionally, new high-yielding and climate-resilient crop varieties will be released for cultivation by farmers, with a focus on natural farming. Significant provisions have been made for agriculture, rural development, and infrastructure. The budget also includes plans for the all-round development of the eastern region and promoting women-led development. Various tax reliefs and reductions have been announced, along with measures to boost start-ups and investments. Overall, the budget aims to address key priorities for generating ample opportunities for all sectors of society.
Yezdi Nagporewalla, CEO, of KPMG in India
The government of India as a first major move in its third term has taken a balanced view in Budget 2024 to chart the course for transforming India into ‘Viksit Bharat’ by 2047. Sustained efforts continuing on nine priority areas including energy security, infrastructure, innovation, and R&D amongst others will certainly provide the necessary fillip to the economy.
The Budget saw a special focus on creating ‘employment’ and ‘Ease of Doing Business’ in India with announcements including a comprehensive review of the Income Tax Act, the announcement of an amnesty scheme under income tax, limited reopening of reassessments and providing incentives to employers for job creation.
A prudent growth forecast of 6.5-7 percent for the current fiscal continues to uphold the India growth story and efforts to promote foreign investments dovetail well with a reduced rate of corporate tax for foreign companies, rationalization of customs duty rates, simplification of FDI and overseas investment route, etc. The overall theme of easing personal income tax and increasing tax on capital gains signifies the right intent and move towards enhancing disposable income for mid-salaried employees.
Vijay Chawla, Partner and Head, Life Sciences, KPMG in India
The pharma sector gets a boost with increased R&D allocation, digital healthcare promotion, and initiatives encouraging innovation and entrepreneurship, alongside simplified compliance and private investment incentives driving sector growth. Additionally, three cancer drugs have been exempted from customs duties, making life-saving treatments more accessible and affordable. This will boost growth in the sector.
The pharma sector gets a boost with increased R&D allocation, digital healthcare promotion, and initiatives encouraging innovation and entrepreneurship, alongside simplified compliance and private investment incentives driving sector growth. Additionally, three cancer drugs have been exempted from customs duties, making life-saving treatments more accessible and affordable. This will boost growth in the sector.
Rajeev Dimri, Head of Tax, KPMG in India
Union Budget proposals 2024-25 showcase continuity and inclusivity, given India’s growth story. The proposals are focused on building a roadmap towards increased development in India, making Viksit Bharat a tangible future. The proposal themes are largely around deepening innovation and indigenous manufacturing, with emphasis on skills, women empowerment, and building sound policies around those in employment.
All of these measures seek to strengthen and stimulate the economic fora. Specifically on taxes, immediate steps have been taken to alleviate the MSME sector. On the GST and Customs duty front, there will be an increased focus on duty and rate rationalization, with a 6-month window for Customs rate review, for ease of trade and removal of duty inversions. A slew of tweaks has been introduced in customs duty rates for various priority sectors like mobile and telecom, and energy, amongst others.
On the Direct Tax front, with a 6-month comprehensive review of the anvil, the focus has been to simplify, provide tax certainty, and reduce litigation with the reintroduction of amnesty schemes. The proposals while restructuring the TDS rate structure, also emphasized the widening of the tax base with an increase in capital gains tax. To boost investment in India, the FDI rules have also been proposed to rationalize, along with a reduction in the corporate tax rate for foreign companies.
Sandeep Paidi, Office Managing Partner, Hyderabad, KPMG in India
As inferred from the Hon’ble finance minister’s budget speech, Andhra Pradesh is one of the beneficiary states under the Union Budget. The state government, which placed priority on developing a greenfield capital at Amaravati and world-class infrastructure has received support from the Union Government. Rs 15,000 crore will be provided as financial support through multilateral institutions in this fiscal to develop Amaravati. This is expected to provide impetus to the development of the city and create definitive investment opportunities across multiple sectors.
Given its strategic location on India’s east coast, financial support for the development of external infrastructure at the two industrial nodes of Kopparthy and Orvakal will provide a boost to manufacturing in the State. Facilitating the completion of the Polavaram project is also on the agenda which will provide a lifeline for the State and promote agriculture, drinking & industrial water requirements, and food security.
The economic future of Andhra Pradesh will play an integral part in the country’s Viksit Bharat paradigm
Abhishek Jain, Partner and Head, Indirect Tax, KPMG in India
Under the GST Council’s recommendations, the Budget proposes enabling provisions for regularising GST dues and contours of the amnesty scheme for interest and penalty dues. The Finance Bill also proposes to eliminate the distinction between fraud and non-fraud cases for a limitation period with penalty distinctions continuing. The industry may need to watch out for prescriptions on sectors not covered for benefits under manufacturing in bonded warehouses. Also, many industries were eager to hear about new PLI Schemes. With the Government’s sustained emphasis on “Make in India,” industry would be eager to see how developments unfold in this area.
Manoj Kumar Vijai, Office Managing Partner, Mumbai, KPMG in India
The Union Budget 2024-25, released today, showcases the government’s commitment to sustainable economic growth and inclusivity. Key highlights, including increased capital expenditure, tax reforms, and enhanced focus on the manufacturing and technology sectors, signal a robust framework for corporate growth and innovation. At the heart of this budget lies a commendable focus on segments needing more attention, including the Poor, Women, Youth, and Farmers, with significant allocations aimed at uplifting these groups. Honourable Finance Minister laid down nine clear priorities for the coming year including Productivity in agriculture; Inclusive Growth; Employment and skill; Boost to Manufacturing & Services; Urban Development; Energy Security; Infrastructure Development; Innovation and R&D; and Next-Generation Reforms.
For corporates, the emphasis on infrastructure development with a capital outlay of Rs. 11.11 lakh crore (3.4% of GDP) will significantly boost sectors such as construction, real estate, and logistics, creating numerous opportunities for employment, investment, and expansion. The introduction of tax incentives for green energy projects and digital enterprises demonstrates a forward-thinking approach, encouraging businesses to adopt sustainable and digital-first strategies.
The simplification of tax structures, reduction in corporate tax rates for MSMEs, and streamlined compliance procedures are welcome steps that will enhance the ease of doing business, fostering a more conducive environment for entrepreneurial ventures and foreign investments. Furthermore, the government’s focus on skill development and education reforms, with a substantial Rs. 2 lakh crore package, is poised to create a more skilled workforce, addressing critical talent gaps in key industries.
Overall, this budget lays a strong foundation for an accelerated growth trajectory, positioning India as a global economic powerhouse. It is now up to businesses to leverage these opportunities, innovate, and drive the next wave of growth and transformation in the Indian economy.
Nikhil Sethi, Partner and National Head – Consumer Goods, KPMG in India
The budget is based on a thoughtful approach to balancing economic growth with fiscal responsibility. By maintaining essential spending and introducing targeted measures such as tax revisions, housing boosts, incentivizing employment thus unlocking disposable income, innovation in farming and its supply chain, access to credit, and next-generation reforms for e-commerce, they aim to stimulate consumption and drive economic momentum.
The approach is expected to yield positive outcomes for the consumer markets, in the enhanced economic environment with rural as well as urban coverage. The investments in long-term growth drivers like infrastructure, tourism, and the skilling of youth are poised to bolster investor confidence, unlocking new opportunities for expansion and innovation with public-private partnerships. Enabling digital infrastructure to boost productivity and facilitating efficient markets and sectors with a boost to the green economy via allocation on climate considerations is also expected to support the sector’s ambitions.
These initiatives are expected to contribute to the nation’s overall economic resilience. Additionally, the government’s focus on self-sustainability is anticipated to yield long-term benefits by reducing input costs, enabling industries to enhance pricing strategies and boost profitability. This approach is expected to benefit consumers, businesses, and the economy, fostering a virtuous cycle of growth.
Dr. Puneet Mansukhani, Partner and Head, Retail, KPMG in India
The horizon for retail and E-commerce in India gleams with promise. The government’s strategic initiatives, including support for small retailers through the ONDC platform, streamlined financing for MSMEs, and simplified GST reforms, paint a vibrant canvas. As infrastructure improves, supply chain costs are poised to decrease, while policies promoting digital payments add hues of growth. E-commerce export hubs, forged through public-private partnerships, beckon local manufacturers toward global vistas. Simultaneously, the launch of 100 street food hubs across select cities nourishes the food business and elevates cloud kitchens, creating a symphony of opportunity. Overall, the budget will help foster a conducive business environment, drives consumption, and fuels growth.
Naveen Aggarwal, Office Managing Partner – Delhi NCR, KPMG in India
In her 7th consecutive budget presentation in a row, Hon’ble Finance Minister Nirmala Sitaraman laid out a comprehensive roadmap for Viksit Bharat, focusing on key sectors crucial for India’s growth and development. With a sharp focus on pioneering innovation, infrastructure development, enhancing skill development, and productivity, this year’s budget brought a roadmap towards India’s journey towards a developed economy by 2047.
Highlighting the nine growth imperatives and picking up from the six-pronged strategy for ‘Amrit Kaal’ as mentioned in the Economic Survey 2024, the budget brought announcements to boost investor confidence, enhance domestic production, and facilitate ease of doing business across a range of sectors. Retaining the infrastructure spending at 3.4% of GDP, the same as in the interim budget, is expected to have a multiplier effect across the ecosystem at the back of a prudent fiscal discipline is a step in the right direction and shows the economy is on a strong footing.
With the new tax code on the anvil aimed at simplifying and rationalizing tax measures to enhance ease if doing business, this year’s budget stands true to the government’s vision of fostering sustainable, lasting, and inclusive growth and lays the foundation for a robust economic future for the country.
Kalpesh Maroo, Partner & National Head – Deal Advisory – M&A Tax, PE, KPMG in India
The Budget 2024 is truly a mixed bag from a deal-making perspective. Indian founders and promoters will be smiling at the reduction of capital gains tax on exits from 20 percent to 12.5 (without indexation) and foreign investors are hit where it matters most, exits would now be taxed at 12.5 percent as opposed to 10 percent. Rationalization of the period of holding to classify as long-term capital gains to 12 months for listed securities and 24 months for other assets is welcome.
Abolition of angel taxation is super helpful as it will remove significant complexity from a deal structuring perspective. The reduction of timelines for reopening tax proceedings to 5 years and the introduction of a time cap for withholding taxes on payments to non-resident sellers will also significantly reduce the degree of uncertainty in deal-making.
