Finance Minister Nirmala Sitharaman tabled the Union Budget 2024–25 in Parliament on Tuesday, the first budget under Prime Minister Narendra Modi's new coalition government.
An increase in standard deduction in income tax, change in tax slabs, hiking of securities transaction tax, and long-term and short-term capital gains tax remained the key focus in the finance minister's speech.
India's benchmark stock indices plunged as traders viewed that increase in short-term gains on some financial assets as a negative note.
Sitharaman emphasised better fiscal discipline. The fiscal deficit target was cut to 4.9% from 5.1% for the current financial year.
Here's what the Budget Masters from NDTV Profit's special budget shows have to say about the economic and financial roadmap announced in the budget.
'Increase In Long-Term Capital Gains Tax Disappointing'
Raamdeo Agrawal, chairman and co-founder of Motilal Oswal Financial Services. (Photo: NDTV Profit)
Raamdeo Agrawal, chairman and co-founder of Motilal Oswal Financial Services. (Photo: NDTV Profit)
The budget was expected to heavily favour the capital market, and the finance minister delivered on that promise.Raamdeo Agrawal, chairman and co- founder at Motilal Oswal Financial Services Ltd.
Raamdeo Agrawal, chairperson of Motilal Oswal Financial Services Ltd., found the increase in long-term capital gains tax a bit disappointing. "This asset class deserves encouragement."
Agarwal highlighted that systematic investment plan flows are increasing, indicating inclusivity across the nation. Since this is fundamentally a long-term narrative, the long-term capital gains tax shouldn't have been raised from 10% to 12%, he said.
'Budget Achieved Trinity Of Impossible'
Kotak Mahindra Asset Management MD, Nilesh Shah.
Kotak Mahindra Asset Management MD, Nilesh Shah.
This budget has achieved the trinity of impossible. Fiscal prudence, investment and growth momentum.Nilesh Shah, Managing Director, Kotak Mahindra AMC
Fiscal prudence of 4.9% for FY24 will pave the way for rating upgrade and the support to employment generation will boost growth, according to Nilesh Shah, managing director, Kotak Mahindra AMC. "Infrastructure investment at 3.4% of GDP is elevated yet not crowding out others."
'Budget Focuses On Lot Of Longer Pending Issues'
(Source: Madhusudan Kela's Official LinkedIn Handle)
(Source: Madhusudan Kela's Official LinkedIn Handle)
The budget focuses on longstanding issues, such as employment generation and significant reforms in the agriculture sector.Madhusudan Kela, Founder of MK Ventures.
Madhusudan Kela, founder of MK Ventures, highlighted the budget's efforts in addressing long-pending income tax laws. "Overall, it's a good budget. It focuses on a lot of longer-pending issues."
'Budget Very Progressive From Long-Term View'
Keki Mistry (Source: Vijay Sartape/NDTV Profit)
Keki Mistry (Source: Vijay Sartape/NDTV Profit)
The budget was very progressive from a long-term point of view and it kept more money in the hands of the people.Keki Mistry, chairperson of HDFC Life Insurance Co.
The stock markets reacted negatively initially because of the increase in the capital gains tax, but it will pull aside, according to Keki Mistry, chairperson of HDFC Life Insurance Co.
He pointed out that the positives of the budget include indications for the growth momentum and the government's focus on employment generation and skilling. "Incentives have been given to sectors that are job machines."
'Capital Gains Tax To Cost More To Long-Term Investors'
Maneesh Dangi, founder, Macro Mosaic Investing and Research (Source: NDTV Profit)
Maneesh Dangi, founder, Macro Mosaic Investing and Research (Source: NDTV Profit)
The hike in the capital gains tax is likely to cost more to long-term investors who might end up paying higher taxes.Maneesh Dangi, founder of Macro Mosaic Investing and Research.
"If you are booking profits much later, be prepared for much higher taxes," Maneesh Dangi, founder of Macro Mosaic Investing and Research, said.
The biggest announcement in the budget is on the capital gains tax and this will only be tweaked upwards. The increase in securities transaction tax would go up quite potentially, and the recent hike is more benign than expected, according to Dangi.
'Well Thought-Out Budget'
Uday Kotak, former MD and CEO, Kotak Mahindra Bank. (Photo: NDTV Profit)
Uday Kotak, former MD and CEO, Kotak Mahindra Bank. (Photo: NDTV Profit)
Well thought-out budget. Fiscal discipline maintained. Right focus on employment and the MSMEs.Uday Kotak, founder and director, Kotak Mahindra Bank.
Capital gains tax is smartly simplified, leaning in favour of revenue, according to Uday Kotak, founder of Kotak Mahindra Bank.
Increase in the STT is "necessary sand in the wheels of high derivative volume," he said. "Paradigm shift of saver to investor continues."
'Abolishing Angel Tax A Big Positive'
Pranav Sayta, National Leader International Tax and Transaction Services, EY India (Source: NDTV Profit)
Pranav Sayta, National Leader International Tax and Transaction Services, EY India (Source: NDTV Profit)
The long-term capital gains tax was a surprise, and the market will not take it well.Pranav Sayta, National Leader International Tax and Transaction Services, EY India
The hike in short-term gains on some financial assets from 15% to 20% was not unexpected. The government wanted to temper the short-term trading a bit and that might have been the provocation, according to Pranav Sayta, partner at EY India.
The announcement on long-term capital gains tax is still early in implementation, he said.
Abolishing angel tax is a big positive, especially for entrepreneurs, startups and the whole ecosystem, including foreign investors, Sayta said. "That's a great move indeed."
'Government Chose Fiscal Side Over Welfare Schemes'
Ravi Dharamshi, Founder & CIO, ValueQuest Investment Advisors (Source: NDTV Profit)
Ravi Dharamshi, Founder & CIO, ValueQuest Investment Advisors (Source: NDTV Profit)
The government has chosen the path to stay on the fiscal side rather than giving a boost to the consumption side or the welfare side.Ravi Dharamshi, Founder & CIO, ValueQuest Investment Advisors
The government has surprised the market positively in terms of the fiscal-deficit target. The post-election results and the political compulsion should have made the government focus more on the bottom of the pyramid, according to Ravi Dharamshi, chief investment officer of ValueQuest. "But. I think the government has decided to strictly stay on the path."
The capital gains taxes are going to be a pinch for investors, and this is going to be pursued negatively, according to Dharamshi.
The hike in the STT might impact the volume a little bit, as it does change the economics of the trader and the kind of strategies that they deploy, he said. "So, for them, it does make a difference but from the overall market and system point of view, I don't think it changes in a big way."
'Growth And Action-Oriented Budget'
A Balasubramanian, Aditya Birla Sun Life AMC (Source: NDTV Profit)
A Balasubramanian, Aditya Birla Sun Life AMC (Source: NDTV Profit)
This is a growth-oriented and action-oriented budget, and the capital gains tax may not significantly dent investors' sentiment significantly, given that this has to be paid on redemption.A Balasubramanian, Aditya Birla Sun Life AMC
The income-tax change is giving people more money and boosting consumption, according to A Balasubramanian, chief executive officer of Aditya Birla Sun Life AMC.
Despite a heavy allocation in Andhra Pradesh and Bihar, the packages are linked to pickups in industrial activity, he said.
'SST Hike Outcome Of Criticism On Derivatives Volume'
File photo of Ashishkumar Chauhan for a photograph at the India International Exchange in GIFT City, Gujarat. (Photographer: Dhiraj Singh/Bloomberg)
File photo of Ashishkumar Chauhan for a photograph at the India International Exchange in GIFT City, Gujarat. (Photographer: Dhiraj Singh/Bloomberg)
Hike in securities transaction tax is an outcome of the criticism received on the derivatives volume.Ashishkumar Chauhan,CEO, NSE
The budget refers more to job creation and some burden has been given to top companies to train more people, according to Ashishkumar Chauhan, chief executive officer of National Stock Exchange.
There has been only a minor change on the STT and the tax regime remains stable, Chauhan.
'Budget Forward-Looking, Equitable And All-Inclusive'
Sundararaman Ramamurthy, managing director and chief executive officer, BSE (Company website)
Sundararaman Ramamurthy, managing director and chief executive officer, BSE (Company website)
With clear emphasis on nine priorities, the budget lays down the roadmap for infrastructure development, startups, SMEs, job creation, skill development and innovation.Sundararaman Ramamurthy, managing director and chief executive officer, BSE.
"These are likely to create new opportunities, uplift demand, and unlock multipliers for the economy, including long-term capital formation with fiscal prudence," Sundararaman Ramamurthy, CEO of BSE, said.
'Believe In Vision Of Viksit Bharat 2047'
Vikas Khemani, founder of Carnelian Asset Management & Advisors Pvt. (Source: LinkedIn account)
Vikas Khemani, founder of Carnelian Asset Management & Advisors Pvt. (Source: LinkedIn account)
We remain confident in investing in India and believe in the vision of 'Viksit Bharat 2047'.Vikas Khemani, founder of Carnelian Asset Management & Advisors Pvt.
The budget sets priorities for a 'Viksit Bharat' and the increase in long-term and short-term capital tax is not expected to significantly impact market sentiment, according to Vikas Khemani, founder of Carnelian Asset Management & Advisors Pvt.
The overall budget appears balanced, with the new coalition government clearly focusing on agriculture, manufacturing, employment generation, youth skilling, MSME support, and urban infrastructure development, Khemani said.
In terms of tax reforms, the increase in LTCG and STCG could have been avoided but it is not expected to significantly impact market sentiment. The budget maintains good fiscal discipline and yet focuses on channeling resources to the desired sections, he said.
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