Union Finance Minister Nirmala Sitharaman presented the interim budget for 2024-25 in the Lok Sabha on February 1. The budget, presented ahead of the April-May Lok Sabha elections, focused massively on infrastructure development and proposed removal of disputed direct tax demands.
Sitharaman emphasised building 20 million affordable houses in five years, adding to the existing 30 million. The capital expenditure for infrastructure increased to Rs. 11, 11, 111 crore ( (3.3% of GDP) from Rs 10 lakh crore (3.3% of GDP) in the 2023 budget. Whereas Rs 2.55 lakh crore was allocated for Railways, including three new corridors-energy, Mineral, and Cement corridor, a Port Connectivity Corridor, and a High Traffic Density Corridor and converting 40,000 bogies to Vande Bharat standard.
"The budget places a clear emphasis on infrastructure, particularly benefiting projects related to housing, roads, railways, and aviation. Companies within these sectors are poised for advantages. The defense sector, with a 20% additional allocation, is set to gain. The allocation of 2 crore houses for the middle class spells positive outcomes for cement companies, steel manufacturers, and products like sanitary ware. Amid global turbulence, the Indian economy appears poised for stability," said Manoj Sathe, former Vice President of National Securities Depository Limited (NSDL) and Country Head for Ixsight Technologies Private Limited.
Further added, "As anticipated, with elections scheduled for April 24 this year, the interim budget doesn't propose significant schemes or changes. However, the notable increase in the number of taxpayers and tax collections, as mentioned, signals a promising fiscal outlook."
"It actually means nothing from budgetary perspective. The tax demands to be withdrawn are for AYs that are old. It meant that all the taxes demands were anyways not met and the IT staff will now be relieved of that follow ups and hence they can focus on the present direct taxes outstanding," said Sathe. "There is tax benefit extension for startups and pension funds which means direct advantage to startups and contribution to pension which will indirectly benefit employment creation and PPP as pension funds will Invest more in these with more money in their kitty," he added.
The 2024 budget proposed the removal of disputed direct tax demands. It involves withdrawing outstanding direct tax demands up to Rs 25,000 for the period up to FY 2009-10 and up to Rs 10,000 for financial years 2010-11 to 2014-15. As per the budget speech, this is expected to benefit approximately 1 crore taxpayers.
Many taxpayers received outstanding tax demands under Section 245 of the Income-tax Act, 1961, after filing their 2023 income tax returns. This section allows the income tax department to offset past years' outstanding dues against the current year's tax refund. This proposed provision can benefit the taxpayers.
The Finance Minister also commended the self-help groups' initiative, stating, "The government has empowered 1 crore women to become Lakhpati Didis," during the budget speech. According to the speech, the fiscal deficit for Financial Year 24 has been revised down to 5.8% of the GDP. The budget also prioritized clean energy and climate change, addressing the expansion of e-vehicle infrastructure, the necessity to increase the production of green energy, and the anticipated benefits through "rooftop solarisation."