Analysis on key provisions of Interim Budget FY25

World Trade Center Mumbai and All India Association of Industries (AIAI) organised a programme to discuss the Interim Budget which was presented at the Parliament by Hon’ble Finance Minister Ms. Nirmala Sitharaman on February 1, 2024.

Economists and tax experts praised the central government's Interim Budget 2024-25 for prioritizing infrastructure investment and reducing fiscal deficit estimates. Dr. Soumya Kanti Ghosh from the State Bank of India noted expectations of a lower fiscal deficit in FY25 and highlighted strong tax revenue collections. He emphasized the importance of non-tax revenue, such as dividends and disinvestment proceeds, in managing fiscal deficit. Additionally, Dr. Ghosh pointed out the potential impact of GST reform to compensate for the discontinuation of the compensation cess from FY26. He also highlighted the significant growth in infrastructure investment and bank credit, particularly in sectors like data centers, electric vehicles, and renewable energy.

Mr. M.S. Mani, Partner-GST at Deloitte India, mentioned that the government might introduce the next phase of GST reform in the latter part of the upcoming financial year. He noted that while the interim budget didn't see major GST amendments, there were changes regarding input service distributor provision and a new penalty section for non-registration of machineries in regulated sectors. Looking ahead, Mr. Mani anticipates potential rationalization of GST rates to reduce the number of slabs and gradual inclusion of petroleum products like natural gas, aviation turbine fuel, petrol, and diesel under the GST regime. Additionally, he expects customs duty amendments in future union budgets to align with proposed free trade agreements (FTAs) with countries like Oman and the UK once these agreements are in effect.

Mr. Firoze Andhyarujina, Senior Counsel at the Supreme Court of India, highlighted that the government's innovative scheme aimed at reducing litigation by withdrawing outstanding direct tax demands of small taxpayers. He clarified that this provision should be seen as a waiver of outstanding tax demand rather than an amnesty scheme. Mr. Andhyarujina further explained that the waiver would apply to year-wise tax demands rather than cumulative tax demands. 

Earlier in her welcome remarks, Ms. Rupa Naik, Executive Director, World Trade Center Mumbai mentioned that the Hon’ble Finance Minister has delivered a development-oriented budget without resorting to populist schemes. Within the available resources, the Minister tried to support all sections of the society, whether it is farmers, women, youth, start-ups, MSMEs, small taxpayers and large corporates, she added.

Ms. Naik raised hope that the budget measures will promote investment in sustainable manufacturing, green energy, real estate and infrastructure sectors.

In Photo (From left to right): Ms Rupa Naik, Executive Director, WTC Mumbai; Mr. Firoze Andhyarujina, Senior Counsel, Supreme Court of India; Dr. Soumya Kanti Ghosh, Group Chief Economic Advisor, Economic Research Department, State Bank of India; and Mr. M.S. Mani, Partner-GST, Deloitte India