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Business News/ Industry / One Nation, One Tax Dream: Can Budget 2024 address GST complexities and pave the way for a truly unified tax regime?
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One Nation, One Tax Dream: Can Budget 2024 address GST complexities and pave the way for a truly unified tax regime?

Budget 2024: The coming budget is likely to serve as a precursor to the long-term policy endeavors that the incoming government may embark upon post-elections

Finance Minister Nirmala Sitharaman will present the interim Budget on February 1 . Premium
Finance Minister Nirmala Sitharaman will present the interim Budget on February 1 .

Finance Minister Nirmala Sitharaman will present the interim budget on Thursday (February 1). Expectations for Budget 2024 include advocating for a progressive tax structure, targeted relief for SMEs, promoting digital transactions, and reviewing the GST structure. Tax incentives for sustainable practices and strategic investments in social sectors are also proposed.

India’s complex GST structure with its multiple rate slabs has stalled the dream of ‘One Nation, One Tax.’

“Streamlining rates and procedures could unclog the wheels of compliance and boost tax revenue – paving the path to an efficient unified regime. The upcoming budget must frontally address procedural headaches to realise a simplified GST's full potential," said Ashish Aggarwal, Director, Acube Ventures.

GST was envisioned as a landmark tax reform to integrate India's fragmented market. “However, complex filings and frequent rate changes have harmed compliance. The budget must spur fresh thinking to resolve issues like inverted duty structures, while pushing export and job growth. With targeted changes, a simplified GST can yet become the tax law that unites India's market," said Agam Gupta. Executive Director at Share India Fincap Pvt. Ltd.

The coming budget is likely to serve as a precursor to the long-term policy endeavors that the incoming government may embark upon post-elections. “This may include an emphasis on fostering public-private partnerships for financing, which could potentially catalyse private sector investments in sustainable projects, aligning with India's pledge to attain net-zero emissions by the year 2030," said Saurabh Srivastava, Co-founder, of India Angel Network

The slew of positive measures taken by this government to kick-start the entrepreneurial ecosystem have already made India the third-largest startup ecosystem in the world. 

Given the phenomenal potential of startups to create employment while solving India's many challenges in affordable healthcare, education, environment etc, the ecosystem hopes that the remaining tasks will also get addressed. “These include the same tax treatment for LTCG and STCG for listed and unlisted equities, taxation of ESOPs on sale and not on exercise, an enabling framework with possible incentives (like tax credits given by the US, Singapore and Israel) to increase the flow of domestic and foreign capital to startups and help increase the number of SEBI registered India focussed AIFs by removing their current disadvantage re GST payments vs overseas VC/PE funds," said Saurabh Srivastava. 

Our expectations for Budget 2024 are grounded in the pursuit of tax parity, fostering a resilient fiscal environment, said Kuljeet Singh, Director of Finance at GI Group Holding.

“Key measures may include advocating for a progressive tax structure, incentivizing compliance, and providing targeted relief for Small and Medium Enterprises (SMEs) to enhance economic inclusivity. We propose promoting digital transactions through incentives and calling for a comprehensive review of the Goods and Services Tax (GST) structure for simplification. Recognizing environmental responsibility, we suggest tax incentives for sustainable practices," said Kuljeet Singh.

Following the positive push for fintechs in the previous budget, we look forward to continued favorable policies this year, said Ramanathan RV, Co-founder, of Hyperface.

"The fintech industry, in particular, stands to gain significantly from increased subsidies and support, providing a crucial boost for startups like ours and fostering overall growth and innovation in the country, said Ramanathan RV.

We are hopeful that the budget will further support fintech startups by extending tax benefits, encouraging new ideas, and addressing key areas like regulatory backing, incentives for financial inclusion, and digital progression, he added.

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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ABOUT THE AUTHOR
Sangeeta Ojha
A business media enthusiast. Writes on personal finance, business and banking.
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Published: 31 Jan 2024, 12:54 PM IST
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