Budget 2024, February 1, 2024: In a significant move to support India’s economic resurgence, Finance Minister Nirmala Sitharaman presented the Interim Budget for 2024, unveiling key measures to maintain tax stability and empower the startup ecosystem.
Sitharaman emphasized a significant boost in capital expenditure, announcing an 11.1% increase to Rs 11,11,111 crore for the next year, constituting 3.4% of the GDP. This surge follows the massive tripling of the capital expenditure outlay over the past four years, with a substantial impact on economic growth and employment creation.
Amidst global uncertainties, the decision to maintain the existing tax structure aims to instill investor confidence, while a focus on startups is set to fuel innovation and job creation in Budget 2024 is welcome.
Extension of Tax Exemptions for Startups and IFSC Units
Among the key takeaway is the extension of the date of incorporation for income tax benefits and the benefit of carrying forward losses on a change of shareholding for start-ups to ten years
Addressing concerns about expiring tax exemptions in Budget 2024, Sitharaman announced the extension of certain tax exemptions for startups and International Financial Services Centre (IFSC) units. Expiring on March 31, 2023, these exemptions will now continue until March 31, 2025. This move is expected to provide continuity in taxation, offering relief to startups and promoting a conducive environment for IFSC units.
Fund of Funds, Startup India, and Startup Credit Guarantee Scheme: Fuelling Youth Employment
In a bid to turn the youth into “Rozgaar Daata,” the Finance Minister highlighted the role of the Fund of Funds, Startup India, and the Startup Credit Guarantee Scheme. These initiatives are designed to empower the younger generation by fostering entrepreneurship, innovation, and job creation. The government aims to provide a robust support system for startups, ensuring they become engines of economic dynamism.
Key Highlights for Startups in Interim Budget 2024
Tax Holiday Extension: The budget proposes an extension of the tax holiday for eligible startups, allowing them to continue allocating resources to innovation and expansion.
Ease of Compliance: Recognizing the compliance challenges faced by startups, Sitharaman introduced measures to streamline regulatory processes, reducing bureaucratic hurdles for emerging businesses.
Investment Facilitation: To address the crucial need for capital infusion, the budget outlines initiatives to make it easier for startups to attract investment. This includes revisiting and refining policies related to angel tax and other investment-related regulations.
Capital Expenditure Surge and GDP Growth
According to the First Advance Estimates of National Income for FY 2023-24, presented alongside the budget, India’s Real GDP is projected to grow at 7.3%. This aligns with the RBI’s upward revision of growth projections from 6.5% to 7%, reflecting robust growth in Q2 of FY2023-24.
Industry Response and Future Outlook
Industry leaders and experts have praised the government’s commitment to tax stability and support for startups. The increased capital expenditure and GDP growth projections further bolster optimism. As India continues its post-pandemic recovery, the Interim Budget for 2024 sets a pragmatic tone, positioning the nation for sustained economic growth, job creation, and innovation.
The coming months will unveil the true impact of these measures, as the nation eagerly anticipates a future shaped by fiscal resilience and entrepreneurial vibrancy.
