In a bid to foster a more stable and mature investment environment, the government on Tuesday announced an increase in security transactions tax (STT) on futures and options trading, which is in line with the suggestions made by the Economic Survey 2023-2024.

Presenting the Union Budget 2024-2025, the Finance Minister announced a couple of proposals for deepening the tax base.

“First, Security Transactions Tax on futures and options of securities is proposed to be increased to 0.02 per cent and 0.1 per cent,” said the finance minister while adding that income received on buy back of shares will be taxed in the hands of the recipient.

In the derivatives segment, STT on the sale of options is 0.0625 per cent, which is paid by the seller.

On the sale of options in which the option is exercised, it is 0.125 per cent which is payable by the buyer. On the sale of futures, it is 0.0125 per cent, which is payable by the seller.

However, the new rate will come into effect from October 1 as per the Finance Bill.

“It is proposed to increase the rates of STT on the sale of an option in securities from 0.0625 per cent to 0.1 per cent of the option premium, and on sale of a futures in securities from 0.0125 per cent to 0.02 per cent of the price at which such futures are traded,” the finance minister said.

The Economic Survey said India needs to have an orderly and gradual evolution of the financial market.

“While derivatives are hedging instruments, they are mostly used as speculative instruments by investors worldwide. India is likely no exception,” it warned, adding that derivatives trading holds the potential for outsized gains and caters to “humans’ gambling instincts and can augment income if profitable”.

A significant stock correction could see losses that are more considerable for retail investors participating in capital markets through derivatives.

According to Shripal Shah, MD and CEO, Kotak Securities, the Union Budget sets a clear vision for India’s economic future, prioritizing both growth and fiscal responsibility.

“The increase in STT on futures and options is aimed at moderating currently heightened activity levels and fostering a more sustainable pace of growth in the stock market,” said Shah.

“We anticipate a small period of adjustment as the market adapts to these new tax measures, but this will ultimately contribute to a sustainable investment landscape with balanced and orderly growth of the capital market,” Shah added.

Vaibhav Porwal, Co-founder, Dezerv, said they encourage investors to look beyond immediate market reactions and consider the long-term benefits of a tax structure that promotes patient capital.

The finance minister also increased the long-term capital gains tax from the current 10 per cent to 12.5 per cent while increasing the short-term capital gains tax from the current 15 per cent to 20 per cent. These increased tax rates will be implemented with immediate effect. AGENCIES

 Madhya Pradesh Chief Minister Mohan Yadav hailed Prime Minister Narendra Modi and Union Finance Minister Nirmala Sitharaman for the Budget on Tuesday.

The Chief Minister said the Centre has tried to reduce the burden of inflation, especially from the people belonging to lower income categories and salaried class. He said the control over inflation is the need of the hour and PM Modi’s government has taken this step through its Budget.

“The framework of the annual Budget indicates that steps have been taken to keep the growth of the country and its people from every class. This Budget is the vision of ‘Viksit Bharat’ and I congratulate PM Modi and FM Nirmala Sitharaman for the budget,” the Chief Minister said.

He added that the nine-point schemes of the budget, which includes agriculture, employment, economic growth, social justice etc will take the country into new growth in the coming years.

The Chief Minister expressed hope that the Budget will provide ample opportunity for parallel growth of Madhya Pradesh. “The growth of Madhya Pradesh is part of the growth of the country. I believe that MP will witness growth parallelly,” he added.

Finance Minister Nirmala Sitharaman presented her seventh consecutive Union Budget on Tuesday.

She introduced increased standard deduction and revised tax rates for salaried individuals under the new tax regime and cut on customs duty on gold, silver, mobile phones and other goods were announced.

The Budget has the provision for employment-linked incentives, including one month’s wage support for first-time employees, which has become the need of the hour.

Women-specific skilling programs and increased workforce participation, MSME and manufacturing support and some others are key points of the annual Budget. AGENCIES

 The government on Tuesday announced to reduce the basic customs duty (BCD) on mobile phones, printed circuit board assembly (PCBA) and mobile chargers to 15 per cent from the current 20 per cent.

With a three-fold increase in domestic production and an almost 100-fold jump in exports of mobile phones over the last six years, the Indian mobile phone industry has matured.

“In the interest of consumers, I now propose to reduce the BCD on mobile phones, mobile PCBA and mobile chargers to 15 per cent,” said Nirmala Sitharaman while presenting the Union Budget 2024-2025.

India’s electronics sector has experienced rapid growth, reaching $155 billion in FY23.

Production nearly doubled from $48 billion in FY17 to $101 billion in FY23, driven primarily by mobile phones, which now constitute 43 per cent of total electronics production.

Pankaj Mohindroo, Chairman, India Cellular Electronics Association (ICEA), congratulated the government for the landmark budget.

“We are impressed with its intent and direction focusing on enhancing manufacturing and export competitiveness. The Finance Minister has also acknowledged the tremendous growth of mobile phone manufacturing and exports,” Mohindroo told IANS.

The industry had recommended reducing BCD on mobile phones, its PCBA and charger/adapter to 15 per cent, which has been accepted.

“The announcements will go a long way to enhance manufacturing, exports and our competitiveness. Our proposal for tariff slab rationalisation, as has also been acknowledged and FM has announced that it will be taken up in the next six months, will further embolden the industry and its competitiveness,” Mohindroo explained.

India has significantly reduced its reliance on smartphone imports, now manufacturing 99 per cent domestically.

According to Siddhesh Mehta, research analyst, Samco Securities, this change will reduce costs and support the Indian manufacturers.

“Dixon Technologies will benefit the most from this move, allowing the company to strengthen its market position and grow further,” said Mehta.

AGENCIES

 The proposals to reduce customs duties will support domestic manufacturing, deepen local value addition, promote export competitiveness, and simplify taxation, while keeping the interest of the general public and consumers surmount, Union Finance Minister Nirmala Sitharaman said on Tuesday.

New customs duty rates are proposed for commodities from life-saving medicines to rare earth minerals and mobiles.

A comprehensive review of the customs duty rate structure will be undertaken over the next six months to rationalise and simplify it for ease of trade, removal of duty inversion and reduction of disputes.

Customs duties on gold and silver have been reduced from 15 per cent to 6 per cent while that on platinum from 15.4 per cent to 6.4 per cent, to enhance domestic value addition in gold and precious metal jewellery in the country.

Further, basic customs duty (BCD) on ferro nickel and blister copper has been removed to reduce the cost of production of steel and copper.

Ankur Gupta, Practice Leader, Indirect Tax at SW India, said the reduction of customs duties on precious metals, including gold, silver, and platinum, to enhance domestic value addition in jewellery manufacturing is another significant move.

“This measure is expected to support the jewellery industry by making raw materials more affordable, thus encouraging local craftsmanship and export growth,” Gupta added.

The Finance Minister said the last six years have seen a three-fold increase in domestic production of mobile phones and almost a hundred-fold jump in exports of mobile phones.

“In the interest of consumers, I now propose to reduce the BCD on mobile phones, mobile PCBA and mobile chargers to 15 per cent,” said the Minister while presenting the Union Budget 2024-25 in Parliament.

The Finance Minister also announced full exemption of customs duties on 25 critical minerals, while reducing BCD on two of them.

This will benefit sectors like space, defence, telecommunications, high-tech electronics, nuclear energy and renewable energy, where these rare earth minerals are critical.

In a further boost to the renewable energy sector, the minister announced the expansion of the list of exempted capital goods for use in the manufacture of solar cells and panels in the country.

“Further, in view of sufficient domestic manufacturing capacity of solar glass and tinned copper interconnect, I propose not to extend the exemption of customs duties provided to them,” the Finance Minister said.

To enhance the competitiveness of seafood exports from the country, the Minister proposed a reduction of BCD on certain broodstock, polychaete worms, shrimp and fish feed to 5 per cent.

Apart from this, various inputs for the manufacture of shrimp and fish feed are exempted from customs duty to further boost seafood exports.

Similar reductions and exemptions are also announced for various leather raw materials to enhance the competitiveness of exports in the leather and textile sectors. Furthermore, the export duty structure on raw hides, skins and leather is proposed to be simplified and rationalised. AGENCIES

 Presenting the Union Budget 2024-25 in the Parliament on Tuesday, Finance Minister Nirmala Sitharaman fixed the fiscal deficit at 4.9 per cent of GDP despite higher allocations for social welfare schemes due to robust tax collections in a fast-growing economy.

Sticking to the fiscal consolidation path will help ensure a stable growth path for the economy as a lower deficit helps keep inflation in check. 

“The gross and net market borrowings through dated securities during 2024-25 are estimated at Rs 14.01 lakh crore and Rs 11.63 lakh crore, respectively. Both will be less than the 2023-24 figures,” the Finance Minister said.

The reduced borrowings by the government will leave more money in the banking system for companies to borrow for investments, which will in turn help spur growth and create more jobs.

Sitharaman also said that for the 2024-25 fiscal, total receipts other than borrowings and the total expenditure are estimated at Rs 32.07 lakh crore and Rs 48.21 lakh crore, respectively. The net tax receipts are estimated at Rs 25.83 lakh crore.

“The fiscal consolidation path announced by me in 2021 has served our economy very well, and we aim to reach a deficit below 4.5 per cent next year,” the Finance Minister said during her 80-minute Budget speech.

She also said the government is committed to staying the course on fiscal consolidation.

“From 2026-27 onwards, our endeavour will be to keep the fiscal deficit each year such that the Central government debt will be on a declining path as a percentage of GDP,” the Finance Minister said.

She also pointed out in her speech that GST has been a “success of vast proportions”.

“To multiply the benefits of GST, we will strive to further simplify and rationalise the tax structure and endeavour to expand it to the remaining sectors.

“GST has decreased tax incidence on the common man; reduced compliance burden and logistics cost for trade and industry; and enhanced revenues of the Central and state governments,” she added. 

The Finance Minister also mentioned that the global economy, while performing better than expected, is still in the grip of policy uncertainties.

Elevated asset prices, political uncertainties, and shipping disruptions continue to pose significant downside risks for growth and upside risks to inflation, she said.

“In this context, India’s economic growth continues to be the shining exception and will remain so in the years ahead. India’s inflation continues to be low, stable and moving towards the 4 per cent target. Core inflation (nonfood, non-fuel) currently is at 3.1 per cent. Steps are being taken to ensure supplies of perishable goods reach the market adequately,” the Finance Minister added.  AGENCIES

 The Centre on Tuesday said Goods and Services Tax (GST) has decreased tax incidence on the common man, reduced compliance burden and logistics cost for trade and industry, and enhanced revenues of the Central and state governments.

The Union Budget 2024-25 indicated that GST will be expanded to the remaining sectors.

“It is a success of vast proportions. To multiply the benefits of GST, we will strive to further simplify and rationalise the tax structure and endeavour to expand it to the remaining sectors,” said Finance Minister Nirmala Sitharaman.

All the major taxpayer services under GST and most services under Customs and Income Tax have been digitised.

India’s gross GST collection rose to Rs 1.74 lakh crore in June this year representing a 7.7 per cent increase over the same month last year, according to sources.

This takes the total GST mop-up for the first three months of the current financial year to Rs 5.57 lakh crore. In April 2023, GST collection had soared to a record high of Rs 1.87 lakh crore.

According to experts, the GST reforms, which have eased compliance and reduced tax burdens, have been instrumental in driving economic growth.

“The proposed rationalization of the tax structure, coupled with the new tax regime changes, including the increased standard deduction, will further benefit the salaried class and boost disposable income, positively impacting housing demand,” said Prashant Sharma, President, NAREDCO, Maharashtra.

The GST regime, which has completed seven years of implementation, has brought happiness and relief to every home through reduced taxes on household appliances and mobile phones.

The GST taxpayer base increased to 1.46 crore in April 2024 from 1.05 crore in April 2018.

The compliance burden was reduced for small taxpayers, and the GST Council has recommended waiving the annual return filing requirement for taxpayers with an aggregate annual turnover of up to Rs 2 crore in fiscal 2023-24. AGENCIES

 In a move to bring in the private sector in the nuclear power sector, the Indian government will partner with private players in setting up small reactors, for research and development of small modular reactors, and newer nuclear energy technologies. 

Presenting her seventh Union budget on Tuesday in the Parliament, Finance Minister Nirmala Sitharaman said: “Nuclear energy is expected to form a very significant part of the energy mix for Viksit Bharat.”

“Towards that pursuit, our government will partner with the private sector for setting up Bharat Small Reactors, research & development of Bharat Small Modular Reactors, and research & development of newer technologies for nuclear energy. The R&D funding announced in the interim budget will be made available for this sector,” she said.

The US and Russia have shown interest in developing small modular reactors in India. Small modular reactors are the ones which are factory-made compact with less than 300 MW capacity.

India and the US are working together to develop next-generation small modular reactor technologies for domestic and export markets.

According to a joint statement issued by the White House, President Joe Biden and Indian Prime Minister Narendra Modi, during the latter’s visit to the US last year, noted “the ongoing discussion on developing next-generation small modular reactor technologies in a collaborative mode for the domestic market as well as for export”. AGENCIES

 Indonesia is planning to broaden its mineral and coal online tracking system, known as Simbara, to include several commodities, including copper, gold and bauxite, said the country’s Minister for Energy and Mineral Resources Arifin Tasrif.

He mentioned the plan after the government officially broadened its Simbara to encompass nickel and tin commodities on Monday, Xinhua news agency reported.

“Next, we will finish several other commodities, including copper, gold, bauxite, manganese, and others,” said the minister.

According to the Finance Ministry, Simbara, which started its operation in 2022, has contributed up to 7.1 trillion Indonesian rupiahs ($ 437 million) in state revenues through the prevention of illegal mining, risk profiling, and an automatic blocking system. AGENCIES

 Finance Minister Nirmala Sitharaman on Tuesday announced that a New Pension Scheme (NPS) ‘Vatsalya’, a plan for contribution by parents and guardians for minors, will soon be launched by the government.

The plan can be seamlessly converted into a normal NPS account on minors becoming an adult, the Finance Minister stated during her budget speech.

“The launch of NPS-Vatsalya, allowing parents and guardians to contribute towards minors’ future, is a transformative step. This plan seamlessly converts into a regular NPS account once the minor becomes an adult. Thank you, PM Modi, for your visionary approach in securing the financial future of our young citizens, paving the way for a Viksit Bharat,” said Arunachal Pradesh Chief Minister Pema Khandu.

The Finance Minister also announced that the committee to review the NPS has made considerable progress in its work.

She expressed satisfaction that the staff side of the National Council of the Joint Consultative Machinery for Central government employees have taken a constructive approach.

“A solution will be evolved which addresses the relevant issues while maintaining fiscal prudence to protect the common citizens,” said FM Sitharaman. AGENCIES

 Finance Minister Nirmala Sitharaman announced a review of the Income Tax Act 1961 in Budget proposals for 2024-25.

“I am now announcing a comprehensive review of the Income-tax Act, 1961. The purpose is to make the Act concise, lucid and easy to read and understand. This will reduce disputes and litigation, thereby providing tax certainty to the taxpayers. It will also bring down the demand embroiled in litigation. It is proposed to be completed in six months,” she said in her Budget speech.

“A beginning is being made in the Finance Bill by simplifying the tax regime for charities, TDS rate structure, provisions for reassessment and search provisions and capital gains taxation,” she said.

As per the proposal, the two tax exemption regimes for charities are proposed to be merged into one. The 5 per cent TDS rate on many payments is being merged into the 2 per cent TDS rate and the 20 per cent TDS rate on repurchase of units by mutual funds or UTI is being withdrawn. The TDS rate on e-commerce operators is proposed to be reduced from one to 0.1 per cent.

“Moreover, credit of TCS is proposed to be given in the TDS to be deducted from salary. Further, I propose to decriminalize delay for payment of TDS up to the due date of filing statement for the same. I also plan to provide a standard operating procedure for TDS defaults and simplify and rationalise the compounding guidelines for such defaults,” the Finance Minister said. AGENCIES