Union Finance Minister Nirmala Sitharaman, in her Budget 2024 speech, fulfilled a long-pending demand of the startup industry by abolishing the Angel Tax for all classes of investors. The decision is expected to bolster the Indian start-up ecosystem.
To promote investment employment and social security, the Modi government has also reduced the corporate tax rate on foreign companies to 35% from 40% currently.
Additionally, the FM proposed a simpler tax regime for foreign shipping companies operating domestic cruises in the country. The government also proposed safe harbour rates for foreign mining companies selling raw diamonds in the country.
The deduction of expenditure by employers towards NPS will be increased from 10% now to 14% of the employee's salary. "Similar deduction up to 14% of salary from income of employees in the private sector, public sector banks and undertakings, opting for the new tax regime has also been introduced."
The Budget 2024 has also come up with capital and entrepreneurship reforms. "Financial sector vision and strategy document to set agenda for next 5 years. Taxonomy for climate finance to increase the availability of capital for climate action."
Apart from this, the FM's Budget 2024 also provides special attention to MSMEs and manufacturing, particularly labour-intensive manufacturing. "New mechanism announced for facilitating continuation of bank credit to MSMEs during their stress period. The limit of Mudra loans increased from ₹ 10 lakh to ₹20 lakh."
On this announcement, ratings agency CRISIL says the doubling of MUDRA loans to ₹20 lakh for entrepreneurs that availed of, and repaid, loans under the Tarun Scheme is significant. "The scheme accounts for a quarter of all MUDRA loans. Overall, MUDRA loans account for 10-15% of the total MSME credit in India."
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