.png){kind=logo}
Budget 2024: As India braces for the interim budget presentation for FY25, scheduled just ahead of Lok Sabha elections, leading rating agency ICRA anticipates a slew of changes spanning taxation, pensions, insurance, mutual funds, equity funds, and non-equity investments. Of particular note is ICRA's expectation for significant developments in the realm of crypto regulations, sovereign green bonds, and energy transition funds. This article explores the key points raised by ICRA and their potential impact on various sectors.
ICRA Analytics highlights the cryptocurrency sector's anticipation of a more comprehensive policy on crypto regulation. The absence of a clear regulatory framework has been a longstanding concern, and market participants are hopeful that the upcoming budget will pave the way for a more structured and inclusive participation in the crypto market.
ICRA points to the potential resurgence of sovereign green bonds in the budget. These bonds are viewed as instrumental in addressing the funding requirements for sectors such as wind, power, and hydropower. As the government emphasizes its commitment to green initiatives, sovereign green bonds could play a crucial role in supporting environmentally sustainable projects.
In the realm of energy transition, ICRA anticipates a significant capital allocation towards energy transition and net-zero objectives. The focus is expected to shift towards new-age fuels, including green hydrogen, ethanol, and other biofuels. This allocation aligns with global trends and reflects the government's emphasis on transitioning towards cleaner and more sustainable energy sources.
ICRA emphasizes the need for addressing the differences in tax treatment between equity mutual funds and Unit-linked Insurance Plans (ULIPs). Additionally, there is a call for equity Fund of Fund to be on par with equity-oriented mutual funds in terms of taxation. The simplification of the capital gains taxation structure is proposed, aiming for uniformity across domestic equities and mutual funds to encourage higher compliance.
The tax amendments in the previous Finance Bill have brought about a level playing field between bank deposits and debt mutual funds. However, ICRA suggests a potential reevaluation of tax changes, especially in light of the impact on global equity funds, equity fund of funds, gold funds, and hybrid funds holding less than 35% in equities. The aim is to ensure tax-friendly policies that support different investment instruments.
ICRA anticipates changes in the limit of pension per month under the Atal Pension Yojana. Moreover, there are expectations for significant modifications in annuity offerings under the National Pension Scheme (NPS), with a potential tax-free status for these annuities. Separation of tax deductions for life insurance for policyholders is also suggested.
Under the security transaction tax (STT), there is a growing demand for its removal, with the expectation that this move will attract more investors to participate in domestic equity markets. Additionally, hopes are high for relief in double taxation on dividends of listed equities.
In conclusion, as India awaits the unveiling of the interim budget, the crypto and financial sectors, in particular, are watching closely for signals on regulatory clarity, tax reforms, and supportive measures for sustainable and green initiatives. The decisions made in this budget could have far-reaching implications for the Indian economy and its positioning in the global economic order.
Join our WhatsApp Channel to get the latest news, exclusives and videos on WhatsApp
_____________
Disclaimer: Analytics Insight does not provide financial advice or guidance. Also note that the cryptocurrencies mentioned/listed on the website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. You are responsible for conducting your own research (DYOR) before making any investments. Read more here.
