Union Budget 2025's tax dilemma and expectations for Viksit Bharat
Union Budget 2025 draws near, all eyes are on the Government’s fiscal strategy to navigate India’s economic aspirations amidst global uncertainties.
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In the July 2024 budget, the Government had proposed a comprehensive review and overhaul of the Income-tax Act, 1961. Whilst the comprehensive review is underway, it would be good if some of the industry’s wishlists could be addressed in the upcoming budget. Some of the notable expectations from the banking and financial service sector standpoint are discussed below.
Whilst the tax rate reduction in the last budget for foreign companies was a welcome move, still there remains a significant gap in the tax rate applicable to foreign bank operating in India through a branch vis-à-vis the Indian Banks. Since foreign bank branches also significantly contribute to the growth of Indian economy, for them to be competitive/ at par with the Indian banks, further reduction in tax rate for them should be considered.
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Securities Transaction Tax (STT) was introduced in lieu of an exemption for long-term capital gains and concessional tax for short-term capital gains from listed equity shares/ units of equity oriented mutual fund. Now that both are being taxed at competitive rate, it warrants
