Union Finance Minister Nirmala Sitharaman presented the Economic Survey 2024-25 in the Lok Sabha on Friday, January 31. The survey projects India’s FY26 GDP growth to be between 6.3-6.8%, despite global uncertainties.
It anticipates inflation will remain controlled, with consumption staying stable, and rural demand expected to pick up momentum.
This Economic Survey follows closely on the heels of the previous one, which was tabled in Parliament on July 22, 2024, just six months after the General Election.
Key Pointers On Taxation
During April – November 2024 , three major facts stand out in union finances.
First, following an unprecedented expansion of capital expenditure in the last four years, it remained subdued during Q1 FY25, owing to general elections. However, it rebounded after July despite a reduction in non-debt receipts owing to an increase in the devolution of taxes to states. Until November 2024, defence, railways and road transport accounted for about 75 per cent of the capital expenditure, whereas significant YoY growth occurred in power and food and public distribution.
Second, despite the gross tax revenue (GTR) increasing by 10.7 per cent YoY during April-November 2024, the tax revenue retained by the Union, net of devolution to the states, hardly increased. This was because of increased tax devolution, which helped the states to manage their expenditures smoothly.
Thirdly, as of November, the deficit indicators of the union were comfortably placed, leaving ample room for developmental and capital expenditure in the rest of the year.
India has carried out a series of structural reforms in the last decade. From the Goods and Services Tax (GST), which has been verily described as India’s EU moment, to the Insolvency and Bankruptcy Code (IBC), which established a framework for dealing with corporate renewal, to the RERA (Real Estate Regulation Act), which helped clean up the real estate sector and rapid roll-out of digital infrastructure – the India Stack (UID, UPI, DBT).
GST unified And streamlined taxation
The introduction of GST in July 2017 marked a significant shift in India’s indirect tax structure, aiming to create a unified, streamlined taxation system across the country.
The implementation of GST generated a host of positive externalities through enhancement in ease of doing business, giving impetus to digitalisation, fostering economic integration via the creation of a single market, and adding to the buoyancy of revenue generation and collection. Similarly, IBC has led to faster resolution of non-performing assets (NPAs) in banks and created a more efficient bankruptcy process, boosting investor confidence and India’s Digital Public Infrastructure (DPI) has emerged as a game-changer in the country’s journey towards a more inclusive and efficient economy. By leveraging digital tools and platforms, DPI has not only enhanced the accessibility of services but also brought transformative benefits across various sectors.
GST Simplified Tax Structure
GST has helped to simplify the taxation structure in real estate transactions by applying a single unified tax system across states. It has encouraged proper invoicing and documentation, thus reducing the scope for tax evasion.
Abolition Of The Angel Tax
The abolition of the angel tax (on investments made by investors in startups) is expected to boost the country’s global innovation and entrepreneurial competitiveness. Expanding the scope of safe harbour rules and streamlining transfer pricing assessment procedures are expected to make the country’s transfer pricing regime more attractive and competitive, boost IT exports, and ease business for Global Capability Centres and the IT services industry.
Read More: Mis-Classification Of Goods Is No Ground Of Confiscation Or Imposition Of Penalty: CESTAT
