Budget 2024: FM's speech sparks praise for employment scheme, angel tax cut

Budget 2024: Industry experts react to Finance Minister's announcement of three employment-linked incentive schemes, abolition of angel tax, among others

Finance Minister Nirmala Sitharaman on Tuesday presented the Union Budget 2024 in the Lok Sabha. FM Sitharaman said three employment-linked incentive schemes will be launched, based on registration with the Employees’ Provident Fund Organisation (EPFO).

Krishnendu Chatterjee, vice-president and business head at TeamLease Services, says the Centre’s commitment to employment is clear with the launch of these schemes. “The government’s commitment to employment and employability is clear with a Rs 1.48 trillion provision. This initiative, based on EPFO enrollment, focuses on recognising first-time employees and includes direct benefit transfers of the first month’s salary in three installments for salaries up to Rs 1 lakh. Special emphasis is placed on the industrial and manufacturing sectors...”

 

Ankita Ray, partner at Cyril Amarchand Mangaldas, said these schemes would help generate jobs in India. “The three employment-linked incentive schemes are a move in a positive direction for job creation... While we will have to review further details on this (especially on the duration of this incentive etc) this should lower hiring costs for employers.”

Budget 2024: FM announces abolition of angel tax

The Finance Minister said that angel tax for startups will be abolished. She said that this tax would be removed for all classes of investors.

Pallav Pradyumn Narang, partner at CNK, said that the angel tax always involves uncertainty. “The dreaded Angel tax was a barrier to investments in India since this involved a huge amount of uncertainty and potential for litigation. This was made worse when the exemption available to foreign investors was withdrawn. The announced removal of this section will certainly foster investments into businesses and reduce compliances and costs of investments,” Narang said.

Kunal Savani, Partner at Cyril Amarchand Mangaldas, said the Finance Minister’s decision to abolish the angel tax is a major win for India’s startup ecosystem.

“...While the detailed proposal to abolish the 2 per cent equalisation levy would need to be examined in detail, the FM seems to have provided a much-yearned relief to foreign e-commerce operators and foreign crypto exchanges. The abolition of the angel tax is a major win for the Indian startup ecosystem. Especially for young companies, securing early-stage funding is crucial for growth and innovation. This should be especially helpful for attracting investment from outside India...,” Savani said.

Raj Ramachandran, Partner at JSA Advocates & Solicitors, said this is a welcome change. "A welcome change and much anticipated update is the abolition of angel tax in the budget 2024. Since introduction, it has created discomfort and confusion for all players alike, and is certainly one change that will be a welcome one for all," Ramachandran said.

 

Union Budget 2024: Rs 15,000 cr for Andhra Pradesh

During her Budget speech, the finance minister said that the state of Andhra Pradesh announced a budget of Rs 15,000 crore for Andhra Pradesh’s development in the current financial year, with promises of additional funding in the coming years. She reaffirmed the government’s dedication to the Andhra Pradesh Reorganisation Act and committed to providing grants for the state’s underdeveloped regions, particularly emphasising the Polavaram Dam project.
 

Alay Razvi, partner at Accord Juris, said this allocation will help develop infrastructure and improve the overall development of the state.

“The allocation of Rs 15,000 crore for Andhra Pradesh’s new capital is a significant step towards the development and modernisation of the state. This funding will not only boost infrastructure but also enhance economic opportunities and improve the quality of life for the residents...”

Nilaya Varma, co-founder and CEO at Primus Partners, said that the 2024 Budget can be viewed as a transition Budget that helps put private sector at the heart of growth in India. "This budget needs to be seen as a transition budget that puts private sector at the heart of investments and growth, something we had written about in our budget expectation. The budget broadly delivers that same. Budget addresses six key transitions with energy being the most obvious. The other key transition includes supporting skilling to become demand driven not supply oriented; agriculture becoming more market driven; housing reflecting the growing demand for rental market; Rural having urban infrastructure and improved access; and manufacturing growth centred around the support of MSMEs - getting support for easy capital and adoption of technology..."