Budget 2024 Expectations and Key Highlights

Updated: Feb 1

Every year on the first day of February, the Finance Minister presents the Union Budget to the Parliament. But what exactly does a ‘Union Budget’ mean? A Union Budget is referred to as the Annual Financial Statement as per Article 112 of the Indian Constitution. It is prepared by the Ministry of Finance for the upcoming financial year. A Union Budget presents the estimated revenues as compiled by the Department of Revenue and estimated expenses as compiled by the Department of Expenditure.

Budget 2024: An Introduction

Difference between Interim Budget and Full Budget

Expectations from Budget 2024

Budget 2023: What was the focus of the last Budget? Most Asked Questions

Frequently Asked Question

The Union Budget is broadcasted live from Sansad Bhawan on DD National, DD News, and Sansad TV. It is presented live without any interruption from 11 A.M. followed by an expert report evaluating the impact of the Budget on every sector. Moreover, the additional budget documents and materials are made available to all over the Government’s website and Union Budget Mobile App.

This article talks about the upcoming Budget 2024. This article discusses the upcoming Budget 2024. Let’s take a deep dive into the article to see what Budget 2024 has in store for everyone.

Budget 2024: An Introduction

The Honorable Finance Minister Nirmala Sitharaman will present an Interim Budget for 2024 on February 1, 2024. Every year, a Full Budget is presented in the Lok Sabha for the upcoming Financial Year. However, 2024 being the year of General Elections, the Full Budget is expected to be presented post elections around July. The Interim Budget which is announced just before the elections, gets the most attention because it decides the poll priorities. This article will provide a glimpse of the upcoming Budget 2024.

Difference between Interim Budget and Full Budget

Usually during the election year, the existing Government presents the Interim Budget unlike a normal Full Budget. The Interim Budget is different from the Full Budget in the following ways:

Expectations from Budget 2024

What is your wishlist from Budget 2024? Check to see if your wishlist matches any of the following Budget 2024 expectations:

Policy and Economy:

To enhance the participation of Private Sectors in Infrastructure development.
To expand the investment in the infrastructure of energy, keeping a focus on green and sustainable energy.

Industries:

Agriculture: To increase digitization in the agriculture sector and strengthen the value chain activity of food processing.
Consumer Industry: To pay royalty to Indian companies for using technological know-how and capabilities in the manufacturing and distribution of technological products and services from foreign service providers. Moreover, to support the retail sectors and implement measures to control inflation and increase consumption.
Education: To simplify the process of obtaining loans in foreign currencies and expedite the clearance process for receiving donations and grants in foreign currencies.
Financial Services and Financial Inclusion: To allow foreign education institutions based in GIFT City to accept student fees in Indian currency. To strengthen Indian Capital Markets by bringing simplicity and clarity in the Indian Capital Gains Tax Regime.
Technology, Media and Telecommunications: To streamline the Advance Pricing Agreement (APA), and Mutual Agreement Procedure (MAP) regulations in order to resolve the backlog of APA applications.
Global Capability Centres: To increase the export incentives for Global Capability Centres (GCCs); and to facilitate development of Tier 2 locations such as Ahmedabad, Kolkata, Coimbatore, and Indore to develop into mature GCC hubs.
Life Sciences and Health Care: The Government may extend the sunset date for the 15% concessional tax rate under Section 115BAB until March 31, 2025 to encourage investment in the manufacturing sector. This will boost exports and strengthen the industry.

Taxation:

Direct Taxation: To propose an extension to the concessional corporate tax rate for new manufacturing companies beyond March 31, 2024. To release settlement schemes or specific guidelines to resolve past tax disputes caused by differing interpretations of tax treaties.
Indirect Taxation: To introduce the Amnesty Scheme and digitize the litigation process under Customs.
Mergers and Acquisition Tax: To implement tax neutrality on swap of shares in case of internal reorganizations under internalization. To introduce tax neutrality for outbound mergers.
Personal Taxation: To ease tax payments and tax obligations for non-residents. To broaden the information captured and presented in the Annual Information Statement of assessee (AIS).
Transfer Pricing: To streamline the Advance Pricing Agreement (APA) scheme to expedite resolutions and remove legal anomalies. To make the tax compliance easier for non-residents transactions.

Future Themes:

Artificial Intelligence (AI): To accelerate research and development for using AI applications in various sectors including taxation. To promote Public-Private Partnership (PPP) model with value-driven AI implementation.
Space: To incentivize the production space-grade components. To develop Digital Public Infrastructure (DPI) for various sectors including agriculture. A budget announcement of a Digital Public Infrastructure (DPI)/Digital Public Goods (DPG) for earth observation will open the way for democratic change of utilization of space technology.
Technology Stack: To implement a Unified Digital Infrastructure to streamline filings under multiple regulations, reducing reporting duplication and reconciling similar data. To further implement Standard Audit File for Tax (SAF-T) for tax digitalization, reducing the time and effort required by tax administration and taxpayers.
Trade 4.0: To accelerate the digital transformation and encourage technology adoption across industries in order to improve trade and operational efficiencies. To develop legal and tax frameworks to streamline business processes and technological progress, thus leading to Trade Facilitation 2.0.
Ease of doing business: To simplify the business ecosystem in India by bringing accountability and transparency of Central and State Government Departments, and strengthening the institutional mechanism for promoting businesses in India.
Supply Chain: To improve the credit access for Micro, Small, and Medium Enterprises (MSMEs) engaged in the manufacturing sector while also reducing the risk of the credit inflows to MSMEs.

Budget 2023: What was the focus of the last Budget?

The Budget 2023 targeted seven areas known as ‘Saptarishi’ which is a guideline through the Amrit Kaal. Following are the seven important elements of or ‘Saptarishi’ of Budget 2023:

Inclusive Development: To implement policies that promote equitable growth for all, reduce disparities, and thus build a more inclusive society.
Reaching Last Mile: The Government aims that its policies and initiatives should reach every nook and corner of the society. Even the most neglected part of the society should reap the benefits of the policies and initiatives of the Government. The Government intended to ‘Reach the Last Mile’ through technological advancements and innovative methods.
Infrastructure Investment: To improve the infrastructure across the nation such as ports, airports, railroads, and roads. This will increase the competitiveness of the country and contribute to economic growth.
Unleashing Potential: To implement reforms in key sectors such as labor, land, and education in order to eliminate challenges to the overall economic growth.
Green Growth: To make further investments in renewable energy, environmental protection, and to counter climate change effects which will in turn promote environmental friendly and sustainable growth.
Youth Power: To unlock the potential of the Nation’s youth through education, job creation, skill development, and entrepreneurship.
Financial Sector: To expand and develop the financial sector by increasing credit access while improving functionality and stability.

FAQ

Q1. Is it mandatory to present the Union Budget each year?

As per Article 112 of the Indian Constitution, the Finance Minister must present a Full Budget to Parliament every year. It should be presented before the beginning of the financial year, that is, 1st April, and latest by the end of February. Therefore, presenting the Union Budget each year is a mandatory requirement as per the Indian Constitution.

Q2. What are the provisions for Interim Budget in the Indian Constitution?

There is no provision for Interim Budget in the Indian Constitution. However, it is a customary practice followed by each Government during the year of elections to present an Interim Budget instead of a Full Budget. The Indian Constitution has a detailed provision for the Full Budget only.

Q3. Explain Vote on Account?

During the General elections, it becomes practically difficult for the Government to prepare a comprehensive Full Budget. Thus an Interim Budget is prepared. Through the Interim Budget, a Vote on Account is passed by the Parliament. The Vote on Account process allows the Government to cover expenses until the new Government is formed. It is a formal endorsement of the fund by the Parliament for facilitating Government expenses during the interim period.

Q4. How long does an Interim Budget remain valid?

The Interim Budget remains valid until the new Government presents the Full Budget. The Interim Budget is usually in effect during the interim period, that is, from February to July. Once the new Government is formed, a Full Budget is presented for the remaining portion of the year.

Q5. Is it compulsory to present a Full Budget after an Interim Budget?

Yes. An Interim Budget serves as a temporary path for the existing Government to address the revenue issues and meet Government expenditures during the interim period. Also, there is no provision for Interim Budget in the Indian Constitution. It is, however, a customary practice, with 14 instances in the past, whereby the incumbent Government presents the Interim Budget during the election period and was replaced with the Full Budget by the new Government later. The new Government is, therefore, duty bound to lay the Full Budget for the remaining period.

Q6. Interim Budget v/s Vote on Account?

An Interim Budget is a plan for the transition period, which lasts until the formation of the new Government. It includes everything similar to a Full Budget like: expenses and revenues estimates, fiscal deficits, financial performance, and projections for the year ahead. However, no major policy changes are implemented in the country through an Interim Budget.

A Vote on Account is passed as part of the Interim Budget specifically to enable the Government for covering expenses during the interim period of election until the new Government is formed. It is formal permission obtained from the Parliament for allocation of funds for incurring Government expenditure. Vote on Account only covers expenditure.

Q7. What is the meaning of Fiscal Consolidation in relation to the Budget?

Fiscal Consolidation refers to the reduction in financial expenditures. To consolidate the deficits, the Government implements policies at National and Sub-National levels whereby measures are taken to increase the Government revenues and decrease its expenses. One of the measures of fiscal consolidation is increase in tax rates whereby the tax collection of the Government is increased.

Q8. What is a ‘Paperless Budget’?

A Budget which is presented using a digital medium is known as a ‘Paperless Budget’. Amidst the rise of COVID-19, the traditional way of presenting the Budgets were swapped with the digital mode and the Budget was presented using a digital tablet for the first time in India in the year 2019. Since then, the Finance Minister presents the budget in a digital format. Instead of a traditional Budget Briefcase containing all budget documents, the budget is carried on a digital tablet in a red pouch with a golden-colored National Emblem embossed on it.

Q9. What is the significance of the ‘Halwa Ceremony’ in the Budget presentation?

It is a customary practice in Indian tradition, to begin anything good with a sweet dish. So is the nexus of ‘Halwa Ceremony’ in the Budget presentation. It marks the end of the budget preparation process and indicates that within a few days the Budget will be presented. As a result, a few days before the presentation of the Budget, the ‘Halwa Ceremony’ takes place. In which, ‘Halwa’ is served to the officials and other support personnel involved in the Budgeting process.

Q10. Explain the ‘Lock-in’ period in the Budget process.

The ‘Lock-in’ period refers to the number of days during which the budget secrecy must be locked or kept secret amongst officials involved in the Budgeting process. During the ‘Lock-in’ period, the officials are not permitted to meet their closed ones until the formal presentation of the Budget. Only after the presentation, the officials are allowed to meet their closed ones, at which point the ‘Lock-in’ period ends.