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While there was tax googly for the MF industry with respect to equity taxation in the budget 2024, many experts believe it to be positive for overall economy considering the lower fiscal deficit targets and increased capital expenditure.
Here are what experts have said about impact of the Union Budget.
Aashish Somaiyaa, CEO, WhiteOak Capital AMC
What was unexpected was that while rationalizing capital gains structure, we would see a slew of measures that basically increases tax outgo for investors that too long term investors across the asset classes; that’s a negative surprise. Further, we persist with charging tax on onward distribution of tax paid corporate income to its owners by way of taxing dividends and buybacks which can be interpreted as a double tax.
Deepak Ramaraju, Senior Fund Manager, Shriram AMC
On the growth and social agenda, the government has clearly articulated the focus areas like agriculture, employment, skilling, infrastructure, inclusive social growth, manufacturing, infrastructure, urbanization, innovation and next-gen reforms. The budget spending in the years to come will keep adding to these focus areas.
Harshad Patwardhan, CIO, Union MF
The biggest positive from this budget is the government’s reaffirmation that it is committed to its fiscal consolidation plan despite perceived pressures from the coalition partners. It is heartening to see that the government has not diluted its focus on capital expenditure for infrastructure creation. It has, however, brought some rebalancing to its supply side focus with more attention to boost consumption by creating incentives from employment generation and easing credit availability to MSMEs. We believe the time is now ripe for the private sector to pick up the mantle to undertake capital investment to boost growth. While increase in capital market taxation is a bit disappointing, on balance, the budget is expected to prove positive for equity markets from medium to long term perspective.
Rushabh Gandhi, MD & CEO at IndiaFirst Life
This Union Budget is aimed at enhancing employment, skill development, MSMEs, and the welfare of the middle class. By raising the standard deduction and adjusting tax slabs, taxpayers under the new regime will face lower tax burdens, thus improving their disposable income, which bodes well for consumer spending.
The introduction of a clause pertaining to non-deductible expenses in Section 37 for life insurance companies may lead to tax litigation. The proposed hike in Capital Gain Tax is expected to impact the tax liabilities for ULIP policyholders. However, the ULIP holders purchasing policies with premium of less than 2.5 lakh p.a. can continue to avail benefits under Section 10 (10D) and are not liable to pay any tax on maturity.
The decrease in TDS rate from 5% to 2% on policy payouts is anticipated to boost customers' liquidity, which is a welcome move.
Nilesh Shah, MD, Kotak Mahindra AMC
This budget has achieved the trinity of impossible. Fiscal prudence, investment and growth momentum.
Fiscal Prudence of 4.9 % for FY 25 will pave the way for rating upgrade. Support to employment generation will boost growth. Infrastructure investment at 3.4 % of GDP is elevated yet not crowding out others.
Navneet Munot, MD & CEO, HDFC AMC
Budget has focused on continuing SIP i.e. Sustainable development, Inclusive growth and Prudence (fiscal consolidation). Spotlight on job creation will help India reap rewards of its demographic edge.
Swarup Anand Mohanty, Vice Chairman & CEO, Mirae Asset
Given the low penetration of financial assets, consistency of taxes always helps in the long run. The intention of change in slabs in the new tax regime is to spur consumption. The government is also making a clear indication that the new tax regime would be the preferred one going forward.
Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance
As one of the largest employers in the country, the insurance sector will continue to grow and provide employment opportunities, reflecting the expanding needs of our citizens. This budget sets the stage for the insurance industry to play a pivotal role in safeguarding the economic well-being of our citizens and driving sustainable growth."
Venkat Chalasani, Chief Executive, AMFI
The increase in exemption limit for Long Term Capital Gains tax from ₹1 lakh to ₹1.25 lakhs is a welcome change. While the changes in rates for LTCG and STCG were not anticipated, the markets will take them in their stride.
We are happy to note that AMFI’s demand of change in definition of ‘Specified Mutual Funds’ under Section 50AA has been acceded to and will lead to rationalization in taxation for the funds affected hitherto.
