With national elections on the horizon, the Government of India (GOI) is poised to unveil the interim budget for the fiscal year 2024-25 on 1st February 2024. While the upcoming budget is anticipated to be a vote on account, GOI is expected to foster its vision of Amrit Kaal by emphasising a technology-driven knowledge-based economy and inclusive development. In its vision of becoming the world’s third-largest economy by the end of this decade, India has emerged as the fastest growing economy and a global manufacturing hub fueled by initiatives such as 'Make in India', production-linked incentives, skill development, supply chain diversification, etc. Notably, the e-commerce market and fintech startups have significantly contributed to the GDP, showcasing economic resilience. Amid fiscal consolidation, the budget is expected to focus on capex, digital innovation and infrastructure development.
On the indirect taxes front, the Government has made significant strides in streamlining compliances and litigation frameworks. These encompass clarifications on GST reporting, demarcation of part of built-up area of IT/ITeS SEZs as non-processing areas, launch of ICEGATE 2.0 portal and the constitution of GST appellate tribunals. It is anticipated that GOI will settle the dust on prevailing litigative issues with divergent views in different sectors to alleviate persisting ambiguities and advance towards revamping the rehashed SEZ framework.
Given recent GST changes affecting the online gaming industry and casinos, subsequent influx of notices and pleas from sector players, it is anticipated that ongoing tax-related concerns may be addressed. Additionally, a clear regulatory framework and increased investment in digital infrastructure is predicted for this industry being one of the prominent sectors in India's startup ecosystem. With the recent introduction of the definition of Virtual Digital Assets (VDAs) under GST legislation and its growing prominence, its taxability along with that of cryptocurrency is expected to be an area of focus.
This article first appeared in Taxsutra on 31 January 2024.