Business News at 05:30 pm on 23nd July, 2024

Let’s begin, on Tuesday, Indian markets fell to their intra-day lows, reacting to Finance Minister Nirmala Sitharaman’s announcement on STT in Union Budget 2024. The Government has hiked capital gains tax, STT. As a direct impact, the Nifty 50 plunged 353.10 points, or 1.44%, closing at 24,156.15. The BSE Sensex dropped 1,058.98 points, or 1.32%, settling at 79,443.10. The Nifty Midcap index experienced a significant decline as well, falling over 3% or 1,891.32 points to 54,733.50. Whereas the Nifty CPSE index falls over 3% to intra-day low of 6,726.65 on the other hand S&P BSE PSU index fell over 3.5% to day lows of 20,795.27 led by all PSU stocks including HAL, BHEL, Mazagon dock, Cochin Shipyard, PFC, ONGC, RVNL, IRCTC and more.
Moving to revised Income Tax slabs: In the Union Budget 2024-25, Finance Minister Nirmala Sitharaman has announced a comprehensive review of the Income Tax Act. The FM has proposed easing taxation norms for individuals and entities. Presenting the Union Budget for 2024-25, Finance Minister Nirmala Sitharaman also said the government will come out with standard operating procedure for TDS defaults and simplify and rationalise compounding of such offences. Quote To simply taxation, we have taken a number of measures in the last few years unquote Sitharaman further said. For the last fiscal, more than two-thirds have availed the new income tax regime, she added. FM Sitharaman also proposed raising the long-term capital gains to 12.5% from 10% in the Budget 2024-25.
Now update on Angel Tax! In one of the biggest announcements of her seventh consecutive Budget speech, Nirmala Sitharaman proposed to abolish the “Angel Tax”. Contrary to its misleading name, Angel Tax does not provide tax relief. It operates under Section 56(2)(viib) of the Income Tax Act, 1961, treating investments received by startups from external investors as quote income from other sources unquote and then, subjecting it to a 30% tax rate. So, this has come as a relief for the Indian startup ecosystem. Angel tax applies to capital raised by unlisted companies through share issuance to Indian investors. If the share price exceeds the fair market value of the company, the surplus amount is treated as income and taxed accordingly.
Over to schemes, Finance Minister Nirmala Sitharaman unveiled three employment-linked schemes during her presentation of the Union Budget for 2024-25 in the Lok Sabha. These initiatives, she explained, are designed to leverage enrolment in the Employees’ Provident Fund Organization. Scheme A aims to provide one month’s wage to new entrants across all sectors joining the workforce. Meanwhile, Scheme B focuses on incentivizing additional employment in the manufacturing sector, particularly targeting first-time employees. Sitharaman highlighted that incentives will be directly provided to employees and employers based on EPFO contributions over the first four years of employment, benefiting an estimated 30 lakh youth and their employers. Ahead of the Union Budget, the Department for Promotion of Industry and Internal Trade had proposed to eliminate the levy on startups.
Next from Market, Shares of ITC experienced a notable gain of over 4% on Tuesday, making significant contributions to the Nifty index’s upward movement. The stock is adding close to 40 points, helping to mitigate broader index losses. The surge in ITC’s shares comes in response to Finance Minister Nirmala Sitharaman’s budget speech, during which no changes were announced regarding tobacco taxation. This decision has been welcomed by ITC, a company that derives a significant portion of its revenue from cigarettes. The current rates were left unchanged following a 16% increase in National Calamity Contingent Duty imposed last year. ITC’s shares have shown little movement on a year-to-date basis and have remained relatively flat over the past 12 months, following a strong performance in 2022 and 2023.
Heading to Infra news, Finance Minister Nirmala Sitharaman is currently presenting the Union Budget 2024 in Parliament. She opened her speech by emphasising that India’s economic growth remains robust despite the persistent policy uncertainty in the global economy. Talking about infrastructure, Sitharaman announced a capital expenditure of Rs 11.11 lakh crore to support the development of infrastructure over the next five years, same as the allocation announced in the Interim Budget earlier this year. Infrastructure is one of the nine priorities of the Union Budget the FM announced today. Quote The government endeavours to maintain strong fiscal support for infrastructure over the next 5 years. Capital expenditure to be Rs 11,11 lakh crore at 3.4% of our GDP unquote she said in her speech.
Lastly, let’s have a look at how the market performed today. Markets end lower on Budget Day. Nifty below 24,500, Bank Nifty sheds over 500 points. As Nirmala Sitharaman presented the budget for FY25, markets dived deep into the red as the short-term capital gains tax was revised to 20 percent. The long-term capital gains tax was revised to 12.5%.