The way taxes are structured has a significant impact on how both businesses and individuals operate. Tax policies affect decisions about investments, business growth, job opportunities, and the overall performance of the economy. Because of this, the 2024 Budget needs to focus on making specific changes to the tax system that will encourage innovation, entrepreneurship, and long-term economic success.
In the Budget 2024, one of the critical areas that need attention is the corporate tax structure. Having a competitive corporate tax rate will encourage entrepreneurial investments, while making India a more central destination for multinational corporations and encouraging established enterprises to expand their operations. Lowering the corporate tax rate will incentivize businesses to invest in new ventures, research and development activities, and create employment opportunities.
In addition to the corporate tax rate, the Budget for 2024 should consider introducing tax incentives and credits to promote investment in key industries such as technology, renewable energy, and infrastructure development. Targeted tax benefits for companies involved in these sectors will pave the way for sustainable growth in high-potential areas.
Needless to say, the focus of tax reforms in the Budget 2024 should be on creating a business-friendly environment while also ensuring fiscal sustainability. While doing business has been greatly simplified since I started Unicel, my first company, in 2003, there is still some way to go. So, the biggest item on my Budget 2024 wishlist, though, is to simplify the tax compliance process for businesses. Complicated tax regulations and administrative procedures are a significant burden for companies, particularly small and medium-sized enterprises. By simplifying the tax code and reducing compliance costs, we can ease the administrative burden on businesses, freeing up resources that can be deployed for more productive activities. A more efficient and transparent tax system will not only benefit businesses but also improve overall tax compliance and revenue collection. The tax reforms should be fair and balanced, with the aim of supporting business growth and job creation, stimulating investment, and ensuring the long-term sustainability of the economy.I would also like to see measures to support small and medium-sized enterprises (SMEs), which play a crucial role in driving broad-based economic growth and employment. Introducing tax relief programs such as tax credits for hiring new employees or investing in technology upgrades, can offer much-needed support to these businesses. By strengthening the resilience and competitiveness of SMEs, the government can contribute to a more diverse and dynamic business environment. This, in turn, can help boost economic growth and create more jobs, while also protecting local businesses from foreign competition.Another important aspect of tax reform in the Budget 2024 is related to international tax policies. With the growing globalisation of business operations, it is essential to review tax treaties and agreements to avoid double taxation and ensure fair treatment of cross-border transactions. By updating international tax rules and promoting cooperation with other countries, the government can enhance investor confidence and facilitate smoother cross-border trade and investment.
Strategic tax reforms must be accompanied by responsible fiscal management to maintain overall economic stability. It’s important to consult extensively with stakeholders, including businesses, industry associations, and tax experts, to gather diverse perspectives and insights for the design and implementation of effective tax policies. The government should strive to maintain fair and equitable tax policies while avoiding unintended consequences, and also ensure that the public is well-informed about the purpose and implications of the tax policies.
As an individual, in light of the current high inflation rate and increasing GST base, I would also like to see the budget put money back into the hands of individuals, either through lowered rates or increasing the slabs. In my view, this would be a better approach than incentivising certain forms of investments, such as ELSS or PF or home loan repayments, to get tax breaks.
In conclusion, the Budget 2024 is an important opportunity to prioritise tax reforms aimed at creating a better environment for businesses to succeed. By addressing key issues such as corporate tax rates, targeted incentives, simplifying tax compliance, supporting small and medium-sized enterprises (SMEs), modernizing international tax policies, policymakers can lay the groundwork for sustained economic growth, job creation, and enhanced competitiveness. The decisions made in the Budget 2024 can also be continued and tweaked over the next 4 budgets, enabling consistency and certainty. Therefore, the Budget 2024 must include a comprehensive set of tax reforms to ensure the long-term success of the economy.
The writer is Founder and CEO of Hubler.
