Post Budget reaction on Real Estate by Himanshu Sinha, Partner and Head of Tax Practice, Trilegal

New Delhi, February 01, 2025: The Finance Bill 2025 proposals mark a directional shift towards a growth strategy based on consumption rather than government led capital expenditure. In the last few years the government has made significant investment in infrastructure to boost growth. This was necessitated by softness in private investment evidenced by slow capex and credit growth. While the growth figures have been encouraging, the government’s ambition of achieving growth rates close to double digits remains a far cry. This budget demonstrates a change of gear – a greater reliance on private sector and domestic consumption to boost higher levels of growth. The government has projected a revenue reduction of 13 billion US$ on account of reduction of personal income tax and corresponding reduction in government capital expenditure.

Reduction in personal income taxes is likely to jumpstart discretionary spending in sectors like automobiles, FMCG, travel and tourism, quick commerce and affordable housing. One can expect increased investments and M&A in these sectors by large MNCs and funds.

Lowering of individual taxes coupled with commitment to keep fiscal deficit in check through reduced debt displays prudence and is likely to boost sovereign ratings for India leading to increased foreign inflows of capital.

The amendments proposed for improving the tax certainty for MNCs by bringing in block transfer pricing assessments for three years in one go and expansion of safe harbour provisions is likely to improve the foreign investors sentiment. Similarly, reduction of customs tariff structure from 15 to 8 and proposals to improve the ease of mergers and acquisitions will likely enhance pace of investor activity.

On the whole, the budget proposals demonstrate clear strategic thinking, a commitment to prudence and improving the momentum for enhancement of country’s investment climate.

Corporate Comm India (CCI Newswire)