The biggest negative impact of the Union Budget FY25 announcements within the non-BFSI sector will be on the financial intermediaries such as stock exchanges, brokers and wealth managers. BFSI stands for banking, financial services and insurance.
The short-term capital gains tax has been increased to 20% from 15% and long-term capital gains tax to 12.5% from 10%. Higher taxes would hurt trading demand.
Further, there has been an increase in securities transaction tax (STT) on futures to 0.02% from 0.0125% and also on option to 0.1% from 0.0625%. The single biggest negative for the stock markets is the increase in STT as that can reduce the trading volumes, adversely impacting companies linked to the stock market. Note that an investor or trader has to pay STT whether they make a profit or loss. On the other hand, capital gains tax is paid only when a profit is made.
On the brighter side, affordable housing finance companies stand to gain due to the renewed focus under the PM Awas Yojana Urban 2.0. Aadhar Housing Finance Ltd, Aavas Financiers Ltd, Aptus Value Housing Finance India Ltd and Home First Finance Co. India Ltd should be the prime beneficiaries. For them, the roadmap has become clear as the central government will provide assistance of ₹2.2 lakh crore over the next five years. A provision of interest subsidy to facilitate loans at affordable rates is also envisaged. The scheme seeks to address housing needs of 1 crore urban poor and middle-class families with an investment of ₹10 trillion.
For banks, though the specific details have not been announced, appropriate changes to the Insolvency and Bankruptcy Code (IBC), reforms and strengthening of the tribunal and appellate tribunals will be initiated to speed up insolvency resolution.
Indian banks will get an opportunity to lend more under the Mudra loan scheme and also to MSME. Given that these loans qualify for priority sector lending, it will become easier for banks to meet their targets, especially for small finance banks. Banks can gain from doubling of Mudra loan limit, credit guarantee for MSME etc. The limit of Mudra loans will be enhanced to ₹20 lakh from the current ₹10 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category. For facilitating term loans to MSMEs for purchase of machinery and equipment without collateral or third-party guarantee, a credit guarantee scheme will be introduced.
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