Finance Minister Nirmala Sitharaman presented the Union Budget 2024 to Parliament, prioritizing support for the underprivileged, women, youth, and farmers. The budget proposes higher spending, job creation programs, and tax relief for the middle class. Significant tax changes include an increase in the Securities Transaction Tax (STT), lower short- and long-term capital gains taxes, and the repeal of the angel tax. In addition, changes to the personal income tax slabs under the New Tax Regime were announced.
Which are the most important announcements?
Ms. Sitharaman presented the Budget and announced that the standard deduction for salaried personnel will increase to ₹75,000 from ₹50,000 under the new income tax regime in FY25. The Union Budget 2024-25 identifies nine priorities for creating abundant opportunities: productivity and resilience in agriculture, employment and skilling, inclusive human resource development and social justice, manufacturing and services, urban development, energy security, infrastructure, innovation, research and development, and next-generation reforms.
The majority of the Union Budget allocation for the Ministry of External Affairs went to India-funded projects in the area. Nepal received an allocation of ₹700 crore, an increase of ₹150 crore from the previous year’s ₹550 crore. Sri Lanka, which has a number of India-funded projects, has received ₹245 crore, an increase of ₹95 crore from last year’s ₹150 crore.
The benchmark Sensex and Nifty finished marginally lower in tumultuous trade on July 23, as the government suggested raising the securities transaction tax on futures and options in the 2024-25 Budget. The 30-share BSE Sensex finished lower by 73.04 points, or 0.09%, at 80,429.04.
Capital Gains Tax
The Finance Minister declared that the tax rate on long-term capital gains on all financial and non-financial assets will be 12.5%, up from 10% previously. Meanwhile, the short-term capital gains tax has been raised to 20% from 15% previously. Additionally, the annual exemption maximum on capital gains will be ₹1.25 lakh.
On F&O
In a huge blow to Futures and Options (F&O) traders, Finance Minister Nirmala Sitharaman said that the STT rate would be raised from 0.01 percent to 0.02 percent. As a result of this budget proposal, equities and index traders will have to pay twice as much tax on their trades.
Let’s look at the primary highlights of the 2024 Budget.
Employment and Skilling
PM Package of 5 Schemes
Finance Minister Nirmala Sitharaman announced a ₹2 lakh crore PM Package, which includes five projects to increase employment and skilling. ₹1.48 lakh crore is allocated for education, employment, and skill development.
Job Creation
The government plans to adopt three programs for employment-related incentives, with a focus on EPFO enrollment and first-time employees. New hires can receive up to ₹15,000 in direct benefit transfers (DBT) in three installments, with a monthly pay ceiling of ₹1 lakh.
This initiative intends to benefit 2.1 lakh youth. Employers would be reimbursed up to ₹3,000 per month for two years for each new employee, with the goal of supporting 50 lakh new jobs and 30 lakh youth. A system will also be launched to provide internships to one crore young people over the next five years, and rental housing for industrial workers would be made available through a public-private partnership.
Customs Duty
The Finance Minister noted that the Indian mobile business has matured and proposed lowering the Basic Customs Duty (BCD) on mobile phones, mobile PCDA (Printed Circuit Design Assembly), and mobile charges to 15%.
The customs tariff on gold and silver will be decreased to 6%, and platinum to 6.4%.
BCD will increase from 10% to 15% on printed circuit board assemblies used in particular telecom equipment.
FM waives customs charges on 25 key minerals and reduces BCD for two of them.
MSMEs and Manufacturing
A new initiative would make it easier for MSMEs to get term loans to buy machinery and equipment without having to put up collateral. A guarantee fund worth up to ₹100 crore would be established to promote credit guarantees for MSMEs in the manufacturing sector.
She also launched a technological support package for MSMEs and stated that SIDBI will establish 24 new branches to serve MSME clusters.
Women Empowerment
Over ₹3 lakh crore has been allocated for projects aimed at increasing women’s workforce participation. This involves establishing hostels and developing women-specific skilling programs.
Agriculture & Rural Development
Agriculture Sector
₹1.52 lakh crore would be dedicated to agriculture and related sectors. A complete assessment of agricultural research will be conducted in order to increase production and generate climate-resilient cultivars.
Rural Development
₹2.66 lakh crore will be set up for rural development programs.
Over the course of two years, the initiative aims to expose one crore farmers to natural farming.
Bihar and Andhra Pradesh
Assistance to Bihar
The budget will speed up the Bihar government’s request for foreign aid from multilateral development banks. Bihar will receive funding for new airports, medical facilities, sports infrastructure, and roadways totaling ₹26,000 crore.
Financial Assistance for Andhra Pradesh
Andhra Pradesh will receive ₹15,000 crore and more funds in future years to help the Pollavaram irrigation project and other economic growth initiatives.
Financial initiatives
Mudra Loans
Mudra loans will now have a cap of ₹20 lakh, up from ₹10 lakh for people who have previously repaid their loans.
Higher Education Loans
The government would provide financial support for loans up to ₹10 lakh for higher education. E-vouchers will be issued directly to 1 lakh students annually, with a 3% APR subsidy.
The Insolvency and Bankruptcy Code (IBC)
An integrated technology platform will be established to improve outcomes under the IBC, enabling greater consistency, openness, and oversight. The IBC has resolved over 1,000 firms, recovering ₹3.3 lakh crore for creditors and settling 28,000 cases worth over ₹10 lakh crore before admission.
FDI rules will be simplified further
The Finance Minister announced that procedures and recognition for Foreign Direct Investments (FDIs) will be streamlined to encourage their influx.
Infrastructure and Development
Infrastructure
An additional ₹26,000 crore would be earmarked for road connection projects.
Critical Mineral Mission
A mission to recycle essential minerals and make abroad purchases will be launched, with plans to auction off the first batch of offshore mining areas.
Affordable housing
₹10 lakh crore would be invested to meet the housing needs of 1 crore urban poor and middle-class families. The PM Surya Ghar Muft Bijli Yojana would install rooftop solar panels in one crore houses.
Nuclear and Space
According to FM, the government will work with the business sector to establish Bharat small reactors, conduct research and development on Bharat small modular reactors, and create innovative nuclear energy technologies.
She also mentioned that there will be a continuous emphasis on increasing the space economy fivefold over the next ten years. A ₹1,000 crore venture capital fund will be established to help achieve this goal.
Budget Estimates for FY25
- The fiscal deficit is estimated to be 4.9% of GDP, down from 5.1% in the interim budget.
- FM seeks to achieve a budget deficit of less than 4.5% by FY26.
- Market borrowing fell to ₹14.01 lakh crore from ₹15.43 lakh crore in FY24.
- FY25 receipts totaled ₹32.07 lakh crore.
- FY25 expenditure is estimated at ₹48.21 lakh crore.
Wrapping It Up
The Union Budget 2024-25, with its broad approach to tax reform and economic growth, would ideally lay the groundwork for India’s long-term financial stability and inclusion.
FAQs
What is India’s budget in 2024-25?
FY25 total receipts are estimated at ₹32.07 lakh crore. FY25 total expenditure is predicted at ₹48.21 lakh crore. Net tax collections are estimated at ₹25.83 lakh crore.
What about MSMEs in the 2024 budget?
The Budget for 2024-25 prioritizes MSMEs, particularly labor-intensive manufacturing, through finance, regulatory adjustments, and technological support. This focus is viewed as critical to the sector’s survival and growth.
What are the three main aspects of a budget?
Any successful budget must integrate three key elements: people, data, and process.
What sectors will profit from the budget in 2024?
We remain optimistic about investing in India, and we believe that the policies mentioned in this budget will boost sectors such as manufacturing, infrastructure, MSME/mortgage finance, and consumption.
What is the new tax regime for 2024?
The Union Budget 2024 makes significant reforms to personal finance, benefiting a huge number of taxpayers. The rise in the standard deduction from Rs 50,000 to Rs 75,000, as well as the modification of the 5% tax slab ceiling from Rs 5 lakh to Rs 7 lakh, will significantly increase disposable income.
Who funds MSMEs in India?
MUDRA is a non-banking financial company (NBFC) that promotes the growth of MSMEs. MUDRA supports banks, microfinance institutions (MFIs), and NBFCs in making loans to micro units with loan requirements of up to 10 lakhs.
What is the new MSME scheme?
Credit-linked subsidy scheme for establishing new microenterprises in the non-farm sector. The margin money subsidy ranges from 15% to 35% of project cost for projects up to Rs. 50 lakh in the manufacturing sector and Rs. 20 lakh in the service sector.
What is the fiscal year of 2024?
The fiscal year runs from 1 April 2024 to 31 March 2025.
What is the 50 30 20 rule?
The 50-30-20 guideline advocates allocating 50% of your money to needs, 30% to wants, and 20% to savings. The savings category also includes money for future aspirations.
What is a budget of five points?
A budget is basically a spending plan that accounts for projected current and future income and expenses over a specific time period, typically a year. A budget keeps your spending under control and ensures that your savings are on track for the future.
