Budget 2024: Finance Minister Nirmala Sitharaman’s seventh budget introduced a series of boosters for various sectors. In her budget speech, Sitharaman stated that India’s economic growth continues to be a standout and will remain so in the coming years. However, she also highlighted significant downside risks to growth and upward pressures on inflation.

Here are the key takeaways of the Union Budget 2024-25:

Tax:

• Finance Minister Nirmala Sitharaman announced changes to the new tax regime, proposing to increase the standard deduction from Rs 50,000 to Rs 75,000.
• The revised tax rate structure in the new tax regime will be:
  • 0-3L: Zero
  • 3-7L: 5%
  • 7-10L: 10%
  • 10-12L: 15%
  • 12-15L: 20%
  • 15L and above: 30%
• The Finance Minister stated that salaried employees in the new tax regime will save up to Rs 17,500 in income tax.
• Monetary limits for filing appeals related to direct taxes, excise, and service tax in the Tax Tribunals, High Courts, and Supreme Court have been increased to Rs 60 lakh, Rs 2 crore, and Rs 5 crore respectively.
• To improve social security benefits, the deduction of expenditure by employers towards the National Pension System (NPS) is proposed to be increased from 10% to 14% of the employee’s salary.
• The TDS rate on e-commerce operators is proposed to be reduced from 1% to 0.1%. Additionally, credit of TCS is proposed to be given in the TDS to be deducted on the salary.

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Stock Markets:

• Long-term capital gains on all financial and non-financial assets will be taxed at a rate of 12.5%. The exemption limit for capital gains will be set at Rs 1.25 lakh per year.
• The Securities Transaction Tax (STT) on Futures will increase from 0.0125% to 0.02%, and the STT on Options will rise from 0.0625% to 0.10%.
• The 20% TDS on repurchase by Mutual Funds (MF) or Unit Trust of India (UTI) is proposed to be withdrawn.
• Key changes include:
  • Short-term capital gains (STCG) on certain assets will attract a 20% tax rate, while all other financial and non-financial assets will be taxed at the applicable tax rate.
  • The capital gains exemption limit will be increased to Rs 1.25 lakh per year.
  • Long-term capital gains (LTCG) on specified assets will be increased to 12.5%.
  • Unlisted bonds and debt mutual funds will continue to be taxed at the applicable tax rate.

Economy & Fiscal:

• The fiscal deficit for the year is estimated at 4.9% of GDP, according to the Budget presented by Finance Minister Nirmala Sitharaman.
• The government announced a strong fiscal support for infrastructure, allocating Rs 11.11 lakh crore for capital expenditure, which constitutes 3.4% of India’s GDP.
• Due to an increase in tax revenue, the government has reduced its projected borrowings for the current fiscal year to 14.01 lakh crore. To achieve the desired budget deficit, the government plans to issue dated securities for borrowing.

Government Expenditure Under Major Heads:

• Defence: Rs 4,54,773 crore
• Rural Development: Rs 2,65,808 crore
• Agriculture and Allied Activities: Rs 1,51,851 crore
• Home Affairs: Rs 1,50,983 crore
• Education: Rs 1,25,638 crore
• IT and Telecom: Rs 1,16,342 crore
• Health: Rs 89,287 crore
• Energy: Rs 68,769 crore
• Social Welfare: Rs 56,501 crore
• Commerce & Industry: Rs 56,501 crore

Agriculture:

• To boost the agriculture sector, the government will conduct a comprehensive review of the agricultural research setup to increase productivity and develop climate-resilient crop varieties. Domain experts will oversee this research to ensure its effectiveness and relevance.

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Jobs:

• The Budget prioritizes increasing women’s participation in the workforce. This will be facilitated by setting up hostels and creating partnerships to organize women-specific skilling programs.
• Job creation in the manufacturing sector will be incentivized through a scheme linked to the employment of first-time employees. This scheme will provide incentives to both employees and employers regarding EPFO contributions for the first four years of employment.
• The scheme is expected to benefit 30 lakh youth and cover additional employment in all sectors. The government will reimburse employers up to Rs 3,000 per month for two years towards EPFO contributions for each additional employee.
• The initiative aims to incentivize the additional employment of 50 lakh people.

Big Skilling Move:

• The Finance Minister announced employment-linked skilling schemes as part of the PM’s package. These schemes will be based on enrolment in the EPFO, focusing on recognizing first-time employees.
• First-time employees will receive one month’s wage upon entering the workforce in all formal sectors. A direct benefit transfer (DBT) of one month’s salary, up to Rs 15,000, will be provided in three installments.
• The eligibility limit for this benefit will be a salary of Rs 1 lakh per month, and it is expected to benefit 2.1 lakh youths.
• A PM Package of five schemes will be announced to facilitate employment and skilling, with an outlay of Rs 2 lakh crore.

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