India Union Budget 2024 Key Takeaways

In presenting the Union Budget 2024, Finance Minister Nirmala Sitharaman’s seventh budget, several boosters were announced for various sectors. She highlighted that India’s economic growth remains a standout and is expected to continue in the coming years. However, she also pointed out significant downside risks to growth and potential upward pressure on inflation.

The budget laid out nine priorities for this year and coming years. They are:

• Productivity and resilience in Agriculture
• Employment and skilling
• Inclusive HRD and social justice
• Mfg & services
• Urban development
• Energy security
• Infra
• Innovation, R&D
• Next generation reforms

There is a need to focus on the garib, mahilaye, yuva and annadata, said the FM. One of the top Budget highlights pertained to a PM Package of 5 schemes to facilitate employment and skilling at an outlay of Rs 2 lakh crore.

Tax

In new tax regime, the tax rate structure will be revised. Below is the new structure:

• 0-3L Zero
• 3-7L 5%
• 7-10L 10%
• 10-12L 15%
• 12-15L 20%
• 15 & above, 30%

Finance Minister announced that salaried employees in the new tax regime will save up to Rs 17,500 in income tax. The monetary limits for filing appeals related to direct taxes, excise, and service tax have been increased to Rs 60 lakh for Tax Tribunals, Rs 2 crore for High Courts, and Rs 5 crore for the Supreme Court. Additionally, to enhance social security benefits, the employer’s contribution deduction towards NPS is proposed to increase from 10% to 14% of the employee’s salary.

Stock markets

Long-term capital gains on all assets will now be taxed at 12.5%, with an exemption limit set at Rs 1.25 lakh per year. The Finance Minister also announced an increase in the Securities Transaction Tax (STT): from 0.0125% to 0.02% on futures, and from 0.0625% to 0.10% on options. Additionally, the 20% TDS on repurchases by mutual funds or UTI is proposed to be withdrawn.

Economy & Fisc

The fiscal deficit for the year is estimated at 4.9% of GDP. The government will maintain strong fiscal support for infrastructure, with Rs 11.11 lakh crore allocated for capital expenditure, amounting to 3.4% of GDP.

Govt’s expenditure under major heads

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

Agriculture

Giving a big boost to the agriculture sector, the Finance minister said that the government will undertake a comprehensive review of the agricultural research setup to increase productivity and develop climate-resilient varieties. Domain experts will oversee the conduct of this research to ensure its effectiveness and relevance.

Jobs

The Budget announced a focus on increasing women’s workforce participation by setting up hostels and organizing women-specific skilling programs. Job creation in manufacturing will be incentivized through a scheme linking incentives to the employment of first-time employees, covering EPFO contributions for the first four years. The scheme aims to benefit 30 lakh youth, cover additional employment in all sectors, and incentivize the employment of 50 lakh people by reimbursing employers up to Rs 3,000 per month for two years per additional employee.

Big Skilling move

The Finance Minister announced employment-linked skilling schemes as part of the PM’s package, focusing on first-time employees enrolled in the EPFO. First-timers will receive a direct benefit transfer (DBT) of one month’s salary, up to Rs 15,000, in three instalments, with an eligibility limit of Rs 1 lakh per month. This is expected to benefit 2.1 lakh youths. A PM Package of five schemes, with an outlay of Rs 2 lakh crore, will facilitate employment and skilling.

Education

The Budget announced financial support for loans up to Rs 10 lakh for higher education. This year, a provision of Rs 1.48 lakh crore has been made for education, employment, and skilling.

FDI

It was announced that the rules and recognition for Foreign Direct Investments (FDIs) will be simplified to facilitate their inflow. This move is aimed at prioritising and promoting the use of the rupee for overseas investments.

Corporate tax

The Finance Minister announced a cut in the corporate tax rate for foreign companies, reducing it from 40% to 35% in the FY25 Budget.

Startups: Angel tax

In a major move, Finance Minister Nirmala Sitharaman announced the abolishment of Angel tax. This abolition is for all investor classes.

Telecom

The duty on printed circuit board assemblies (PCBA) for specific telecom equipment will increase by 10-15%. The duty on mobiles and accessories, including PCDA and chargers, will be reduced to 15%.

Customs duty

India, the second-largest consumer of bullion in the world, cut import levies on gold and silver from 15% to 6%. Industry officials say this could increase retail demand and assist reduce smuggling. Increased Indian demand for gold could drive up world prices, which broke records this year, but it could also increase India’s trade deficit and weaken the rupee.

Providing significant relief to cancer patients, Nirmala Sitharaman waived customs duties on three cancer medications. Osimertinib, Durvalumab, and Trastuzumab Deruxtecan are the three medications.

GST

The Finance Minister proposed rationalizing the GST tax structure to further enhance its benefits. GST has already reduced tax incidence for the public and eased compliance for industry, marking significant success.

Realty sector

Under the PM Awas Yojana, Urban 2.0, the housing needs of the urban poor and middle class will be addressed with an investment of Rs 10 lakh crore. A Rs 2.2 lakh crore push to make housing more affordable was announced. States charging high stamp duty will be encouraged to moderate their rates for all, it was announced in the Budget. Additionally, further reductions in duties for properties purchased by women will be considered. These measures will also be incorporated as essential components of urban development schemes, the FM said.

Indexation bonus on property sale

The 2024 budget announced the elimination of the indexation bonus for property sales. Long-term capital gains on real estate will now be taxed at 12.5% without indexation, replacing the previous 20% rate with indexation benefit.

NPS for minors

The NPS Vatsalya programme will be made made available for parents to invest in on behalf of their children. The account may be passed to the child after they reach adulthood.

Space economy

There will be a continued emphasis on expanding the space economy by five times over the next 10 years. To facilitate this target, a venture capital fund of Rs 1,000 crore will be established, the FM announced.

Infra

Budget 2024 proposes Rs 2.66 lakh crore for rural development and a Rs 26,000-crore boost for road connectivity projects. It includes the sanctioning of 12 industrial parks and the launch of Phase IV of Pradhan Mantri Gram Sadak Yojana to provide all-weather connectivity to 25,000 eligible rural habitations.

Urban infra

Street Markets: Envisioning a scheme to develop 100 weekly ‘haats’ or street food hubs in select cities. Transit Oriented Development: Transit Oriented Development plans for 14 large cities with a population above 30 lakh. Water Management: Promote water supply, sewage treatment and solid waste management projects and services for 100 large cities through bankable projects

R&D push

A mechanism will be set up to spur private-driven research at a commercial scale, supported by a financial pool of Rs 1 lakh crore. This move had been first announced in February.

Power and nuclear energy

The govt will partner with the private sector for setting up Bharat small reactors, research and development of Bharat small modular reactors & research and development of newer technologies for nuclear energy. It was also announced that a policy document on energy transition pathways will be released, with a stress on employment and sustainability.

Entrepreneurship

The Finance Minister announced that the limit of MUDRA loans will be enhanced to Rs 20 lakh from the current Rs 10 lakh for those who have availed and successfully repaid loans under the TARUN category.

IBC

An integrated tech platform will be set up to improve outcomes under the Insolvency and Bankruptcy Code (IBC). This platform will aim to achieve greater consistency, transparency, and better oversight for all stakeholders, including the National Company Law Tribunal (NCLT).

Critical minerals

A critical mineral will be mission set up for the recycling of critical minerals and their overseas acquisitions, the FM announced. The government will launch the auction of the first tranche of Offshore blocks for mining, building on the exploration already carried out.

Defence

The defence outlay has been set at Rs 4.56 lakh crore, compared to Rs 4.55 lakh crore previously.

Small businesses

On credit guarantee schemes for MSMEs in manufacturing, FM said, “to facilitate term loans for MSMEs for the purchase of machinery and equipment without collateral and guarantee, a new scheme will be introduced. This guarantee fund will provide guarantees of up to Rs 100 crore.”

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