Union Budget 2024-25 Key Highlights and takeaways

Union Finance Minister Smt. Nirmala Sitharaman presented the Union Budget 2024-25 in the parliament today. This will be the first budget of Prime Minister Narendra Modi’s third term in the government and the seventh budget that is presented by FM Sitharaman. The budget 2024 is expected to provide focus on the government’s roadmap for ‘Viksit Bharat’ by 2047( union govt’s plan to make India a developed nation till 2047- 100th year from Independence)

FOCUS OF BUDGET

• ‘Garib’ (Poor)
• ‘Mahilayen’ (Women)
• ‘Yuva’ (Youth)
• ‘Annadata’( Farmer)

BUDGET THEME

• Employment
• Skilling
• MSMEs
• Middle Class

BUDGET 2024: SIMPLYFYING NEW INCOME TAX REGIME

INCOME TAX SLABS

Income Tax slabs for FY 2024-25 have been revised. The new income tax regime tax slabs are:

• Up to Rs 3 lakh the tax is NIL
• From Rs 3 lakh to Rs 7 lakh the tax rate is 5%
• From Rs 7 lakh to Rs 10 lakh the tax rate is 10%
• From Rs 10 lakh to Rs 12 lakh the tax rate is 15%
• From Rs 12 lakh to Rs 15 lakh the tax rate is 20%
• Above Rs 15 lakh income the tax rate is 30%

OTHER KEY POINTS:

• Savings upto ₹17,500: Salaried taxpayers stand to gain up to ₹17,500 on income above ₹15 lakh. This saving is accumulation of saving across income slabs and additional standard deduction, thus adding to total savings.
• Standard Deduction for salaried employees increased from ₹50,000 to ₹75,000.
• Deduction on family pension for pensioners increased from  ₹15,000 to ₹25,000.

MANUFACTURING & SERVICES

• Mudra Loans: The limit enhanced to ₹ 20 lakh from the current ₹ 10 lakh (for entrepreneurs who have successfully repaid previous loans under the ‘Tarun’ category).
• Credit Support to MSMEs during Stress Period.
• New assessment model for MSME credit.
• Credit Guarantee Scheme for MSMEs in the Manufacturing Sector (a separately constituted self-financing guarantee fund will provide, to each applicant, guarantee cover up to Rs 100 crore, while the loan amount may be larger).
• Enhanced scope for mandatory onboarding in TReDS (Trade Receivables electronic Discounting System).
• MSME Units for Food Irradiation, Quality & Safety Testing .
• Twelve industrial parks under the National Industrial Corridor Development Programme.
• E-Commerce Export Hubs to be set up in PPP mode to enable MSMEs and traditional artisans to sell their products in international markets.
• Critical Minerals Mission for domestic production, recycling and overseas acquisition.
• Internship Opportunities: Scheme for providing internship opportunities in 500 top companies to 1 crore youth in 5 years and Allowance of  ₹5,000 per month along with a one-time assistance of ₹6,000 through the CSR funds. 

INFRASTRUCTURE

• Provision of  ₹11,11,111 crore for infrastructure (3.4% of GDP- CAPEX of the govt. amount same as the interim budget).
• ₹1.5 lakh crore to states as long term interest free loans to support resource allocation.
• Phase IV of PMGSY will be launched to provide allweather connectivity to 25,000 rural habitations.

INFRASTRUCTURE IN TOURISM

• Development of Vishnupad Temple Corridor and Mahabodhi Temple Corridor modelled on Kashi Vishwanath Temple Corridor.
• Comprehensive development initiative for Rajgir will be undertaken which holds religious significance for Hindus, Buddhists and Jains.
• The development of Nalanda as a tourist centre besides reviving Nalanda University to its glorious stature.
• Assistance to development of Odisha’s scenic beauty, temples, monuments, craftsmanship, wildlife sanctuaries, natural landscapes and pristine beaches making it an ultimate tourism destination.

ENERGY SECURITY

• PM Surya Ghar Muft Bijli Yojana:
• 1 crore Households to obtain free electricity
• Up to 300 Units every month
• 1.28 crore Registrations and 14 lakh applications so far.
• Initiatives with private sector in  Nuclear Energy :
• • Setting up Bharat Small Reactors.
• • R&D of Bharat Small Modular Reactor and  newer technologies for nuclear energy.
• Energy Audit :
• Financial support for shifting of micro and small industries to cleaner forms of energy.
• Facilitate investment grade energy audit in 60 clusters,  next phase expands to 100 clusters.
• AUSC ( Advanced Ultra Supercritical) Thermal  Power Plants:
• A joint venture between NTPC and BHEL will set up a full scale 800 MW commercial plant.
• Pumped Storage Policy:
• For electricity storage and facilitation of smooth integration of the growing share of renewable energy.

TAX PROPOSALS

• Simplification in Taxes: Review of Income Tax Act 1961, Simplification of charities and TDS, Litigation and Appeal, Deepening the tax base.
• Sector Specific Customs Duty Proposals: Comprehensive review of the rate structure for ease of trade, removal of duty inversion and reduction of disputes.
• Changes in Custom Duty                                          Beneficiaries

DIRECT TAX PROPOSAL

To reduce the compliance burden, promote entrepreneurial spirit and provide tax relief to citizens

• Rationalisation of capital gains:
• Short term gains of financial assets to attract 20% tax rate
• Long term gains on all financial an non-financial assets to attract a tax rate of 12.5% 
• Increase in limit of exemption of capital gains on financial assets to ₹1.25 lakh per year
• Employment and Investment:
• Abolish ANGEL tax for all classes of investors
• Simpler tax regime to operate domestic cruise
• Provide for safe harbour rates for foreign mining companies (Selling raw diamonds)
• Corporate tax rate on foreign companies reduced from 40% to 35%

EXPENDITURE OF MAJOR ITEMS (In decending order)

Expenditure for FY25 seen at 48.21 lakh crore

ALLOCATION TO MAJOR SCHEMES ( In ₹ Crore)

           Scheme                                          2023-24(BE)                              2024-25(BE)

SPECIAL FOCUS ON EDUCATION

• Financial support for loans up to & 10 lakhs for higher education.
• Revision of Model Skill Loan Scheme to help 25,000 students every year.
• E- vouchers for loans up to & 10 lakh for 1 lakh students annually, with 3% interest subvention for higher education.

OTHER IMPORTANT KEY HIGHLIGHTS

• Custom duties on gold, silver reduced to 6%
• TDS rate on e-commerce operators reduced from 1% to 0.1%
• Fiscal deficit estimated at 4.9% of GDP & government is committed to reduce deficit below 4.5%.
• Rs 2 lakh crore allocated to employ 4.1 crore youth over next 5 years
• Long term capital gain tax revised to 12.5% on Financial assets
• Short term capital gain tax on certain financial assets revised to 20%
• Receipts for FY25 32.07 lakh crore.
• Investment-ready “plug and play” industrial parks to be developed in or near 100 cities.
• 1,000 ITIs to be upgraded in hub & spoke arrangements in 5 years
• Keeps capex for FY25 at ₹11.11 lakh crore or 3.4% of GDP.

Conclusion

The budget of 2024 is in same line as previous budgets with some slight changes. In terms of inflation and fiscal deficit govt wants to remain disciplined which is a good for economy in long term. In budget FM pointed that inflation is heading towards below 4% and she lowered the fiscal deficit target to 4.9%. Government aimed to present the budget 2024 as a roadmap for developed nation and thus it specially focused on education and skill development. Budget also focus on manufacturing sector which is key to achieve this target.

Click here to read about our IPO coverage