The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, has ushered in a range of financial reforms, tax adjustments, and sector-specific allocations aimed at bolstering economic growth and catering to the diverse needs of the Indian population. This is the first budget of the newly re-elected Modi Government and follows the interim budget presented earlier this year.
Official Budget 2024 Highlights Download Link- Click Here
Full Budget 2024 Transcript Download Link- Click Here
Key Income Tax Slab Changes And Financial Implications
Revised Income Tax Structure
The Union Budget 2024 has introduced a revised income tax structure aimed at simplifying the tax regime and providing relief to taxpayers. The new income tax slabs are as follows:
| Income Range (₹) | Tax Rate (%) |
|---|---|
| 0 - 3,00,000 | NIL |
| 3,00,001 - 7,00,000 | 5 |
| 7,00,001 - 10,00,000 | 10 |
| 10,00,001 - 12,00,000 | 15 |
| 12,00,01 - 15,00,000 | 20 |
| Above 15,00,001 | 30 |
Standard Deduction for salaried employees has been increased from ₹50,000 to ₹75,000. Deduction on family pension for pensioners has been increased from ₹15,000 to ₹25,000. These changes are designed to increase disposable income and boost consumer spending.
Long-Term Capital Gains And Securities Transaction Tax
The budget has proposed an increase in the Securities Transaction Tax (STT) on futures and options (F&O) transactions and has raised the long-term capital gains tax on certain financial assets to 12.5%. This move aims to generate additional revenue for the government while encouraging long-term investments.
Corporate Tax Adjustments
Corporate tax for foreign companies has been reduced from 40% to 35%, promoting foreign investments and enhancing the business environment in India. Additionally, specific incentives have been provided for sectors like renewable energy and manufacturing.
Simplification And Rationalisation Of Capital Gains
- Short-term gains on specific financial assets will now be taxed at 20%.
- Long-term gains on all financial and non-financial assets will attract a tax rate of 12.5%.
- The exemption limit for capital gains on certain financial assets has been raised to ₹1.25 lakh per year.
Taxpayer Services
- Over the next two years, all remaining services related to Customs and Income Tax, including rectifications and appellate orders, will be digitalized.
Litigation and Appeals
- The ‘Vivad Se Vishwas Scheme, 2024’ aims to resolve pending income tax disputes.
- Increased monetary limits for filing direct tax, excise, and service tax appeals: ₹60 lakh for Tax Tribunals, ₹2 crore for High Courts, and ₹5 crore for the Supreme Court.
- Safe harbour rules will be expanded to reduce litigation and ensure certainty in international taxation.
Employment and Investment
- The angel tax has been abolished for all investor classes to support the start-up ecosystem.
- A simplified tax regime for foreign shipping companies operating domestic cruises is introduced to boost cruise tourism in India.
- Safe harbour rates established for foreign mining companies selling raw diamonds domestically.
- Corporate tax rate for foreign companies reduced from 40% to 35%.
Deepening the Tax Base
- Security Transactions Tax on futures and options of securities increased to 0.02% and 0.1% respectively.
- Income from share buybacks will now be taxed in the hands of the recipient.
Social Security Benefits
- Employers’ deduction for contributions to the National Pension Scheme (NPS) increased from 10% to 14% of the employee’s salary.
- Non-reporting of small movable foreign assets up to ₹20 lakh will no longer be penalized.
Sectoral Allocations And Economic Growth Initiatives
Budget Expenditure on Major Sectors
The budget has outlined significant allocations for various sectors to drive economic growth. The major sectoral allocations are as follows:
| Sector | Allocation (₹ crore) |
|---|---|
| Defence | 4,54,773 |
| Rural Development | 2,65,808 |
| Agriculture and Allied Activities | 1,51,851 |
| Home Affairs | 1,50,983 |
| Education | 1,25,638 |
| IT & Telecom | 1,16,342 |
| Health | 89,287 |
| Energy | 68,769 |
| Social Welfare | 56,501 |
| Commerce & Industry | 47,559 |
Fiscal Deficit And Borrowings
The fiscal deficit for FY25 is projected at 4.9% of GDP, with total expenditure estimated at ₹48.21 lakh crore and total receipts at ₹32.07 lakh crore. The government aims to reduce the fiscal deficit below 4.5% by the next year.
Things That Get Cheaper & Expensive In Budget 2024
Cheaper Goods and Services
- Mobile Phones and Accessories: The basic customs duty on mobile phones, PCBA, and chargers have been reduced to 15%.
- Gold, Silver, and Platinum: Customs duties on gold and silver have been reduced to 6%, and on platinum to 6.4%.
- Critical Minerals: Customs duties on critical minerals for renewable energy and high-tech electronics sectors have been fully exempted.
Dearer Goods and Services
- Luxury Goods: TCS of 1% on notified luxury goods valued above ₹10 lakh.
- Financial Transactions: Increased STT rates on F&O transactions to 0.1% on options and 0.02% on futures.
Infrastructure Development And Skilling Initiatives
Infrastructure Boost
The Union Budget 2024 has placed a significant emphasis on infrastructure development, allocating substantial funds to enhance the country’s physical and digital infrastructure. The key highlights include:
- Roads and Highways: The budget has allocated ₹1.6 lakh crore to the Ministry of Road Transport and Highways to accelerate the development of national highways, expressways, and rural roads. This is expected to improve connectivity and boost economic activities in remote areas.
- Railways: An allocation of ₹1.4 lakh crore has been made for the Indian Railways, with a focus on modernising railway stations, introducing more semi-high-speed trains, and enhancing safety measures. The expansion of the Dedicated Freight Corridor (DFC) is also a priority to improve freight transport efficiency.
- Urban Infrastructure: The government has earmarked ₹75,000 crore for urban infrastructure development, including the Smart Cities Mission and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT). This aims to improve urban living standards and infrastructure resilience.
- Energy and Power: The budget has allocated ₹68,769 crore to the energy sector, with a focus on renewable energy projects, grid infrastructure improvements, and energy efficiency measures. The aim is to achieve the target of 500 GW of non-fossil fuel-based energy capacity by 2030.
Skilling and Employment
Recognising the need for a skilled workforce to support the growing economy, the budget has introduced several skilling and employment initiatives:
- PM Kaushal Vikas Yojana 4.0: A revamped version of the skill development programme with an allocation of ₹12,000 crore aims to train youth in industry-relevant skills, including AI, robotics, and 3D printing.
- National Apprenticeship Promotion Scheme: An allocation of ₹4,000 crore to promote apprenticeships, providing stipends to apprentices and incentives to employers to create more apprenticeship opportunities.
- Digital University: Establishment of a digital university to provide world-class quality education and online learning opportunities, especially targeting rural and remote areas.
- Skill Hubs and Vocational Training: ₹8,000 crore has been allocated to establish 500 skill hubs across the country, offering vocational training and certification in collaboration with industry partners.
Social Sector Initiatives and Welfare Programs
Healthcare and Education
The Union Budget 2024 has emphasised improving healthcare and education, recognising their importance in fostering a healthy and educated population. Key initiatives in these sectors include:
- Healthcare: An allocation of ₹89,287 crore aims to enhance healthcare infrastructure, particularly in rural areas. The focus is on expanding the Ayushman Bharat scheme, which provides health insurance to economically disadvantaged sections. Additionally, funds have been allocated to improve the National Health Mission, establish more medical colleges, and promote telemedicine.
- Education: The budget has allocated ₹1,25,638 crore to the education sector, with significant investments in the PM Schools for Rising India (PM SHRI) scheme, which aims to develop 14,500 model schools across the country. There is also a strong focus on digital education, with the establishment of a National Digital Library and increased funding for e-learning platforms.
Social Welfare and Inclusion
To ensure social welfare and inclusion, the budget has introduced several schemes aimed at uplifting the marginalised and vulnerable sections of society:
- Women and Child Development: An allocation of ₹30,000 crore aims to support schemes like Beti Bachao Beti Padhao, which promotes the education and welfare of girls, and the Pradhan Mantri Matru Vandana Yojana, which provides maternity benefits.
- Senior Citizens and Differently-Abled: The budget has earmarked ₹15,000 crore for the welfare of senior citizens and differently-abled individuals, focusing on providing pensions, healthcare, and accessibility enhancements.
- Rural Development: A significant allocation of ₹2,65,808 crore has been made for rural development, which includes funds for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) to provide employment and support livelihoods in rural areas.
Environmental Initiatives & Energy Security
Energy Transition Initiatives
- Energy Transition Pathways: The government will release a policy document outlining ‘Energy Transition Pathways’ to balance employment, growth, and environmental sustainability.
- Pumped Storage Policy: A new policy will promote pumped storage projects for electricity storage.
- Nuclear Energy R&D: The government will collaborate with the private sector on the research and development of Bharat Small Modular Reactors and other advanced nuclear technologies.
- Advanced Ultra Super Critical Thermal Power Plants: A joint venture between NTPC and BHEL will establish an 800 MW commercial plant using Advanced Ultra Super Critical (AUSC) technology.
- Hard-to-Abate Industries: Regulations will be developed to transition these industries from the ‘Perform, Achieve and Trade’ mode to the ‘Indian Carbon Market’ mode.
PM Surya Ghar: Muft Bijli Yojana
The Union Budget 2024 introduced the “PM Surya Ghar: Muft Bijli Yojana,” a significant initiative aimed at promoting sustainable energy and providing economic relief through the installation of rooftop solar panels. The key highlights and features of the scheme are as follows:
- Objective: The scheme aims to install rooftop solar systems in one crore households across India, providing up to 300 units of free electricity per month.
- Total Outlay: The government has allocated ₹75,021 crore for this initiative.
- Subsidy Structure: Households can receive a Central Financial Assistance (CFA) of 60% of the system cost for 2 kW systems and 40% for systems between 2 to 3 kW, capped at 3 kW. This translates to a subsidy of ₹30,000 for a 1 kW system, ₹60,000 for a 2 kW system, and ₹78,000 for a 3 kW system.
- Low-interest Loans: Households can avail of collateral-free loans at around 7% interest to cover the remaining costs.
Implementation and Benefits
- Registration: Interested households can register on the National Portal to avail the benefits. The portal assists in vendor selection and provides information on system sizes and benefits.
- Economic Impact: The scheme is expected to generate 30 GW of solar capacity, create around 17 lakh direct jobs, and reduce CO₂ emissions by 720 million tonnes over 25 years.
- Additional Income: Households can earn additional income by selling surplus electricity to DISCOMs.
Conclusion
The Union Budget 2024 underscores the government’s commitment to sustainable development through significant investments in renewable energy, pollution control, water conservation, and biodiversity protection. These initiatives aim to create a greener and more sustainable future for India, addressing environmental challenges while promoting economic growth.
