The Union Budget for the fiscal year 2024, presented by Finance Minister Nirmala Sitharaman on 23rd July 2024, has laid out an ambitious roadmap for India's economic growth and development. This blog delves into the key announcements, sectoral allocations, and policy initiatives that define this budget.
In continuation to the Interim Budget presented in February, the focus is on 4 major castes –
1. ‘Garib’ (Poor),
2. ‘Mahilayen’ (Women),
3. ‘Yuva’ (Youth)
4. ‘Annadata’ (Farmer)
Part A: Priorities for Viksit Bharat
For the pursuit of Viksit Bharat, the budget has laid down the following 9 priorities –
1. Productivity and Resilience in Agriculture
• The Government will undertake a comprehensive review of the Agriculture Research Setup to bring the focus on raising productivity and developing climate resilient varieties.
• The Government will strengthen their production, storage and marketing and to achieve Self Sufficiency or Atmanirbharta for oil seeds such as mustard, groundnut, sesame, soybean, and sunflower.
• 109 high-yielding and climate-resilient New Varieties of 32 field and horticulture crops will be released for cultivation by farmers.
• In the next two years, 1 crore farmers across the country will be initiated into Natural Farming supported by certification and branding. 10,000 need-based bio-input resource centres will be established.
• Government, in partnership with the states, will facilitate the implementation of the Digital Public Infrastructure (DPI) in agriculture for coverage of farmers and their lands in 3 years.
2. Employment and Skilling
• The government will implement 3 schemes for Employment Linked Incentive, as part of the Prime Minister’s package. These will be based on enrolment in the EPFO, and focus on recognition of first-time employees, and support to employees and employers
• Government will facilitate Higher Participation of Women in the workforce through setting up of working women hostels in collaboration with industry and establishing creches.
• Model Skill Loan Scheme will be revised to facilitate loans up to
Rs. 7.5 lakh with a guarantee from a government promoted Fund, which is expected to help 25,000 students every year.
• For helping the youth, who have not been eligible for any benefit under government schemes and policies, she announced a financial support for loans upto Rs. 10 lakh for higher education in domestic institutions. E-vouchers for this purpose will be given directly to 1 lakh students every year for annual interest subvention of 3 per cent of the loan amount.
3. Inclusive Human Resource Development and Social Justice
• Government will formulate a plan, Purvodaya, for the all-round development of the eastern region of the country covering Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh. This will cover human resource development, infrastructure, and generation of economic opportunities to make the region an engine to attain Viksit Bharat.
• The Finance Minister announced that for improving the socio-economic condition of tribal communities, government will launch the Pradhan Mantri Janjatiya Unnat Gram Abhiyan covering 63,000 villages and benefitting 5 crore tribal people.
• More than 100 branches of India Post Payment Bank will be set up in the North East region to expand the banking services.
• Allocation of more than Rs. 3 lakh crore for schemes benefitting women and girls
4. Manufacturing and Services
• The FM said this budget provides special attention to MSMEs and manufacturing, particularly labour-intensive manufacturing. 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. Similarly, Public sector banks will build their in-house capability to assess MSMEs for credit, instead of relying on external assessment. She also announced a new mechanism for facilitating continuation of bank credit to MSMEs during their stress period.
• The limit of Mudra loans will be enhanced to Rs. 20 lakh from the current Rs.10 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category.
• The Finance Minister said that as the 5th scheme under the Prime Minister’s package, government will launch a comprehensive scheme for providing Internship Opportunities in 500 top companies to 1 crore youth in 5 years.
5. Urban Development
• Stamp Duty: Encouraging states to lower stamp duties for properties purchased by women
• Street Markets: Government envisions a scheme to support each year, over the next five years, the development of 100 weekly ‘haats’ or street food hubs in select cities.
• Water Management: In partnership with the State Governments and Multilateral Development Banks, government will promote water supply, sewage treatment and solid waste management projects and services for 100 large cities through bankable projects.
• Urban Housing: Under the PM AwasYojana Urban 2.0, housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of Rs.10 lakh crore. This will include the central assistance of Rs. 2.2 lakh crore in the next 5 years.
6. Energy Security
• In line with the announcement in the interim budget, PM Surya Ghar Muft Bijli Yojana has been launched to install rooftop solar plants to enable 1 crore households obtain Free Electricity up to 300 units every month. The scheme has generated remarkable response with more than 1.28 crore registrations and 14 lakh applications.
• Nuclear Energy is expected to form a very significant part of the energy mix for Viksit Bharat.
7. Infrastructure
• The Government has laid down provision of Rs. 11,11,111 crore for infrastructure, which is about 3.4% of the GDP
• Phase IV of PMGSY will be launched to provide all-weather connectivity to 25,000 rural habitations
• Rs. 1.5 lakh crore has been provided to the states as long term interest free loans to support resource allocation
• Financial support for projects with estimated cost of ₹11,500 crore such as the Kosi-Mechi intra-state link and 20 other ongoing and new schemes
• Assistance to Assam, Himachal Pradesh, Uttarakhand and Sikkim for flood management, landslides and related projects.
• Develop infrastructure to promote Spiritual Tourism
8. Innovation, Research and Development
• Operationalisation of the Anusandhan National Research Fund for basic research and prototype development.
• Private sector-driven research and innovation at commercial scale with a financing pool of Rs.1 lakh crore
• To expand the space economy, a venture capital fund of Rs.1,000 crore will be set up.
9. Next Generation Reforms
• Taxonomy for climate finance: Enhancing the availability of capital for climate adaptation and mitigation related investments
• FDI and Overseas Investments: Simplified to facilitate FDIs and promote opportunities for using Indian Rupee as a currency for overseas investments.
• NPS-Vatsalya, a plan for contribution by parents and guardians for minors will be started. On attaining the age of majority, the plan can be converted seamlessly into a normal NPS account.
• Improvement of data governance, collection, processing and management of data and statistics.
• New Pension Scheme (NPS): A solution that address the relevant issues, protects the common citizen and maintains fiscal prudence will be formed.
Part B: Review of Direct and Indirect Taxes
In addition to setting priorities for Viksit Bharat, the Union Budget also seeks to comprehensively review the Direct and Indirect Taxes. The aim is to simplify the tax structure, reduce tax incidence and compliance burdens and broaden the tax nets.
1. Direct Taxes
a) Personal Income Tax
• Standard Deduction of salaried employees has been increased from Rs. 50,000 to Rs. 75,000 for those opting for new tax regime
• Deduction on family pension for pensioners enhanced from Rs. 15,000 to Rs. 25,000
• Assessments can be reopened beyond three years up to 5 years from end of year of assessment, only if, the escaped income is more than Rs. 50 Lakh
• Slab Rates in the new tax regime have been made more favorable leading to savings in tax up to Rs. 17,500 for salaried individuals. Slab Rates for the Old Tax Regime remain unchanged.
The Revised Slab Rates for the New Tax Regime are as follows,
b) Short Term Capital Gains
• Short Term Capital Gains on Financial Assets is to be increased from 15% to 20%.
• This change is effective from 23rd July 2024, thus all transactions attracting STCG tax prior to 23rd July will be counted in the old tax regime.
c) Long Term Capital Gains
• Long Term Capital Gains on Financial Assets is to be increased from 10% to 12.5%
•
Exemption limit of Long Term Capital Gains on Financial Assets is increased from Rs. 1 lakh to Rs. 1.25 lakhs
• Long Term Capital Gains Tax on Non-Financial Assets is also at 12.50%, reduced from the earlier rate of 20%. However, the benefit of indexation where the cost price could be adjusted with inflation will not be available.
• This change is effective from 23rd July 2024, thus all transactions attracting LTCG tax prior to 23rd July will be counted in the old tax regime.
d) Corporate Taxes
• Angel Tax has been abolished for all classes of investors
• Introduction of a simpler tax regime for foreign shipping companies operating Domestic Cruises
• Foreign Mining Companies selling raw diamonds in the country can now benefit from safe harbour rates which will benefit the diamond industry
• Corporate Tax Rates for Foreign Companies is reduced from 40% to 35%
2. Indirect Taxes
a) Tax on F&O
• The Securities Transaction Tax (STT) on Futures Contracts is increased from 0.0125% to 0.02% and on Options Contracts from 0.0625% to 0.10%.
b) Custom Duty
• Affordable Medicines: Fully exempt 3 more cancer medicines from custom duties
• Mobile Industry: Basic Custom Duty on Mobile Phones, Printed Circuit Board Assembly (PCBA) and Chargers reduced to 15%
• Jewellery: Basic Custom Duty on Gold and Silver reduced to 6.5% and on Platinum to 6.4%
• Marine Exports: Basic Custom Duty on shrimp and fish feed reduced to 5% to enhance competitiveness for marine exports.
• Clean Energy: Exempted more capital goods for manufacturing of solar cells and panels
• Rare Earth Minerals: As a boost to various strategic sectors, 25 Rare Earth Minerals like Lithium and more have been fully exempted.
c) Goods and Services Tax (GST)
• The FM acknowledged that GST has reduced compliance burden and logistics cost for trade and industry.
• The Government further plans on simplifying the tax structure and expanding it to the remaining sectors.
Conclusion The Union Budget 2024 presents a forward-looking vision for India's economic growth, with a balanced focus on fiscal discipline, infrastructure development, social welfare, and technological advancement. By addressing the needs of various sectors and promoting inclusive growth, the budget aims to build a resilient and prosperous India.
