On July 23, Finance Minister Nirmala Sitharaman presented the Union Budget 2024-25, with a focus on key themes such as employment generation, skills development, MSME support, and relief for the middle class. With a fiscal deficit projected at 4.9% and a plan to reduce it to 4.5%, this budget aims to address critical areas of the economy. Here are the top 10 key highlights summarized for you:
1. Revamped Agriculture Schemes to Boost Farmer Productivity:
The government will review and enhance the agricultural research setup to focus on increasing productivity and developing climate-resilient crop varieties.
Over the next two years, 1 crore farmers will be introduced to natural farming with certification and branding.
Additionally, 10,000 bio-input resource centers will be established to support this transition.
Higher Minimum Support Prices (MSPs) are announced for all major crops, fulfilling the commitment to provide at least a 50% margin over production costs.
A digital crop survey for Kharif will be conducted in 400 districts, integrating the details of 6 crore farmers and their lands into comprehensive registries.
Furthermore, Kisan Credit Cards will be issued in 5 states under the Jan Samarth initiative.
2. Dynamic Employment Initiatives to Create Job Opportunities:
The government will implement three Employment Linked Incentive schemes: Scheme A offers a one-month wage benefit up to ₹15,000 for first-time employees, benefiting 210 lakh youth. Scheme B supports EPFO contributions for new manufacturing jobs, aiding 30 lakh youth and their employers. Scheme C reimburses employers up to ₹3,000 monthly for two years for additional employees, creating 50 lakh jobs.
The government will boost women's workforce participation by setting up working women hostels, creches, and women-specific skilling programs, and promoting market access for SHGs.
Additionally, a new centrally sponsored skilling scheme will train 20 lakh youth over five years, upgrade 1,000 ITIs, and facilitate skill and education loans up to ₹7.5 lakh and ₹10 lakh respectively.
Government will also be providing internship opportunities in 500 top companies to 1 crore youth in 5 years.
3. MSME Growth Strategies with Increased Financial Support:
The budget provides a comprehensive package for MSMEs, including financing, regulatory changes, and technology support.
A credit guarantee scheme will facilitate term loans for MSMEs without collateral, with guarantees up to ₹100 crore.
Public sector banks will develop new credit assessment models for MSMEs, and a mechanism will be introduced to ensure credit continuity for MSMEs during stress periods, supported by a government fund guarantee.
SIDBI will open 24 new branches this year, expanding to 168 out of 242 major MSME clusters within three years, to provide direct credit.
Financial support will also be given for 50 food irradiation units and 100 food quality testing labs in the MSME sector, and E-Commerce Export Hubs will be set up to help MSMEs and artisans access international markets.
4. Infrastructure Boost with Major Investments in Key Projects:
The Central Government will maintain strong fiscal support for infrastructure, with ₹11,11,111 crore allocated for capital expenditure, accounting for 3.4% of GDP.
Phase IV of PMGSY will launch to provide all-weather connectivity to 25,000 rural habitations.
The government will support Bihar's flood control projects with ₹11,500 crore, including the Kosi-Mechi link, and provide assistance for flood management in Assam, Himachal Pradesh, Uttarakhand, and Sikkim.
Funds will also support essential infrastructure in industrial corridors and set up over 100 India Post Payment Bank branches in the Northeast.
Additionally, ₹2.66 lakh crore is allocated for rural development and industrial parks, with rental housing for industrial workers facilitated through PPPs.
5. Deficit Reduction Plan Targeting a Decrease to 4.5%:
For 2024-25, total receipts are estimated at ₹32.07 lakh crore and total expenditure at ₹48.21 lakh crore.
Net tax receipts are projected at ₹25.83 lakh crore, with market borrowings at ₹14.01 lakh crore gross and ₹11.63 lakh crore net. The gross and net market borrowings for 2024-25 are lower compared to 2023-24.
The government aims to reduce the deficit below 4.5% next year and maintain a declining Central Government debt-to-GDP ratio from 2026-27 onwards.
6. Key Urban Development Projects and Investments:
The government will develop 'Cities as Growth Hubs' through developing a framework for the creative redevelopment of existing cities.
Transit Oriented Development plans will be formulated for 14 large cities, with strategies for implementation and financing.
Under PM Awas Yojana Urban 2.0, ₹10 lakh crore will be invested to address housing needs for 1 crore urban families.
The government will partner with states and development banks to advance water supply, sewage treatment, and solid waste management in 100 large cities.
A new scheme will develop 100 weekly street markets over the next five years.
States will be encouraged to lower stamp duties, particularly for properties bought by women, as part of urban development reforms.
7. Strengthening Energy Security:
A new policy will outline energy transition pathways, balancing growth, jobs, and sustainability.
The PM Surya Ghar Muft Bijli Yojana will provide rooftop solar panels to 1 crore households for up to 300 free units of electricity monthly, with over 1.28 crore registrations to date.
The new pumped storage policy will enhance electricity storage and integration of renewable energy.
The government will also collaborate on developing small and modular nuclear reactors and advanced ultra super critical thermal power plants, with a joint venture between NTPC and BHEL setting up an 800 MW AUSC plant.
A roadmap will shift 'hard-to-abate' industries from energy efficiency to emission targets, with new regulations for transitioning to the Indian Carbon Market.
Traditional micro and small industries will receive energy audits and financial support to adopt cleaner energy and improve efficiency, with plans to expand to 100 more clusters.
8. Next-Gen Economic Reforms:
The government will develop an Economic Policy Framework to guide future reforms aimed at boosting employment and high growth.
Key reforms will focus on improving productivity across land, labor, capital, and technology, with a collaborative approach involving both the Centre and states.
Specific actions include enhancing land administration, digitizing records, and expanding labor services through integrated platforms
Reforms will enhance the financial sector, simplify FDI rules, and boost digitalization and business ease.
Efforts will also focus on improving data governance and reviewing the New Pension Scheme.
9. Direct Tax Policy Changes:
A comprehensive review of the Income-tax Act, 1961, will simplify and clarify the Act to reduce disputes and litigation. Initial changes include streamlining charity tax rules, TDS rates, reassessment provisions, and capital gains taxation, with the full review expected to be completed in six months.
Here’s the most simplified overview of all major direct tax amendments for you:
Category | Previous Rate/Limit | New Rate/Limit | Details |
TDS Rates |
|
| |
- TDS on many payments | 5% | 2% | Merged into the 2% rate |
- TDS on repurchase of units by mutual funds/UTI | 20% | Withdrawn | |
- TDS on e-commerce operators | 1% | 0.10% | Proposed reduction |
- Credit of TCS in TDS on salary | Not applicable | Applicable | Credit of TCS will be given in TDS on salary |
Capital Gains Tax |
|
| |
- Short-term gains | 15% | 20% | On certain financial assets |
- Long-term gains | 10% | 12.50% | On all financial and non-financial assets |
- Exemption limit on capital gains | ₹1 lakh/year | ₹1.25 lakh/year | For lower and middle-income classes |
Corporate Tax |
|
| |
- Foreign companies | 40% | 35% | Reduction in corporate tax rate |
Security Transactions Tax |
|
| |
- Futures | 0.01% | 0.02% | Increase in tax rate |
- Options | 0.05% | 0.10% | Increase in tax rate |
Buyback of Shares | Not taxed | Taxed | Income received on buyback will be taxed |
NPS Expenditure Deduction | 10% of employee’s salary | 14% of employee’s salary | Increased deduction for employers |
Personal Income Tax Rates (New Regime) |
|
| |
- Standard deduction for salaried employees | ₹ 50,000 | ₹ 75,000 | Increase |
- Deduction on family pension | ₹ 15,000 | ₹ 25,000 | Increase |
- Tax rate structure |
|
| |
- 0-3 lakh |
| Nil | |
- 3-7 lakh |
| 5% | |
- 7-10 lakh |
| 10% | |
- 10-12 lakh |
| 15% | |
- 12-15 lakh |
| 20% | |
- Above 15 lakhs |
| 30% | |
Equalization Levy | 2% | Withdrawn | Equalization levy withdrawn |
Angel Tax | Applicable | NIL | Angel tax abolished for all Investors |
As per Finance Minister, these direct tax reforms are designed to simplify tax compliance, offer greater benefits to taxpayers, and foster a fairer and more efficient tax system.
10. Indirect Tax Proposals:
GST will be further simplified and expanded to enhance benefits and efficiency.
Customs duty changes aim to support domestic manufacturing and simplify taxation.
A comprehensive review of customs duty rates will be undertaken in the next six months.
Cancer-related medicines will be exempt from customs duties; x-ray equipment duties will align with domestic capacities.
BCD on mobile phones and parts will be reduced to 15% to benefit consumers.
Critical minerals' customs duties will be exempted or reduced to boost sector growth.
Solar energy sector support includes expanding capital goods exemptions and adjusting solar glass and copper duties.
Marine products' competitiveness will be enhanced with reduced BCD on shrimp and fish feed.
Leather and textile sectors will see reduced BCD on materials and added exemptions for export-related goods.
Customs duties on precious metals will be reduced to promote domestic value addition, and BCD adjustments will be made
The Union Budget 2024 reflects a balanced approach towards fiscal discipline, infrastructure development, green growth, and social welfare. For corporates, angel investors, and HNIs, the budget offers numerous opportunities for strategic investments in emerging sectors and sustainable growth initiatives.
For detailed insights and more such updates, stay tuned.
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