The Budget Is Out. What’s In It For You?

On Tuesday, Finance Minister Nirmala Sitharaman presented the fiscal year 2024-25 Budget. From restructuring the tax regime, introducing internships and schemes in the employment sector, abolishing the angel tax, and getting special attention and status in Andhra Pradesh and Bihar, the new budget has major announcements across various sectors of the economy. 

“Viksit Bharat,” noted the Finance Minister has nine priorities focusing on four major stakeholders: Gareeb, Mahilay, Yuva and Annadaata. Below, we summarise all the announcements made for these in Budget 2024.

Good News for Taxpayers 

For the new tax regime, the standard deduction for salaried employees is proposed to be increased from Rs 50,000/- to Rs 75,000/-. Similarly, the pensioners' family pension deduction is proposed to be enhanced from Rs 15,000/- to Rs 25,000/-. This will provide relief to about four crore salaried individuals and pensioners. 

The tax rate structure for the new regime has been revised as well. The new tax rate slab stands as follows:

According to FM, this slab allows a salaried employee to save up to Rs 17,500/- in income tax.  

Housing needs for the urban poor and middle class have also been looked into. Under the PM Awas Yojana Urban 2.0, the housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of ₹ 10 lakh crore. This will include the central assistance of ₹ 2.2 lakh crore in the next 5 years.

On Trade and Customs 

Following recommendations from bodies like the Department for Promotion of Industry and Internal Trade (DPIIT), the 2024 budget abolished the Angel Tax and proposed the Simplification of Capital Gains. Short-term gains have a tax rate of 20%, while Long-term gains will attract a tax rate of 12.5%. The exemption limit of capital gains has been increased to ₹ 1.25 lakh per year, and  Security Transaction Tax on F&O to 0.02% from 0.01%. 20% TDS rate on repurchase by mutual funds, and UTI has been withdrawn.

Custom Duty was reduced for gold and silver to 6 % and platinum to 6.4 %.

Three medicines are also exempted for relief to cancer patients. BCD is reduced for mobile phones and mobile chargers to 15%, and shrimp and fish feed is reduced to 5%.

Addressing Education and Employment 

Amidst calls for the need for job creation and reducing unemployment during the ruling government’s tenure, five schemes were introduced to focus on 4.1 crore youth over five years with a central outlay of ₹2 lakh crore. This year, a provision of ₹1.48 lakh crores for education, employment and skilling has been made for students to get internships at top companies. 

Employers and new employees are to receive incentives and reimbursements as well. The major scheme will provide a 1-month wage to all entering the workforce newly in all formal sectors. The direct benefit transfer will be up to 15,000, which is anticipated to benefit approximately 2.1 lakh young individuals.

An incentive will be provided to the employee and the employer in the first four years of employment, reimbursing employers up to 3,000 per month for two years. Loans will be facilitated up to  7.5 lakh with a guarantee from a government-promoted Fund for students. Financial support for loans up to 10 lakh for higher education and E-vouchers will be given directly to 1 lakh students yearly. 

Schemes for Women 

The budget allocated over 3 lakh crore for schemes benefitting women and girls. Setting up working women hostels in collaboration with industry and establishing creches are announced for higher participation of women. 

The Kingmakers’ Due

Photo Credit: Deccan Herald

Bihar’s Janta Dal (United) and Andhra Pradesh’s Telugu Desam Party had been kingmakers for the NDA in the 2024 Lok Sabha Elections. With this in mind, the FM has proposed many schemes and developments for both states. The Andhra Pradesh Reorganisation Act was highlighted in Andhra Pradesh, stating special financial support and arrangement of  ₹15,000 crores to develop Amravati. 

Meanwhile, Bihar has been given significant perks. Additional financial assistance has been announced for the Purvodaya Scheme, while infrastructure developments were announced at ₹26,000 crore. Power projects, including one at Pir Payanti to be taken up at ₹21,400 crore. Development of Nalanda will be done, and the government will also provide ₹ 11,500 crore to the state for flood mitigation.

Addressing the Annadaata’s Needs

A provision of 1.52 lakh crore has been made for agriculture and the allied sector.

From releasing 109 new HYV crops to integrating farmers into natural farming, the FM’s announcements highlighted the relevance of agricultural transformation. Additionally, a strategy is being implemented to achieve ‘Atmanirbharta’ for oil seeds and implement the Digital Public Infrastructure in 400 districts.

The details of 6 crore farmers will be brought into the registries and Jan Samarth-based Kisan Credit Cards will be enabled in 5 states. These actions will also facilitate credit flow and other agricultural services.

The Industrial Expansion

The budget gave special attention to MSMEs and intensive manufacturing. The assessment model for credit by public sector banks will not be on external assessment but through assets and turnover criteria. The Small Industries Development Bank of India (SIDBI) will open 24 new branches nationwide. The limit for Mudra loans will be extended from ₹10 lakhs to ₹20 lakhs.

The setting up of 100 food quality and safety testing labs will be facilitated. E-Commerce Export Hubs will be set up in a public-private-partnership mode so that traditional artisans can sell their products in international markets. 12 industrial parks under the National Industrial Corridor Development Programme will also be sanctioned.

Government Numbers through a macro-perspective:

Photo Credit: Finshots

The FM declared 7% as the GDP rate for this year. The Capital expenditure is estimated at 11,11,111 crore, 3.4% of the GDP.  Total receipts other than borrowings and expenditure are estimated at 32.07 lakh crore and  48.21 lakh crore, respectively. 

The fiscal deficit is at 4.9 per cent of GDP and is expected to reach below 4.5% next year. 

With this, the FM concluded the Budget for the financial year 2024-25, surpassing the record of former PM Morarji Desai by doing this for the seventh time. This is the first budget for the re-elected NDA government.

23 Jul 2024
The Chronicle Team, Authored by Visakha Bajaj