India’s Union Budget 2024-25 Key Highlights And Analysis

In July 2024, Finance Minister Nirmala Sitharaman unveiled India’s budget for the year 2024-25. This budget aims to boost economic growth and improve the lives of millions of Indians. Let’s look at some of the main points in the article.

Key Highlights of the Budget 2024-25

• Money Matters – The government plans to spend about 48 lakh crore rupees (US$ 577.16 billion) while expecting to receive about 32 lakh crore rupees (US$ 383.93 billion). The difference, called the fiscal deficit, is targeted at 4.9% of India’s GDP.
• Good News for Taxpayers –

1. Salaried employees can now claim a higher standard deduction of 75,000 rupees under the new tax system.
2. People saving money through investments will get a higher exemption limit of 1.25 lakh rupees on capital gains.
3. The government has simplified taxes on profits from selling assets, making it easier for people to understand.

• Jobs and Skills – A big focus of this budget is creating jobs. The government has announced five new schemes to help 4.1 crore young people find work or improve their skills over the next five years. They’re spending 2 lakh crore rupees on this.
• Support for Small Businesses – Banks will use new ways to decide if small businesses can get loans, making it easier for them to borrow money. The limit for certain small business loans has also been increased.
• Building a Better India – 

1. 11.11 lakh crore rupees will go towards improving roads, railways, and other infrastructure.
2. 3 lakh crore rupees are set aside for programs that help women and girls.
3. There’s a new internship program that will give 1 crore young people a chance to work in top companies.

• Housing and Rural Development – The budget includes 2.2 lakh crore rupees to make urban housing more affordable and 2.66 lakh crore rupees for rural development projects.
• Helping Farmers – 1.52 lakh crore rupees will go to agriculture, with a goal to get one crore farmers to try natural farming methods in the next two years.
• State-Specific Projects – The budget includes special projects for states like Bihar and Andhra Pradesh, focusing on roads, power plants, and other development needs.
• Food Security – The government’s free food program, which helps 80 crore people, will continue for five more years.

This budget shows that the government is trying to balance economic growth with programs that help ordinary people. It focuses on creating jobs, improving infrastructure, and supporting various sectors of the economy.

Changes in Tax Structure Under the New Regime

Under the New tax regime, the tax structure is revised as follows:

Tax Slab for FY 2023-24	Tax Rate	Tax Slab for FY 2024-25	Tax Rate
Up to Rs. 3 lakh	Nil	Up to Rs.3 lakh	Nil
Rs.3 lakh – Rs.6 lakh	5%	Rs.3 lakh – Rs.7 lakh	5%
Rs.6 lakh – Rs.9 lakh	10%	Rs.7 lakh – Rs.10 lakh	10%
Rs.9 lakh – Rs.12 lakh	15%	Rs.10 lakh – Rs.12 lakh	15%
Rs.12 lakh – Rs.15 lakh	20%	Rs.12 lakh – Rs.15 lakh	20%
More than 15 lakh	30%	More than 15 lakh	30%

Founder of OneNDF Nitin Khandelwal in discussion with CA Vipin Agrawal in a recent seminar on Union budget 2024.

Part A: Budget Prime Concern in these Various Sectors

Prime Concern 1: Productivity and Resilience in Agriculture

• The government plans to review and improve agricultural research, focusing on increasing productivity and developing crops that can withstand climate changes.
• 109 new crop varieties that give higher yields and are more resilient to climate change will be introduced for farmers to grow.
• A goal is set to get 1 crore farmers to start natural farming in the next two years, with support for certification and branding.
• Strategies are being developed to make India self-sufficient in oilseed production.
• NABARD (National Bank for Agriculture and Rural Development) will help finance shrimp farming, processing, and export.
• Large vegetable production clusters will be developed near major cities, with support for farmer organizations and startups in the supply chain.
• A digital system for agriculture will be implemented in 3 years, starting with digital crop surveys in 400 districts.
• The budget allocates Rs. 1.52 lakh crore for agriculture and related sectors.

Prime Concern 2: Employment & Skilling

• Three new schemes will be introduced to encourage employment:

1. Scheme A: Provides salary support for new employees in formal sectors.
2. Scheme B: Focuses on creating manufacturing jobs.
3. Scheme C: Supports employers by reimbursing part of EPFO contributions.

• Efforts will be made to increase women’s participation in the workforce through hostels, childcare, and specific skilling programs.
• A new scheme will upgrade 1,000 Industrial Training Institutes to skill 20 lakh youth over 5 years.
• The Model Skill Loan Scheme will be revised to provide loans up to Rs. 7.5 lakh for skills training.
• Financial support announced for education loans, including interest subvention for higher education loans.

Prime Concern 3: Inclusive Human Resource Development and Social Justice

• Rural Empowerment: A substantial Rs.2.66 lakh crore earmarked for rural development and infrastructure.
• Eastern Renaissance: “Purvodaya” initiative to catalyze holistic growth in Jharkhand, Bihar, Odisha, West Bengal, and Andhra Pradesh.
• Industrial Corridors: Boost for Gaya node on Amritsar-Kolkata Industrial Corridor to spur eastern India’s industrial landscape.
• Connectivity Push: Rs.26,000 crore allocated for key expressways and bridges, enhancing regional connectivity.
• Power Boost: New 2400 MW plant at Pirpainti, investing Rs.21,400 crore in energy infrastructure.
• Andhra Pradesh Focus: Commitment to Reorganization Act, with Rs.15,000 crore immediate support and future investments planned.
• Infrastructure Development: Funding for Polavaram Irrigation Project and essential infrastructure in industrial nodes.
• Housing for All: Addition of 3 crore homes under PM Awas Yojana, expanding urban and rural housing.
• Women’s Empowerment: Over Rs.3 lakh crore dedicated to schemes benefiting women and girls.
• Tribal Welfare: Launch of Pradhan Mantri Janjatiya Unnat Gram Abhiyan, targeting 5 crore tribal citizens across 63,000 villages.
• Financial Inclusion: Expansion of banking services with 100+ new India Post Payment Bank branches in the North East.

Prime Concern 4: Manufacturing & Services

• MSME Support:

1. New credit guarantee scheme for MSMEs to obtain loans without collateral.
2. Public sector banks to develop new credit assessment models based on digital footprints.
3. Enhanced credit support during stress periods.
4. Mudra loan limit increased to Rs. 20 lakh for successful borrowers.
5. Expanded mandatory onboarding on TReDS platform.
6. SIDBI to open new branches in MSME clusters.

• Food Industry Support:

1. Financial support for 50 multi-product food irradiation units in the MSME sector.
2. Facilitation of 100 food quality and safety testing labs.

• E-commerce Export Hubs: To be set up in public-private partnership mode for MSMEs and artisans
• Manufacturing Services Promotion:

1. Internship scheme in 500 top companies for 1 crore youth over 5 years
2. Development of “plug and play” industrial parks in 100 cities
3. Rental housing for industrial workers with government support
4. Reforms in shipping industry ownership and leasing

• Critical Minerals and Mining:

1. Establishment of Critical Mineral Mission
2. Launch of offshore mining block auctions

• Digital Public Infrastructure: Development of DPI applications for various sectors including credit, e-commerce, education, health, and urban governance
• Business Reforms:

1. Integrated technology platform for Insolvency and Bankruptcy Code.
2. Extension of C-PACE services for voluntary closure of LLPs
3. Reforms to speed up insolvency resolution and establishment of additional tribunals.

Related Article: Export Credit Guarantee Corporation

Prime Concern 5: Urban Development

Urban Transformation: A Blueprint for Modern Cities

• Smart City Transit: Crafting Transit Oriented Development plans for 14 major urban centers with populations exceeding 30 lakhs.
• Affordable Housing Push: PM Awas Yojana Urban 2.0 to address housing needs of 1 crore urban families, backed by a robust Rs.10 lakh crore investment, including Rs.2.2 lakh crore in central assistance over five years.
• Infrastructure Overhaul: Collaboration with State Governments and Multilateral Development Banks to revolutionize sewage treatment, water supply, and solid waste management in 100 large cities through viable projects.
• Urban Street Culture: Introducing a scheme to develop 100 vibrant weekly ‘haats’ or street food hubs in select cities over a five-year period, celebrating local flavors and entrepreneurship.
• Property Accessibility: Encouraging states to rationalize stamp duty rates, with a special focus on potentially lower rates for women property buyers, promoting inclusive urban property ownership.

Prime Concern 6: Energy Security

Powering the Future: India’s Energy Revolution

• Solar Empowerment: Launch of PM Surya Ghar Muft Bijli Yojana, aiming to provide 1 crore households with 300 units of free electricity monthly through rooftop solar installations.
• Energy Storage Innovation: Introduction of a policy to promote pumped storage projects, ensuring smooth integration of growing renewable energy sources into the power grid.
• Nuclear Advancements: Collaboration with the private sector to develop Bharat Small Reactors and Small Modular Reactors, pushing the boundaries of nuclear technology research.
• Thermal Efficiency Leap: NTPC and BHEL joint venture to establish an 800 MW commercial plant using cutting-edge Advanced Ultra Super Critical (AUSC) technology.
• Green Micro-Industries: Facilitation of energy audits for 60 clusters of traditional micro and small industries, coupled with financial support for transitioning to cleaner energy sources and implementing energy-efficient measures.

Prime Concern 7: Infrastructure

• The government has allocated Rs. 11,11,111 crore (US$ 133.02 billion) for capital expenditure, which is 3.4% of India’s GDP.
• States will receive Rs. 1.5 lakh crore in interest-free loans to support their infrastructure projects.
• Private investment in infrastructure will be encouraged through various policies and regulations.
• Phase IV of (Pradhan Mantri Gram Sadak Yojana) PMGSY will be launched to provide all-weather roads to 25,000 rural areas.
• Financial support will be provided for irrigation and flood mitigation with an estimated cost of Rs. 11,500 crore (US$ 1.38 billion) projects, including assistance to states like Assam, Himachal Pradesh, Uttarakhand, and Sikkim for disaster management and reconstruction.

Prime Concern 8: Innovation, Research & Development

• The Anusandhan National Research Fund (ANRF) will be operationalized for basic research and prototype development.
• A Rs. 1 lakh crore (US$ 11.97 billion) financing pool will be set up to encourage private sector-driven research and innovation.
• A Rs. 1,000 crore (US$ 119.72 million) venture capital fund will be established to support the space economy.
• The government will develop a financial sector vision and strategy for the next 5 years.
• A taxonomy for climate finance will be developed to enhance capital availability for climate-related projects.
• Rules for foreign direct investment and overseas investments will be simplified.
• NPS Vatsalya, a pension plan for minors, will be introduced.
• Efforts will be made to improve data governance and collection across various sectors.
• A committee is reviewing the New Pension Scheme (NPS) for government employees.

Prime Concern 9: Next Generation Reforms

Making India Better: New Plans for the Future

• Land Changes: Working with states to make land rules easier in cities and villages.
• Job Help: Improving the e-shram website to give workers many services in one place.
• Business Made Easier: Updating websites to help businesses follow rules more easily.
• Green Money: Creating new ways to get money for projects that help the environment.
• Foreign Money Rules: Making it simpler for foreign companies to invest in India and for Indian money to be used abroad.
• Savings for Kids: Starting a new savings plan called NPS Vatsalya for parents to save money for their children.
• Better Business Rules: Working on a new law to make doing business in India even easier.

Estimated Budget of 2024-25

• Total receipts (excluding borrowings): Rs. 32.07 lakh crore (US$ 383.93 billion).
• Total expenditure: Rs. 48.21 lakh crore (US$ 577.16 billion).
• Net tax receipts: Rs. 25.83 lakh crore (US$ 309.23 billion).
• Fiscal deficit: 4.9% of GDP
• The government aims to reduce the fiscal deficit to below 4.5% next year and plans to keep central government debt as a percentage of GDP on a declining path from 2026-27 onwards.

Part B: Tax Reforms

Indirect Taxes:

• Customs duties adjusted to support domestic manufacturing and exports:

1. Reduced duties on mobile phones and components.
2. Exempting duties on 25 critical minerals to boost domestic processing for sectors like nuclear energy and high-tech electronics.
3. Expanded exemptions for solar energy equipment.
4. Reduced duties on inputs for marine products, leather, and textiles.
5. Lowered duties on precious metals to boost domestic value addition.

• Sector-specific changes:

1. Medicines: Exempted 3 more cancer medicines from customs duties.
2. Mobile Parts: BCD on mobile phones, PCBA, and chargers cut to 15% due to a three-fold rise in domestic production and nearly 100-fold increase in exports over six years.
3. Removed duties on certain metals and electronics components.

• Trade facilitation: Extended time limits for exporting repaired goods and re-importing goods under warranty.

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Direct Taxes:

Comprehensive review of Income-tax Act announced to simplify and reduce litigation.

• Proposed changes:

1. One-page tax return for individuals with simple incomes.
2. Merged charity tax exemption regimes.
3. Reduced TDS rate on e-commerce transactions from 1% to 0.1%
4. Simplified reopening and reassessment provisions
5. Increased monetary limits for tax-related appeals

• Capital gains taxation simplification:

1. 20% rate for short-term gains on certain financial assets.
2. 12.5% rate for long-term gains on all assets.
3. Increased exemption limit to Rs. 1.25 lakh per year.

• Other proposals:

1. Abolished “angel tax” for all investor classes
2. Simpler tax regime for foreign shipping companies
3. Reduced corporate tax rate for foreign companies to 35%
4. Increased Security Transactions Tax on futures and options
5. Higher deduction for employer NPS contributions
6. Simplified tax regime for freelancers and gig workers
7. Increased standard deduction to Rs. 75,000 for salaried employees

• No changes made to tax slabs under the old regime.

Related Articles: Budget 2024: Major Boost for Small Businesses in India?

FAQs

Q: What is the main focus of the 2024 Indian budget? 

A: The budget focuses on economic growth, job creation, and improving life for all Indians, especially farmers, youth, women, and the poor.

Q: How much money is set aside for infrastructure development? 

A: The government has allocated Rs. 11,11,111 crore for infrastructure development.

Q: What changes are being made to taxes? 

A: The budget simplifies capital gains taxes, increases some deductions, and aims to make the tax system easier to understand and follow.

Q: How is the government supporting small businesses (MSMEs)? 

A: The government is introducing new credit schemes, improving assessment models, and providing support during financial stress periods for MSMEs.

Q: What is the PM Surya Ghar Muft Bijli Yojana? 

A: It’s a scheme to provide free electricity (up to 300 units per month) to 1 crore households through rooftop solar panels.

Q: How is the government planning to improve urban areas? 

A: The government is focusing on affordable housing, better city planning, improved water and sanitation, and developing weekly markets in cities.