The Union Budget 2024 Highlights

“BUDGET” 

A term that brings surprises wrapped in a simple packet (or should I say, suitcase ????) every year, whether for employees, managers, business owners, Indian citizens – and, most notably, UPSC aspirants! 

Indian Union Budget 2024 was no different. 

It brought its fair share of curveballs and pleasant surprises. Let’s delve into the key highlights of the Union Budget 2024 below. 

But where should we start? 

Let’s start on a topic that impacts both employers and employees alike – Tax rates! 

In the next section, we’ll explore the newly introduced tax slabs and their financial implications for employers and employees nationwide. 

New vs Old Tax Regimes: Understanding the financial landscape! 

As you know, Union Finance Minister Nirmala Sitharaman presented the Union Budget 2024 on July 23 in the Indian Parliament. 

One significant change introduced was the revised tax regime, which liberalized the income tax slabs and increased standard deductions from Rs. 50,000 to Rs. 75,000. This change benefits salaried individuals, making the new regime more attractive, while the old regime remains advantageous for those earning over Rs. 10 lakhs due to greater flexibility in deductions. 

Main tax proposals in the Union Budget 2024: 

• Capital gains tax: Short-term capital gains tax on listed equity shares, mutual funds, and REITs/INVITs is proposed to increase from 15% to 20%. Long-term capital gains tax will be levied at 12.5% as compared to previous rates of 10% for short term and 20% for long term capital gains. 

• Securities transaction tax: The tax will increase from 0.0625% to 0.1% on the sale of options and from 0.0125% to 0.02% on the sale of futures. 
• Tax deducted at source: The TDS rate will decrease from 5% to 2% for payments related to insurance commissions, life insurance policies, rent, and brokerage. 
• Changes in customs duty: Introduced the following changes: 
• Reduced: Gold and silver, mobile phones and their components. 
• Exempted: Textiles, steel, and capital goods. 
• Increased: Solar glass and certain chemicals. 

Other important changes include discontinuing the 2% equalization levy on the proceeds received by non-resident e-commerce operators. The tax levied on unlisted companies for receiving funds beyond their face value is also proposed to be discontinued. 

Comparison of Old and New Tax Regimes: 

Source: SBI  

It’s clear from this that the Union Budget 2024 aims to alleviate the financial burdens on salaried individuals while nurturing the nation’s growing startup culture.  

In the next section, let’s discuss the key takeaways from the Budget 2024. 

Budget 2024: Key takeaways! 

The main focus of the Union Budget 2024 rested on nine key pillars: 

1. Productivity and Resilience in Agriculture 
2. Employment and Skilling 
3. Inclusive Human Resource Development and Social Justice 
4. Manufacturing and Services 
5. Urban Development 
6. Energy Security 
7. Infrastructure 
8. Next Generation Reforms 
9. Innovation Research and Development 

Let’s discuss the Budget summary based on the sectors below. 

1. Productivity and resilience in agriculture 

The Budget focuses on transforming agriculture research to increase productivity, develop climate-resilient varieties, and promote a stable vegetable supply chain through FPOs. It also emphasizes self-reliance in oilseed production, mainly mustard, groundnuts, soybeans, and sunflower.  

2. Employment and Skilling 

The Government launched 3 schemes for Employment Linked Incentives: 

• Scheme A: One month’s wage to new entrants in all formal sectors. 

• Scheme B: Incentive for employer and employee for EPFO contributions for 4 years. 

• Scheme C: Reimbursement of employer’s two-year EPFO contributions for new hires. 

It also focuses on generating new employment opportunities for women by creating a safe work environment through hostels. The youth are expected to receive financial support of up to Rs. 10 lakh easy loans for higher education. 

3. Inclusive Human Resource Development and Social Justice 

The government launched the Purvodaya scheme to develop the Eastern region and Andhra Pradesh. Rs. 3 lakh crores have been allocated for women and girls, with establishing 100 new branches for India Post Payment Bank in the Northeast. 

4. Manufacturing and Services 

The Budget 2024 introduced Credit guarantee schemes for MSME sector, a new assessment model for MSME sector, an increase in the limit of Mudra loans from Rs. 10 lakhs to Rs. 20 lakhs, and the announcement of the creation of twelve industrial parks under the National Industrial Corridor Development Program. 

5. Urban Development 

The priorities include encouraging states to lower stamp duties on properties purchased by women, developing 100 weekly street food hubs in selected cities, launching transit-oriented development plans for 14 large cities, and promoting water supply and waste management across prominent cities. 

6. Energy Security 

Focus on creating clean and sustainable energy sources like solar and nuclear power. Provide financial support for shifting micro and small industries to cleaner energy, setting up Bharat Small Reactors, and launching a full scale 800 MW commercial plant under joint venture with NTPC and BHEL. 

7. Infrastructure 

A provision on Rs. 11,11,111 crore is made for infrastructure. Phase IV of PMGSY will be launched to provide all-weather connectivity to 25,000 rural inhabitants. Financial support will be provided for Intra-State link projects, flood and disaster management assistance in Assam, Sikkim, and Uttarakhand. Investments will be made in the Tourism sector to develop Vishnupad Temple Corridor and Mahabodhi Temple Corridor.  

8. Innovation, Research and Development 

The government plans to launch the Anusandhan National Research Fund, investing Rs. 1 lakh crore to drive research and innovation in privately owned research centers. It also plans to establish a venture capital fund of Rs 1,000 crores for the space economy. 

9. Next Generation Reforms 

A series of schemes and plans were launched to develop this sector: 

• Unique Land Parcel Identification Number for all lands and survey of map sub-divisions per current ownership.
• Digitizing land records in urban areas with GIS mapping and establishment of land registry.
• Simplified FDI and Overseas Investments to promote Indian Rupee as a currency for overseas investment.
• Launched NPS Vatsalya to help guardians invest for minors.
• Improvement of data management and statistics through cyber governance. 

Allocation for Specific Ministries: 

Allocation for Major Schemes: 

The basic framework and summary of the Budget 2024 are now clear. In the next section, let’s explore the major distinctions between this year’s Budget and the previous year’s Budget. 

Budget 2023 vs Budget 2024: A Detailed Analysis 

Every year, when a budget is introduced, one question remains constant: How does it fare compared to the previous Budget?  

Then, today, let’s pitch a few pointers in this debate. A comparative analysis of Union Budget 2023 vs. Budget 2024 from various perspectives is presented here. 

Key highlights of Budget 2023: 

• Focused on inclusive development – Sabka Saath, Sabka Vikas, covering Farmers, Women, Youth, Scheduled Castes, EWS, and the UTs of J&K and Ladakh. 

• Introduced a new income tax regime (as discussed earlier), increased capital investment by 33%, and raised the capital outlay for railways to Rs. 2.40 lakh crore. 

• Focused on transforming four key areas: Economic empowerment of women through SHGs, PM VIKAS Yojana, Tourism promotion, and Green growth. 

• Reforms in the Education Sector: Reintroduced teacher’s training, set up National Digital Library, and encouraged state governments to establish physical libraries. 

• In the Health Sector, 157 new nursing colleges were established and launched a mission to eliminate Sickle Cell Anemia by 2047. 

• To support equal regional development the National Government extended the 50-year interest free loan to State Governments for another year. 

• Planned to set up three centers of excellence for Artificial Intelligence in top educational institutions to support the vision of Make AI in India and Make AI work for India. 

• For MSME sector, DigiLocker introduced for securely storing and sharing documents online. Also, started Vivad Se Vishwas scheme to standardize the contract settlement process. 

• Startups also received an added impetus as their losses carried forward has been expanded from 7 years of incorporation to 10 years. 

• The limit for cash deposits and loans by Cooperative Societies has been increased to 2 lakh rupees (per member). 

As the key highlights of the Budget 2024 were already discussed earlier, here is a detailed comparison, highlighting the key differences between Budget 2023 and Budget 2024: 

Summary of key distinctions: 

• Expenditure increase: Overall spending and capital expenditure increased by 6% and 16% respectively. 

• Revenue growth: Receipts are expected to grow by 11.8%, indicating a positive economic upward turn. 
• Deficit reduction: Both fiscal and revenue deficits are expected to reduce, signifying stable financial growth. 
• State support: Increase in transfer to states ensures equitable local development. 

Hopefully, this has helped you understand the main distinctions between the current and previous year’s Budget.  

Wrapping it Up 

India’s Interim Budget 2024 brings significant changes and reforms, particularly in taxation. If you are unsure about shifting tax regimes or new challenges, Keka and Clear Tax have joined forces to simplify this process. With Keka’s easy calculations and Clear Tax integration, tax season becomes a breeze. Learn more about how Keka can streamline your tax calculations here.

Frequently Asked Questions (FAQs) 

1. What are the main highlights of the 2024 budget? 

The Budget 2024 outlines tax cuts for middle-class families, increased defense spending, infrastructure development, and green energy initiatives. 

2. How will the budget affect tax and spending? 

The budget aims to adjust tax brackets to lower rates for middle-income earners and increase spending on education, infrastructure, and healthcare to stimulate economic growth and public sector growth. 

3. What are the key policy changes in the 2024 budget? 

The key policy changes include increased funding for green energy, expansion of healthcare access, tax incentives for small businesses, higher education grants, and a focus on fiscal deficit. 

4. How is the budget expected to impact the economy? 

The budget aims to boost economic growth through increased infrastructure investment, tax relief, and support for innovation, foster new job creation and enhance economic growth and stability. 

5. Where can I find detailed information about the budget? 

You can find detailed information on the Interim Budget 2024 on various government portals, news portals, financial analysis sites, or refer to the budget document published by the Ministry of Finance.