NEW DELHI:Finance Minister Nirmala Sitharaman announced the Union Budget 2024-25 in the parliament on July 23. The Budget focused on provisioning for the agricultural sector, the introduction of schemes related to employment, loan schemes, announcements for financial support to the MSME sector, infrastructural development, and fiscal deficit projection at 4.9% with a commitment to reducing it down to 4.5%.
The government cut customs duties at the same time making changes in the capital gain taxes for the financial year. The “Taxation budget” comes in the form of a revision in tax slabs under the new tax policy.
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- Budget gives top priority to crop production and climate resilience
The Modi 3.0 government aims to improve crop productivity and climate resilience to change India’s farm research system.
Here are the key items in government focus:
1. Plans to disburse 109 high-yielding climate-resilient varieties of 32 crops will be released for cultivation.
2. The government proposed to shift 10 million farmers into natural farming practices in the next two years.
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3. 10,000 bio-input resource centres will be set up to promote natural farming.
4. The government aims to set up a Digital Public Infrastructure (DPI) in agriculture and plans to survey 400 districts.
- Center to digitalize land records, budget brings in next-generation reforms
Finance Minister Nirmala announced that the Central government will provide fiscal support to incentivize states to introduce land and labour reforms. This will be part of the bigger economic policy of the government.
The government is focusing on the following:
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1. Raising productivity in farms and factories
2. Facilitate credit flow and other agricultural services
3. Bridging inequality
4. Digitization of cadastral maps, survey of map sub-divisions as per current ownership, establishment of land registry, and link them to the farmer’s registry.
- Capex target to tax hikes, a glance at Nirmala Sitharaman’s budget announcement
Budget 2024 Key Highlights Live: Key Highlights from Modi 3.0’s first Union Budget
Finance Minister Nirmala Sitharaman focused on the following in Budget 2024 –
1. Productivity and resilience in agriculture
2. Employment and skilling
3. Inclusive human resource development
4. Social justice
5. Urban development
6. Energy security
7. Infrastructure
8. Innovation and Research Development
9. Next generation reforms
Transforming Agriculture Research: Comprehensive review of the agriculture research setup to bring focus on raising productivity and developing climate resilient varieties
National Cooperation Policy: For systematic, orderly and all-round development of the cooperative sector
Atmanirbharta: For oil seeds such as mustard, groundnut, sesame, soyabean and sunflower.
Release of new varieties: 109 new high-yielding and climate resilient varieties of 32 field and horticulture crops will be released for cultivation by farmers
Natural Farming
- 5 schemes to focus on 4.1 crore youth over 5 years with a central outlay of ₹2 lakh crore
Comprehensive internship scheme for 1 crore youth in top companies over 5 years - Employment-linked incentives, including one month’s wage support for first-time employees.
- Women-specific skilling programs and increased workforce participationMSME and Manufacturing Support
- Special attention to MSMEs and manufacturing sector
- Credit guarantee scheme and term loans for machinery purchase
- Technology support package for MSMEs
- SIDBI to open 24 new branches to serve MSME clusters > Financial Initiatives
- Mudra loan limit increased from ₹10 lakh to ₹20 lakh for previous borrowers
- Financial support for higher education loans up to ₹10 lakhs in domestic institutions
> Infrastructure and Regional Development - Rental housing in PPP mode for industrial workers
- Special financial support of ₹15,000 crore for Andhra Pradesh
- New airports, medical facilities, and sports infrastructure for Bihar > Economic Outlook
- Inflation moving towards 4% target
- India’s economic growth described as a “shining exception”
- Focus on job creation and boosting consumption, potentially benefiting consumer goods, real estate, and auto sector > Social Welfare
- Extension of PMGKAY (Pradhan Mantri Garib Kalyan Anna Yojana) for five years
Over ₹3 lakh crore allocated for schemes benefiting women and girls
> Budget Estimates 2024-25
FY25 Total Receipts estimated at ₹32.07 lakh crore
FY25 Total Expenditure estimated at ₹48.21 lakh crore
Net tax receipts estimated at ₹25.83 lakh crore
FY25 Fiscal deficit estimated at 4.9% of GDP
Gross market borrowings estimated at ₹14.01 lakh crore
Net market borrowings estimated at ₹11.63 lakh crore
> Tax rate structure revised in new regime
Tax rate structure in the new income Tax regime has been revised –
₹0-3 lakh – Nil
₹3-7 lakh – 5%
₹7-10 lakh – 10%
₹10-12 lakh – 15%
₹12-15 lakh – 20%
More than ₹15 lakh – 30%
Standard Deduction amount raised to ₹75,000 > Capital Gains Tax
Short term capital gain tax revised to 20% while long term capital gain tax raised to 12.5% on Financial assets
STT (Security Transaction Tax) on derivatives raised to to 0.02%
Railway expenditure highest ever: Fin Secretary
Finance Secretary T. V. Somanathan said that the expenditure towards railways is the highest ever at ₹2.56 lakh crore. On the fiscal deficit, he said it is highly likely the fiscal deficit will not exceed 4.5% in FY26. He added that there is a commitment to endeavor to reduce the debt-to-GDP ratio every year.
Wanted to simplify approach on capital gains tax: FM Sitharaman
Finance Minister Nirmala Sitharaman in a press briefing after the announcement of Union Budget 2024 said that the average taxation has come down for asset classes which encourages investment in the market. She said that an attempt has been made to widen the tax net and it has to be widened for both direct and indirect taxes.
It was also clarified that the increased Securities Transaction Tax (STT) on F&O will be effective from October 1, 2024.
Check the key announcements for Tourism sector:
- Development of Vishnupad Temple Corridor and Mahabodhi Temple Corridor modelled on Kashi Vishwanath Temple Corridor
- Comprehensive development initiative for Rajgir will be undertaken which holds religious significance for Hindus, Buddhists and Jains.
- The development of Nalanda as a tourist centre besides reviving Nalanda University to its glorious stature.
- Assistance to development of Odisha’s scenic beauty, temples, monuments, craftsmanship, wildlife sanctuaries, natural landscapes and pristine beaches making it an ultimate tourism destination.
- The government spends 21% of every rupee earned into states’ share of taxes and duties and 19% towards interest payments.
How does the government earn?
Around 27% of every rupee earned by the government comes from borrowing and other liabilities, while 19% comes from Income tax.
What gets costlier after Budget 2024?
FM Sitharaman also announced hikes in custom duties for certain products. These things are likely to get costlier after Budget 2024:
- Ammonium Nitrate
- PVC Flex Films/Flex Banners
- Laboratory Chemicals
- Solar Glass for manufacture of solar cells or modules
- Non-Biodegradable Plastic
What gets cheaper after Budget 2024?
FM Sitharaman announced cuts in custom duties for a slew of products. These are the things that are likely to get cheaper after Budget 2024:
- Mobile phones and chargers
- Printed Circuit Board Assembly (PCBA) and Oxygen Free Copper for use in manufacture of Resistors
- Precious metals like Gold, Silver and Platinum
- Blister Copper and Ferro-Nickel
- Cancer drugs – Trastuzumab Deruxtecan, Osimertinib and Durvalumab
- Components for manufacture of vessels
- Solar energy parts
- Certain brood stock, shrimp and fish feed
- Medical products like orthopedic implants, artificial parts of the body
- Tax on real estate sales
- Budget 2024 announced removal of indexation benefit on sale of property along with lowering on of long term capital gains tax to 12.5%.
- LTCG arising from sale of property was earlier taxed at 20% with indexation benefit. Now, sale of property will attract a new LTCG tax rate of 12.5% without indexation benefit.
Budget expenditure on major sectors
Here are budget expenditure on major sectors:
Defence – ₹4,54,773 crore
Rural Development – ₹2,65,808 crore
Agriculture and Allied Activities – ₹1,51,851 crore
Home Affairs – ₹1,50,983 crore
Education – 1,25,638 crore
IT and Telecom – ₹1,16,342 crore
Health – ₹89,287 crore
Energy – ₹68,769 crore
Social Welfare – ₹56,501 crore
Commerce & Industry – ₹47,559 crore
FY25 Total Receipts estimated at ₹32.07 lakh crore
FY25 Total Expenditure estimated at ₹48.21 lakh crore
Net tax receipts estimated at ₹25.83 lakh crore
Gross market borrowings estimated at ₹14.01 lakh crore
Net market borrowings estimated at ₹11.63 lakh crore
FY25 Fiscal deficit estimated at 4.9% of GDP
The fiscal consolidation path announced by me in 2021 has served our economy very well, and we aim to reach a deficit below 4.5% next year. The Government is committed to staying the course. From 2026-27 onwards, our endeavour will be to keep the fiscal deficit each year such that the Central Government debt will be on a declining path as percentage of GDP, Finance Minister Nirmala Sitharaman said.
Cut in income tax for foreign companies
FM Sitharaman announced reduction of tax rate on foreign companies. The Budget 2024 proposed to reduce the rate of income-tax chargeable on income of foreign company (other than that chargeable at special rates) from 40% to 35%.
Incentives to IFSC
FM Sitharaman announced certain incentives to IFSC. Here are those:
Retail schemes and Exchange Traded Funds in IFSC, shall enjoy tax exemptions along similar lines as available to specified funds.
Exemption of certain income of Core Settlement Guarantee Fund set up in IFSC.
Exclusion of the applicability of section 94B to certain finance companies located in IFSC.
Where a venture capital fund (VCF) located in IFSC extends a loan / other amount to an assessee, it shall no longer be called upon to explain the source of funds.
Surcharge shall not apply on income-tax payable on income from securities by specified funds.
Changes in Capital Gains Taxes
The taxation of capital gains is proposed to be rationalised and simplified, FM Sitharaman said.
Short term gains tax on specified financial assets raised to 20% from 15%, while that on all other financial assets and non-financial assets shall continue to attract the applicable tax rate.
Long term gains tax on all financial and non-financial assets raised to 12.5%. It is proposed to increase the limit of exemption of capital gains on certain listed financial assets from ₹1 lakh to ₹1.25 lakh per year.
Listed financial assets held for more than a year will be classified as long term, while unlisted financial assets and all non-financial assets will have to be held for at least two years to be classified as long-term.
Unlisted bonds and debentures, debt mutual funds and market linked debentures, irrespective of holding period, will attract tax on capital gains at applicable rates.
23 Jul 2024, 12:45:33 PM IST
Announcements on TDS and TCS
Here are some of the announcements on TDS and TCS:
TDS on payment to a partner
Payments made by a firm to its partner shall be subject to TDS at 10% for aggregate amounts more than ₹20,000 in a financial year.
TCS on notified luxury goods
Levy TCS of 1% on notified goods of value exceeding 10 lakh rupees.
TDS on Floating Rate Savings (Taxable) Bonds (FRSB) 2020
TDS is proposed on interest exceeding ₹10,000 on Floating Rate Savings (Taxable) Bonds (FRSB) 2020 or any other notified security of the Central or State Governments
The Budget 2024 is expected to provide focus on the government’s roadmap for ‘Viksit Bharat’ by 2047. While maintaining the path of fiscal prudence, the government is likely to focus on capex spending to help create jobs and targeted social sector spending. Budget is also expected to be themed on improving access to physical, social and digital infrastructure.
