Union Budget 2024 Highlights: PDF Download, Key Takeaways, Important Points.
Table Of Contents
Budget Day is an eagerly anticipated event in India, with both businesses and the general public waiting with bated breath to understand the schemes and initiatives that could potentially benefit them. This year, due to the elections, Budget 2024 has been announced later than usual i.e. February 1.
The FM announced the Final Budget on 23rd July 2024. She stated that this year’s budget is focused on employment, skilling, MSME and the middle class. She also stated the priorities of the budget which were as follows:
Productivity and Resilience in Agriculture
Employment and Skilling
Inclusive Human Resource Development and Social Justice
Manufacturing and Services
Urban Development
Energy Security
Infrastructure
Innovation, Research and Development
Next Generation Reforms
There were also many reforms under Direct taxes and Indirect taxes in the Budget.
Keep reading this article to learn about the major highlights of the Budget 2024.
1. Direct Tax Proposals
Enhanced Limit of Standard Deduction and Family Pension Deduction Under New Regime
Under the new regime, the standard deduction for salaried individuals has been increased to Rs. 75,000 from Rs. 50,000. Similarly, a deduction on family pension for persons having pension income has been increased to Rs. 25,000 from Rs. 15,000 if they file taxes under the new regime.
Changes in Tax Structure Under the New Regime
Under the New tax regime, the tax structure is revised as follows:
Note: As a result of the above changes, a salaried employee in the new tax regime can save up to Rs. 17,500 in taxes.
Simplification of Taxation of Capital Gains
For classifying assets into long-term and short-term, there will only be two holding periods: 12 months and 24 months. The 36-month holding period has been removed.
The holding period for all listed securities is 12 months. All listed securities with a holding period exceeding 12 months are considered Long-Term. The holding period for all other assets is 24 months.
Unlisted bonds and debentures are brought in line with the taxation on debt mutual funds and market-linked debentures. They will attract tax on capital gains at applicable slab rates. (i.e., they will be treated as short-term irrespective of the period of holding.)
The taxation of Short-Term Capital Gain for listed equity shares, a unit of an equity-oriented fund, and a unit of a business trust has been increased to 20% from 15%. Other financial and non-financial assets which are held for short term shall continue to attract the tax at slab rates.
For the benefit of the lower and middle-income classes, the limit on the exemption of Long-Term Capital Gains on the transfer of equity shares or equity-oriented units or units of Business Trust has increased from Rs.1 Lakh to Rs.1.25 lakh per year. However, the rate at which it is taxed has increased from 10% to 12.5%.
The exemption limit to Rs. 1.25 lakhs has been increased for the whole of the year, whereas the tax rate changed on 23rd July 2024.
The tax on long-term capital gains on other financial and non-financial assets is reduced from 20% to 12.5%. While on the other hand, the indexation benefit that previously was available on sale of long-term assets, has now been done away with. So, any sale of long term asset made from 23rd July, 2024, will attract tax rate of 12.5% only without indexation benefit.
However, it is to be noted that the provision regarding availing the benefit of FMV of asset as on 01.04.2001 as cost while selling the asset, is still available even after the recent changes.
Introduction of TDS on Payments Made to Partners by Firms(Section 194T)
This budget introduced a new TDS provision for payments made by the firms (i.e., it covers both partnership firms as well as LLPs), to the partners by way of salary, remuneration, interest, bonus or commission.
So, now any payment by a firm of the above nature exceeding Rs. 20,000 shall be subjected to the TDS at the rate of 10% u/s 194T.
Abolishment of Angel Tax
The Angel tax provisions of Section 56(2)(viib) has been proposed to be removed.
Angel Tax is a tax levied on companies that issue fresh shares to investors at a price above the company’s Fair Market Value. The excess of the Issue Price over and above the FMV was made taxable u/s 56(2)(viii) as an angel tax in the hands of the Company. This provision is proposed to be removed.
The startup ecosystem will benefit considering the frequent fund raise that can happen in startups and the compliance cost and the time that is consumed by the said provision while conducting a fund raise in start up.
Corporate Taxes on Foreign Companies
Corporate taxes are imposed on the company’s net income or profit. In the Budget 2024, Finance Minister Nirmala Sitharaman has proposed to reduce the corporate tax on foreign companies from 40% to 35%.
Highlights of Various Sectors
Highlights of Priority 1: Agriculture
The government has made a provision of Rs.1.52 lakh crore for agriculture and allied sectors.
The government will release 109 new high-yielding and climate-resilient varieties of 32 field and horticulture crops for cultivation by farmers.
One crore farmers across the country will be initiated into natural farming in the next two years, which will be supported by certification and branding. For this purpose, the government will establish 10,000 need-based bio-input resource centres.
The government will promote Farmer-Producer Organisations, startups and cooperatives for vegetable supply chains, including storage, collection and marketing.
A strategy is being developed to achieve ‘Atmanirbharta’ for oil seeds such as groundnut, mustard, soybean, sesame, and sunflower.
The government will facilitate the implementation of the Digital Public Infrastructure (DPI) in agriculture in partnership with the states to cover farmers and their lands in 3 years. The details of 6 crore farmers and their lands will be recorded in the farmer and land registries. The Jan Samarth-based Kisan Credit Cards will be issued and enabled in 5 states.
Financial support will be provided to set up a network of Nucleus Breeding Centres for Shrimp Broodstocks.
Highlights of Priority 2: Employment and Education
The government will implement 3 new schemes for ‘Employment Linked Incentive’ based on EPFO enrolment:
Scheme A: First Timers – This scheme will provide a direct benefit transfer of one month’s salary in 3 instalments of up to Rs.15,000 to first-time employees in the formal sector registered in the EPFO.
Scheme B: Job Creation in Manufacturing – An incentive will be provided at a specified scale directly to the employee and the employer based on their EPFO contribution in the first 4 years of employment.
Scheme C: Support to Employers – The government will reimburse employers up to Rs.3,000 per month for 2 years based on their EPFO contribution for each additional employee. All additional employment within a salary of Rs.1 lakh per month is included.
A new centrally sponsored scheme for skilling will be introduced in collaboration with the Industry and state governments. Under this scheme, 20 lakh youth will be skilled over a 5-year period, and 1,000 Industrial Training Institutes (ITI) will be upgraded in hub-and-spoke arrangements with outcome orientation.
The Model Skill Loan Scheme will be revised to facilitate loans up to Rs.7.5 lakh for students with a guarantee from a government-promoted Fund.
The government has announced financial support for loans up to Rs.10 lakh for higher education of students in domestic institutions. E-vouchers will be given directly to 1 lakh students every year for an annual interest subvention of 3% of the loan amount.
Highlights of Priority 3: Inclusive Human Resource Development and Social Justice
The government has provided Rs.2.66 lakh crore for rural development and rural infrastructure.
The government will formulate a plan, Purvodaya, for the all-round development of the eastern region of India, covering Jharkhand, Bihar, Odisha, West Bengal, and Andhra Pradesh.
The government will support the development of the industrial node at Gaya, i.e. Amritsar Kolkata Industrial Corridor. This corridor will catalyse the industrial development of the eastern region.
The government will also support the development of road connectivity projects, i.e. Patna-Purnea Expressway, Buxar-Bhagalpur Expressway, Bodhgaya, Rajgir, Vaishali and Darbhanga spurs, and additional 2-lane bridge over river Ganga at Buxar at a total cost of Rs.26,000 crore.
The government will take up power projects, including setting up of a new 2400 MW power plant at Pirpainti at a cost of Rs.21,400 crore.
The government is committed to fulfilling the Andhra Pradesh Reorganization Act and will facilitate special financial support through multilateral development agencies. The government will arrange Rs.15,000 crore in the current financial year, with additional amounts in future years.
The government will provide finance for the early completion of the Polavaram Irrigation Project. It will also provide funds for essential infrastructure such as power, water, roads and railways in the Kopparthy node on the Vishakhapatnam-Chennai Industrial Corridor and the Orvakal node on the Hyderabad-Bengaluru Industrial Corridor.
The government has announced three crore additional houses under the PM Awas Yojana in rural and urban areas.
The government has allocated more than Rs.3 lakh crore to promote women-led development and benefit women and girls.
The government will launch a new scheme, Pradhan Mantri Janjatiya Unnat Gram Abhiyan, to improve the socio-economic condition of tribal communities. It will cover 63,000 villages, benefitting 5 crore tribal people.
To expand banking services, more than 100 branches of India Post Payment Bank will be set up in the North East region.
Highlights of Priority 4: Manufacturing and Services
Promotion of MSMEs
The government will introduce a credit guarantee scheme to facilitate term loans to MSMEs to purchase machinery and equipment without collateral or third-party guarantee. It will be a separately constituted self-financing guarantee fund that will provide a guarantee cover up to Rs.100 crore for each applicant.
Public sector banks will build an in-house capability to assess MSMEs for credit instead of relying on external assessment. They will also develop or get a new credit assessment model based on the scoring of digital footprints of MSMEs in the economy.
The government announced a new mechanism to facilitate the continuation of bank credit to MSMEs during their stress period.
The limit of the Mudra loans is enhanced to Rs.20 lakh from the current Rs.10 lakh under the ‘Tarun’ category for those entrepreneurs who have successfully repaid previous loans under the same category.
The turnover threshold of buyers for mandatory onboarding on the TReDS platform is reduced from Rs.500 crore to Rs.250 crore.
SIDBI will open new branches to expand its reach to serve major MSME clusters and provide direct credit to them within 3 years.
Financial support will be provided to set up 50 multi-product food irradiation units in the MSME sector. The government will facilitate the setting up 100 food quality and safety testing labs with NABL accreditation.
E-Commerce Export Hubs will be set up in public-private-partnership (PPP) mode to enable MSMEs and traditional artisans to sell their products in international markets.
Promotion of Manufacturing and Services
The government will launch a comprehensive scheme to provide internship opportunities to 1 crore youth in 5 years in the top 500 companies. An internship allowance of Rs.5,000 per month and a one-time assistance of Rs.6,000 will be provided.
The government will facilitate the development of investment-ready “plug and play” industrial parks with the states and private sector.
The government will sanction 12 industrial parks under the National Industrial Corridor Development Programme.
The government will set up a Critical Mineral Mission to recycle critical minerals, promote domestic production, and overseas acquisition of critical mineral assets.
The government will launch the first tranche auction of offshore blocks for mining, building on the exploration already carried out.
An Integrated Technology Platform will be set up to improve the outcomes under the Insolvency and Bankruptcy Code (IBC).
The Centre for Processing Accelerated Corporate Exit (C-PACE) services will be extended for the voluntary closure of LLPs.
Additional National Company Law Tribunals to speed up insolvency resolution. Out of these, some Tribunals will be notified to decide cases exclusively under the Companies Act.
Additional Debt Recovery Tribunals will be established to speed up the recovery process.
