Union Budget 2024 Simplified: Things You Must Know!

The Union Budget 2024 is more than just a set of numbers and policies, rather it can be considered a roadmap for the economic future of India. The budget was presented by Finance Minister - Nirmala Sitharaman under the Modi 3.0 government on 24th July 2024 with the aim to set the stage for the government’s economic strategy, impacting everyone from public services to personal finances.

This blog simplifies the Union Budget 2024, highlighting the key changes, new policies, and what they mean for you. So, explore how this year’s budget could affect your finances and change the country’s economic landscape!

Union Budget 2024: Key Highlights You Must Know

• Capital Gains Taxation: Uniform tax rates of 20% for short-term and 12.5% for long-term capital gains, with an increased exemption limit of ₹1.25 lakh per year.
  
• Personal Income Tax Changes: Revised tax rate structure under the new regime, with increased standard deductions and enhanced family pension deductions.
  
• Fiscal Deficit Target: The fiscal deficit is set at 4.9% of GDP, with a goal to reduce it below 4.5% by next year.
  
• Employment and Skilling: A comprehensive package to create jobs, enhance skills, and provide opportunities for 41 million youth over the next five years.
  
• Agricultural Development: Allocation of ₹1.52 lakh crore for agriculture, including initiatives for high-yielding and climate-resilient crop varieties.
  
• Urban Housing: Investment of ₹10 lakh crore under PM Awas Yojana Urban 2.0 to address the housing needs of 1 crore urban poor and middle-class families.

Union Budget 2024: Simplified

The central theme of this Union Budget 2024 revolves around fostering employment, enhancing skilling programs, supporting Micro, Small, and Medium enterprises (MSMEs), and benefitting the middle class.

Notable is the announcement of the Prime Minister’s package, which includes five new schemes to provide employment and skilling opportunities for 4.1 crore youth over the next five years, backed by a substantial central outlay of INR 2 lakh crore.

1. Scheme A: First-time employees (eligible for salary upto ₹1,00,000) get a one month salary up to ₹15,000 in 3 installments.
   
2. Scheme B: Incentives for both employees and employers in the manufacturing sector regarding their EPFO contribution in the first four years of employment.
   
3. Scheme C: Government is to reimburse up to ₹3,000 per month for employer’s EPFO contributions for new employees.
   
4. New Skilling Scheme: A centrally sponsored scheme to skill 20 lakh youth over 5 years. Additionally, 1,000 Industrial Training Institutes (ITIs) will be upgraded in a hub-and-spoke model.
   
5. Internship: One crore youth will receive internship opportunities in top 500 companies over five years, enhancing their employability.

Nine Budget Priorities in Pursuit of ‘Viksit Bharat’:

The budget 2024 outlines nine priorities to drive the vision of a developed India (Viksit Bharat):

1. Productivity and Resilience in Agriculture:

• Allocation of ₹1.52 lakh crore for agriculture and allied sectors.
• Release of 109 high-yield and climate-resilient crop varieties.
• Promotion of natural farming practices for 1 crore farmers, with certification and branding within the next two years.
• Establishment of 10,000 bio-input resource centers for natural farming.
• Implementation of Digital Public Infrastructure (DPI) for Agriculture, covering farmers and their lands within three years.

Employment and Skilling:

• Enhancement of women's participation in the workforce through working women hostels, crèches, and women-specific skilling programs.
• Promotion of market access for women Self-Help Group (SHG) enterprises.
• Revision of the Model Skill Loan Scheme to facilitate loans up to ₹7.5 lakh.
• Provision of financial support for higher education loans up to ₹10 lakh for eligible youth.

Inclusive Human Resources Development and Social Justice:

• Development of industrial nodes along the Amritsar-Kolkata and Visakhapatnam-Chennai Industrial Corridors.
• Significant allocation for women-led development, with over ₹3 lakh crore dedicated to schemes benefiting women and girls.
• Socio-economic development initiatives for tribal families, covering 63,000 villages.
• Establishment of 100 India Post Payment Bank branches in the North East region.

Manufacturing and Services:

• Credit Guarantee Scheme for MSMEs to facilitate loans without collateral for purchasing machinery and equipment.
• New mechanism to ensure continued bank credit to MSMEs during stress periods.
• Enhancement of Mudra Loans under the ‘Tarun’ category to ₹20 lakh.
• Financial support for setting up 50 multi-product food irradiation units in the MSME sector.
• Establishment of E-Commerce Export Hubs under the public-private partnership model to help MSMEs and traditional artisans enter international markets.
• Launch of the Critical Mineral Mission for domestic production and recycling of critical minerals.
• Auctioning of offshore mineral blocks for mining.
• Development of DPI applications in various sectors, including credit, e-commerce, and education.

Urban Development:

• Formulation of Transit-Oriented Development plans for 14 large cities with populations over 30 lakh.
• Investment of ₹10 lakh crore in urban housing, with central assistance of ₹2.2 lakh crore under PM Awas Yojana Urban 2.0.
• Support for developing 100 weekly street markets or ‘haats’ annually over the next five years.

Energy Security:

• Policy documents on ‘Energy Transition Pathways’ to balance employment, growth, and environmental sustainability.
• Promotion of pumped storage projects for electricity storage.
• R&D partnership with the private sector for Bharat Small Modular Reactors.
• Joint venture between NTPC and BHEL for an 800 MW Advanced Ultra Super Critical Thermal Power Plant.
• Regulations for transitioning ‘hard to abate’ industries to the Indian Carbon Market mode.

Infrastructure:

• Central government allocation of ₹11.11 lakh crore for capital expenditure.
• State government provision of ₹1.5 lakh crore in long-term interest-free loans for infrastructure investment.
• Launch of phase IV of the Pradhan Mantri Gram Sadak Yojana to connect 25,000 rural habitations.
• Financial support for irrigation and flood mitigation projects, including the Kosi-Mechi intra-state link in Bihar.
• Comprehensive development projects in tourism sectors, including Vishnupad Temple Corridor and Mahabodhi Temple Corridor.

Innovation, Research and Development:

• Operationalization of the Anusandhan National Research Fund for basic research and prototype development.
• Creation of a ₹1 lakh crore financing pool to spur private sector-driven research and innovation.
• Establishment of a ₹1,000 crore venture capital fund to expand the space economy by five times over the next decade.

Next Generation Reforms:

• Implementation of Unique Land Parcel Identification Number (ULPIN) for all lands.
• Digitization of cadastral maps and establishment of a land registry linked to the farmers' registry.
• Integration of e-shram portals with other portals to create a one-stop solution for the labor market.
• Introduction of NPS Vatsalya, a plan for parents and guardians to contribute to minors' accounts.

Indirect Tax:

GST:

• The tax structure will be simplified and rationalized to expand GST coverage to the remaining sectors.

Customs Duty Changes:

• Reduction on gold, silver, mobile phone parts, and other key items.
• Increase on ammonium nitrate and parts for telecom equipment.

Direct Taxes

Simplification and Rationalization:

• Merging of two tax exemption regimes for charities into one.
• Simplified TDS rates and reassessment processes.
• Revised tax rates for short-term and long-term capital gains -
  

1. Short-Term Capital Gains (STCG):  Short-term capital gains on certain financial assets will now be taxed at a uniform rate of 20%.
   
2. Long-Term Capital Gains (LTCG):  Long-term capital gains on all financial and non-financial assets will now be taxed at 12.5%. To qualify for long-term capital gains benefits, the holding period for equities and equity-oriented mutual funds has been extended from one year to two years.
   
3. Exemption Limit: The exemption limit for capital gains has been increased to ₹1.25 lakh per year.
   

Taxpayer Services:

• Digitization of all remaining services, including rectification and appellate orders.

Employment and Investment:

• Abolishment of angel tax for start-ups.
• Reduced corporate tax rate for foreign companies.

Deepening Tax Base:

• Security Transactions Tax on futures and options increased -
• Futures: 0.02% (previously 0.01%)
• Options: 0.05% (previously 0.035%)
• Taxation on income received from buyback of shares.

Changes in Personal Income Tax

• Standard Deduction: Increased from ₹50,000 to ₹75,000.
• Family Pension Deduction: Increased from ₹15,000 to ₹25,000.

Revised Tax Rates:

Salaried employees in the new tax regime could save up to ₹17,500 in income tax.

Conclusion:

The Union Budget 2024-25 outlines a comprehensive plan to drive economic growth, create jobs, and support various sectors. With targeted initiatives across key areas, the new budget aims to build a more inclusive and resilient economy for a developed India (Viksit Bharat).