On July 23, Finance Minister Nirmala Sitharaman unveiled the Union Budget for 2024-25, setting out a strategic blueprint aimed at revitalizing and strengthening various sectors of the Indian economy.

This budget underscores the government’s intent to drive economic growth through targeted investments and policy changes across several key areas, including agriculture, employment, and infrastructure. The outlined priorities reflect a comprehensive effort to address both immediate and long-term developmental needs.

The Finance Minister laid down nine priorities of the Budget:

• Productivity and resilience in agriculture
• Employment and skilling
• Inclusive Human resource development and social justice
• Manufacturing and services
• Support for promotion of MSMEs
• Urban development
• Energy security
• Infrastructure
• Innovation, research and development

Budget 2024 Key Highlights: Agriculture Sector

The 2024-25 Budget emphasizes enhancing the agricultural sector and supporting farmer welfare. The government plans a thorough evaluation of agricultural research systems to enhance productivity and develop crops resilient to climate change. A significant allocation of ₹1.52 lakh crore has been earmarked for agriculture and related sectors, signaling a robust commitment to this vital area.

Budget 2024 Key Highlight: Employment, Skilling, and Education

In a bid to boost employment and skill development, the Budget introduces three new incentive schemes linked to employee benefits. These initiatives are designed to acknowledge new employees and offer support to both employers and employees. Additionally, students who have not previously benefited from government schemes will have access to education loans of up to ₹10 lakh, with e-vouchers providing a 3% interest subsidy on these loans. A new initiative will also facilitate internships at 500 prominent companies for 1 crore youth over the next five years, providing hands-on experience in business settings.

Budget 2024 Key Highlight: MSMEs

The Budget highlights the importance of Micro, Small, and Medium Enterprises (MSMEs) by introducing a revised credit assessment model based on digital data rather than traditional asset and turnover criteria. This approach aims to ensure continued access to credit for MSMEs, which are crucial to the economy, contributing 30% to GDP, 48% to exports, and employing over 110 million people. The budget also addresses challenges such as reduced compliance burdens and trade concerns to support MSMEs effectively.

Budget 2024 Key Highlight: Income Tax

The Finance Minister has revised the personal income tax slabs under the new regime, which could allow salaried individuals to save up to ₹17,500 in taxes. Although the tax rates remain the same, the adjustment of tax slabs provides more relief. For example, the range for income previously between ₹3 lakh and ₹6 lakh is now expanded to ₹3 lakh to ₹7 lakh, maintaining the 5% tax rate. Deduction on family pension for pensioners increased from Rs 15,000 to Rs 25,000. Standard Deduction for salaried employees increased from ₹50,000 to ₹75,000

Rationalization of Capital Gains
Short term gains of financial assets to attract 20% tax rate

• Long term gains on all financial an non-financial assets to attract a tax rate of 12.5%
• Increase in limit of exemption of capital gains on financial assets to ₹1.25 lakh per year

Budget 2024 Key Highlight: Space Economy

To bolster India’s position in the global space industry, a ₹1,000 crore venture capital fund has been introduced. This fund aims to expand the space sector five fold within the next decade. Since the sector was opened to private players in 2020, this investment will support both industry growth and scientific endeavors, enhancing India’s global market share.

Budget 2024 Key Highlight: Customs Duty and Tax Reforms

The Budget proposes to reduce customs duties on gold and silver to 6% and on platinum to 6.4%, aiming to promote domestic value addition. Additionally, a comprehensive review of the Income Tax Act will be undertaken to simplify and streamline the tax code, thereby reducing litigation and enhancing clarity.

Budget 2024 Key Highlight: Infrastructure Development

An investment of ₹10 lakh crore is allocated for the construction of 1 crore urban houses under the Pradhan Mantri Awas Yojana-Urban 2.0. This scheme will replace the current PMAY-U initiative and includes ₹2.2 lakh crore in Central assistance over five years. The fourth phase of the Pradhan Mantri Gram Sadak Yojana (PMGSY) will also be launched to connect 25,000 habitations with all-weather roads, continuing the focus on rural infrastructure.

Budget 2024 Key Highlight: Tourism

Bihar is set to receive major investments in tourism infrastructure, including world-class facilities for the Vishnupad and Mahabodhi temples. Additionally, Rajgir and Nalanda will be developed as significant tourism and educational hubs. Odisha will also receive funds for tourism development, marking a strategic shift towards destination-based tourism.

Budget 2024 Key Highlight: Human Resource Development and Social Justice

The Budget introduces the Pradhan Mantri Janjati Unnat Gram Abhiyan to improve living conditions for tribal communities across 63,000 villages, benefiting 5 crore tribals. This initiative complements the existing Pradhan Mantri Janjati Adivasi Nyaya Maha Abhiyan (PM-JANMAN), which aims to enhance infrastructure and services in tribal regions.

Conclusion

The Union Budget 2024-25 represents a strategic and balanced approach to addressing the diverse needs of India’s economy. By focusing on key areas, this budget lays a solid foundation for inclusive and sustainable growth. The initiatives outlined are set to promote productivity, foster innovation, and support marginalized communities, positioning India for a prosperous fiscal year ahead.

Watch the full Budget 2024 Here:

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Union Budget 2024: Expectations

With the Union Budget 2024 scheduled for release on July 23rd, all eyes are on Finance Minister Nirmala Sitharaman as she prepares to unveil critical policy measures. Expectations are high across various sectors, particularly regarding reforms in indirect taxes, economic stimulus initiatives, and targeted regulatory changes. Stakeholders are anticipating significant announcements that could reshape India’s economic landscape.
Here’s a detailed exploration of what experts and industry leaders foresee in the upcoming budget:

Indirect Taxes (GST)

A major area of focus for the upcoming budget is expected to be GST. The government is looking to revise indirect tax rates to boost consumer spending. Experts believe a committee should be formed to deliberate on the specifics of adjusting GST rates. The healthcare sector is expecting an exemption from GST on interstate movement of equipment, and the manufacturing sector is looking for tax holidays and enhanced input credit.
Here’s a breakdown of some key expectations by industry leaders:

• CGST and IGST Act Amendments: Experts anticipate various amendments to the CGST and IGST Acts to implement the recommendations from the 53rd GST Council meeting. These amendments include introducing a section empowering the government to regularize any tax not levied due to industry practices, extending the time limit for claiming input tax credit (ITC) for specific fiscal years, and introducing an amnesty scheme to waive interest and penalty on tax payments in specific scenarios.
• GST Rate Rationalization: Industry experts recommend establishing a dedicated committee to meticulously examine the specifics of adjusting GST rates. This committee could begin by identifying items for rate rationalization that were previously considered in prior meetings.
• Relaxation of Section 17(5) of the CGST Act: Experts propose a relaxation of this section by reducing the list of blocked credits. This would exclude various business-related expenses from the purview of Section 17(5).
• Addressing IT Sector Concerns: The tax authorities have demanded GST and interest from several IT companies for delays in receiving foreign exchange within a one-year period. Experts argue that the GST law doesn’t necessitate such penalties unless explicitly mentioned in the Letter of Undertaking (LUT) signed by exporters claiming refunds. The government should provide clear guidelines to condone delays in receiving export service consideration.
• Refund of Accumulated ITC by Exporters: The current mechanism for claiming GST refunds of accumulated credit by exporters restricts the refund of input tax credit availed on capital goods. This limitation restricts working capital for exporters. Experts recommend that the government revisit this exclusion and allow refunds of ITC on capital goods, even if spread out over a period.
• Revised procedure for mechanism to be followed for Input Service Distributor (ISD) mechanism Reform
• Re-formulating the concept of large taxpayers (LTU) to provide a single window clearance point for large taxpayers.

Income Tax Relief

In the upcoming budget, taxpayers are expecting relief measures on income tax. This is expected to increase disposable income, which is the money left after paying taxes, for the common man and the middle class. An increase in disposable income will likely lead to a boost in consumer spending which can help the economy grow.
Rationalization of withholding tax (TDS) provisions: The Government might consider clubbing all withholding tax categories into three slabs: (a) 1% for transactions for data gathering like purchase of goods, sale of property, etc. (b) a unform 5% rate for all other transactions, and (c) a penal rate of 10% or 15% for situations where there is no Permanent Account Number (PAN) available.

Revisiting the tax slabs and basic exemption limit

Increasing the quantum of deduction under Section 80C

Standard deduction to be increased:

The Indian Banks association has raised the demand that investments of up to Rs. 5 lakh in fixed deposits are expected to be tax free.

Boosting the Economy

The manufacturing sector is hoping for a tax holiday and enhanced input credit in the upcoming budget. A tax holiday is a period during which a new business is exempt from paying certain taxes. Input credit refers to the tax paid on purchases that a business can claim as a deduction from the tax it owes on its sales. These measures would help the manufacturing sector stabilize operations and expand.

Real Estate and Housing Sector

The real estate sector is eyeing the budget with anticipation, hoping for policies that will revitalize the industry. Homebuyers are looking forward to tax relief through a significant increase in the home loan interest deduction cap. Developers, on the other hand, are advocating for a reduction in long-term capital gains tax.

A key demand is a more nuanced definition of affordability that acknowledges varying costs in different locations. This would replace the current one-size-fits-all approach. Industry leaders believe granting “industry status” to real estate would be a game-changer, attracting investment and boosting growth. Additionally, streamlining approvals through a single window clearance system is seen as crucial for reducing project delays. These measures aim to make real estate a more attractive proposition for both homebuyers and investors, ultimately fostering sustainable growth in the sector.

Healthcare Sector

India’s healthcare sector is yearning for a budget boost. Their top priorities include a significant funding increase to make healthcare more accessible for the public, with a target of 2.5-3% of GDP. Additionally, they’d like to see existing programs like Ayushman Bharat strengthened through collaboration between public and private entities. Investment in medical research and development is another key area of focus. In essence, the budget is viewed as an opportunity to improve affordability, access, and innovation within India’s healthcare system.

Social Sector Spending

There is an expectation that the budget will allocate more funds towards social sector spending. This includes healthcare,education, and social welfare programs. Increasing spending on social programs can help address the needs of vulnerable populations and promote inclusive growth, which means economic growth that benefits everyone in society.

Infrastructure Development

Investments in infrastructure development are a key priority for the government. The budget is likely to allocate funds for improving roads, railways, and other critical infrastructure.

Support for the Agriculture Sector

The agriculture sector is a major source of employment in India. The budget is expected to include measures to support farmers, such as subsidies for irrigation and seeds.

Conclusion

The Union Budget 2024 is a highly anticipated event that will shape the course of the Indian economy in the coming year. With a focus on GST reforms, economic growth, and social welfare, the budget is expected to address a wide range of issues. It will be interesting to see how the government balances these priorities and allocates resources in the upcoming budget.
It is important to note that these are just some of the expectations for the Union Budget 2024. The actual budget proposals may differ.