Budget 2024 Key Highlights: From capital gains, income tax changes to employment initiatives, here are the key takeaways

Budget 2024 Key Highlights: The Union Budget for the financial year 2024-25 was tabled in the Parliament by Finance Minister Nirmala Sitharaman earlier today. This was the seventh budget presented by the current FM and the first one of Prime Minister Narendra Modi-led government's third term.

"India's economic growth continues to be the shining exception and will remain so in the years ahead," said the FM in her budget speech. The global economy while performing better than expected is in the grip of policy uncertainties. There are significant downside risks to growth and upside risks to inflation, she added.

The FM listed nine priorities for this year and coming years. These include productivity and resilience in agriculture, employment and skilling, inclusive HRD and social justice, manufacturing and services, urban development, energy security, infra, innovation and R&D; and next generation reforms. This focuses on job creation and boosting consumption, potentially benefiting consumer goods, real estate, and auto sectors.

However, no major changes were made in personal income tax, which was a disappointment to salaried individuals. "In this budget, we focus on employment, skilling, MSME, middle class," said the Finance Minister.

From income tax to employment benefits, let's take a look at the 14 key highlights of the 2024 Budget:

Capex: For FY25, the government has retained ₹11.11 lakh crore for capital expenditure, which amounts to 3.4 percent of India's GDP. The same was earmarked in February. This is higher than the last year’s revised estimate of ₹9.5 lakh crore.

Tax

Income Tax:  FM announces changes in new tax regime – standard deduction proposed to increase to ₹75,000 from ₹50,000

In new tax regime, tax rate structure to be revised to:

(in Rs) 0-3L - Zero

3-7L - 5%

7-10L - 10%

10-12L - 15%

12-15L - 20%

15L & above -  30%

Salaried employee in new tax regime will save up to ₹17,500 in income tax, said FM.

Capital gains tax: The Finance Minister announced that long-term capital gains on all financial and non-financial assets will attract a tax rate of 12.5% from 10% earlier. Meanwhile, short-term capital gains tax has been increased to 20% from 15% earlier. Additionally, the limit of exemption for capital gains will be set at ₹1.25 lakh per year.

On F&O: In a significant blow to Futures and Options (F&O) traders, Finance Minister Nirmala Sitharaman declared raising the STT rate from 0.01 percent to 0.02 percent. So, after implementing this budget proposal, equity and index traders will have to pay double the tax for their trade.

Angel Tax: Govt announces that Angel Tax will be abolished.

Customs Duty

-The Finance Minister stated that the Indian mobile industry has matured and proposed to reduce the Basic Customs Duty (BCD) on mobile phones, mobile PCDA (Printed Circuit Design Assembly), and mobile charges to 15%.

-Customs duty on gold and silver to be reduced to 6%, platinum to 6.4%.

-BCD to increase from 10% to 15% on printed circuit board assemblies on specific telecom equipment.

-FM exempts customs duties on 25 critical minerals, and lowers BCD for two of them.

Employment and Skilling

PM Package of 5 Schemes: Finance Minister Nirmala Sitharaman introduced a PM Package with five schemes aimed at boosting employment and skilling, with an allocation of ₹2 lakh crore. ₹1.48 lakh crore is earmarked for education, employment, and skilling.

Job Creation: The government will implement three schemes for employment-linked incentives, focusing on EPFO enrollment and supporting first-time employees. New hires will receive up to ₹15,000 in direct benefit transfers (DBT) in three instalments, with a salary cap of ₹1 lakh per month. This initiative aims to benefit 2.1 lakh youths. Additionally, employers will be reimbursed up to ₹3,000 per month for two years for each new employee, aiming to support 50 lakh new jobs and 30 lakh youths. A scheme will also be introduced to offer internships to one crore youth over five years, and rental housing for industrial workers will be facilitated in PPP mode.

Women Empowerment

Increasing women's workforce participation will be a priority, with over ₹3 lakh crore allocated for schemes benefiting women and girls. This includes setting up hostels and creating women-specific skilling programs.

Agriculture and Rural Development

Agricultural Sector: ₹1.52 lakh crore will be allocated to agriculture and allied sectors. A comprehensive review of agricultural research will be undertaken to improve productivity and develop climate-resilient varieties.

Rural Development: ₹2.66 lakh crore will be allocated for rural development initiatives.

Initiative to introduce 1 crore farmers to natural farming over 2 years.

Bihar and Andhra Pradesh

Assistance for Bihar: The budget will expedite the Bihar government's request for external assistance from multilateral development banks. New airports, medical facilities, sports infrastructure, and ₹26,000 crore for highways in Bihar will be funded.

Financial Support for Andhra Pradesh: ₹15,000 crore will be allocated for Andhra Pradesh, with additional amounts in future years to support the Pollavaram irrigation project and other capital investments for economic growth.

MSME and Manufacturing

A new scheme will facilitate term loans for MSMEs to purchase machinery and equipment without collateral. A guarantee fund of up to ₹100 crore will be introduced to support credit guarantees for MSMEs in the manufacturing sector. She also announced technology support package for MSMEs and said that SIDBI will open 24 new branches to serve MSME clusters.

Financial Initiatives

Mudra Loans: The limit for Mudra loans will be increased to ₹20 lakh from ₹10 lakh for those who have previously availed and repaid their loans.

Higher Education Loans: Financial support for loans up to ₹10 lakh for higher education will be provided, with the government issuing e-vouchers directly to 1 lakh students annually, including a 3 percent interest subvention.

Insolvency and Bankruptcy Code (IBC): An integrated tech platform will be set up to improve outcomes under the IBC, ensuring greater consistency, transparency, and better oversight. The IBC has resolved over 1,000 companies, recovering ₹3.3 lakh crore for creditors and disposing of 28,000 cases involving over ₹10 lakh crore before admission.

FDI rules to be simplified further: The Finance Minister stated that rules and recognition for Foreign Direct Investments (FDIs) will be simplified to facilitate their inflow.

Infra and Development

Infrastructure: An additional ₹26,000 crore will be allocated to road connectivity projects.

Critical Mineral Mission: A mission for recycling critical minerals and overseas acquisitions will be established, with plans to auction the first tranche of offshore blocks for mining.

Affordable Housing: ₹10 lakh crore will be invested to address the housing needs of 1 crore urban poor and middle-class families. The PM Surya Ghar Muft Bijli Yojana will install rooftop solar panels for 1 crore households.

Nuclear and Space

The government will partner with the private sector for setting up Bharat small reactors, research and development of Bharat small modular reactors & research and development of newer technologies for nuclear energy, said FM.

She also stated that there will be a continued emphasis on expanding the space economy by five times over the next 10 years. To support this goal, a venture capital fund of ₹1,000 crore will be established.

Budget estimates for FY25

• Fiscal deficit estimate lowered to 4.9% of GDP from 5.1% in interim Budget.
• FM aims to reach a fiscal deficit of below 4.5% by FY26.
• Market borrowing decreased to ₹14.01 lakh crore from ₹15.43 lakh crore for FY24.
• Receipts for FY25 seen at ₹32.07 lakh crore.
• Expenditure for FY25 seen at ₹48.21 lakh crore.