Finance Minister Nirmala Sitharaman presented the Union Budget for FY24-25 in Parliament on Tuesday, the first full Budget of prime minister (PM) Narendra Modi's third term. The Budget focused on nine key priorities aimed at generating opportunities for all sections of society.
The FM reduced the fiscal deficit target for FY24-25 to 4.5% of GDP from the 5.1% projected in the Interim Budget. Total expenditure for FY24-25 is estimated at Rs48.21 lakh crore, while receipts are pegged at Rs32.07 lakh crore. The government aims to bring down the fiscal deficit below 4.5% in 2025-26.
Here is an overview of the Income and Expenses of the Government
Tax Proposals
The Budget proposed some major changes in the tax structure:
Income Tax: A revised income tax slab structure was announced under the new tax regime, providing a tax saving of Rs17,500. The new slabs are: up to Rs3 lakh (Nil), Rs3 lakh-Rs7 lakh (5%), Rs7-Rs10 lakh (10%), Rs10-Rs12 lakh (15%), above Rs15 lakh (30%). The standard deduction was raised from Rs30,000 to Rs75,000, offering savings of up to Rs17,500 for taxpayers.
Capital Gains Tax: Short-term capital gains tax on specified financial assets was raised to 20% from 15%. Long-term capital gains tax on all financial and non-financial assets was hiked to 12.5%. The exemption limit on long-term gains from listed securities was increased to Rs1.25 lakh from Rs1 lakh.
Buyback Tax: Income from the buyback of shares will be taxed as dividend income for investors instead of the current additional tax on companies. Further, the cost of such shares shall be treated as a capital loss to the investor.
Securities Transaction Tax (STT): STT rates were increased on options (from 0.0625% to 0.1%) and futures (from 0.0125% to 0.02%).
Tax Deducted at Source (TDS): 10% TDS on payments over Rs20,000 made by firms to partners. 1% TCS on luxury goods over Rs10 lakh. TDS on interest over Rs10,000 on certain government securities.
Corporate Tax: Tax rate for foreign companies proposed to be reduced from 40% to 35%.
Abolition of angel tax for all classes of investors.
Custom Duties
Several changes in custom duties have been announced, including reduction of duties on gold and silver to 6%, and platinum to 6.4%. Exemption of lithium, copper, and cobalt from custom duty. Expansion of the list of exempted capital goods used in manufacturing solar cells and panels.
Incentives for IFSC, Startups, Funds
The Budget provided certain incentives for the International Financial Services Centre (IFSC) at GIFT City, such as tax exemption for retail schemes, exchange-traded funds, core settlement funds, and relaxations for finance companies and venture capital funds operating there. The tax holiday for startups and tax benefits for sovereign and pension funds were extended by a year to March 2025.
Boost for Capex, Infra, Skilling and Employment
The Budget maintained the capital expenditure (capex) outlay at Rs11.11 lakh crore or 3.4% of GDP as announced in the interim Budget. It proposed developing investment-ready industrial parks in or near 100 cities and sanctioned 12 parks under the industrial corridor program. A Critical Mineral Mission was announced for domestic production of critical minerals.
On the skilling front, the Budget aims to upgrade 1,000 ITIs in a hub-and-spoke model over five years. It announced internship opportunities for 1 crore youth in top companies over five years and a monthly stipend of Rs5,000 under the 12-month PM internship scheme. It announced a revision in model skill loan up to Rs7.5 lakh with a guarantee from a government-promoted fund, which is expected to help around 25,000 students every year. Working women's hostels will be set up to increase women's participation in the workforce.
Additionally, e-vouchers for loans up to Rs10 lakh for higher education for 100,000 students every year with annual interest subvention of 3% of the loan amount. Three employment-linked incentive schemes were announced based on EPFO enrolment of first-time employees, providing wage support and EPFO contribution reimbursements.
Support for MSMEs
Several measures were unveiled for MSMEs, including increasing the Mudra loan limit to Rs20 lakh from Rs10 lakh for those who have availed and successfully repaid loans under TARUN category, reducing the turnover threshold for mandatory TReDS onboarding from Rs500 crore to Rs250 crore which will bring 22 more CPSEs and 7,000 more companies on the platform, and setting up e-commerce export hubs under public private partnership mode.
Agriculture and Allied Sectors
The Budget allocated Rs1.52 lakh crore for agriculture and allied sectors. It proposed setting up 10,000 bio-input resource centres and initiating one crore farmers into natural farming over the next two years. Financial support was announced for shrimp breeding centres and vegetable clusters near consumption hubs. Kisan credit cards (KCC) will be launched in five states.
Energy Security
Energy security was also a key priority in the current Budget – it announced pumped storage policy will be brought out for electricity storage and integration of renewable energy in the overall energy mix. R&D of small and modular nuclear reactors and newer technologies for nuclear energy.
A joint venture between NTPC and BHEL to set up a full-scale 800MW (megawatt) commercial thermal plant using advanced ultra-supercritical technology. It also announced an energy audit of traditional micro and small industries in 60 clusters with financial support for shift.
The Union Budget FY24-25 has made significant state-specific announcements for Andhra Pradesh and Bihar, demonstrating the government's commitment to regional development. For Andhra Pradesh, the Budget promises social and infrastructure funds, including a backward region grant for three districts. A package for the Vizag-Chennai Industrial corridor has been announced, along with a substantial financial assistance of Rs15,000 crore for the development of Amaravati, with additional amounts promised for future years. The Union government has also committed to financing and expediting the completion of the Polavaram Irrigation project, considered crucial for the state's agriculture. Furthermore, under the AP Reorganisation Act, funds will be provided for essential infrastructure and backward regions of Rayalaseema, Prakasam, and North coastal Andhra Pradesh.
For Bihar, the Budget announces a series of infrastructure projects, including a road and expressways bonanza. An industrial node at Gaya on the Amritsar-Kolkata industrial corridor will be developed. Road connectivity projects worth Rs26,000 crore have been announced, including the Patna-Purnia Expressway, Buxar-Bhagalpur Expressway, and improvements to Bodhgaya, Rajgir, Vaishali, and Darbhanga Spur. A 2400 MW power project at Pirpainti with an investment of Rs21,400 crore and plans for new airports, medical colleges, and sports infrastructure have been proposed. The The Budget also allocates funds for temple development in Bihar and Odisha. Additionally, Bihar will receive support for capital investments through external assistance from multilateral development banks. These announcements reflect a focused approach to addressing the specific developmental needs of these two states, aiming to boost their economic growth and improve infrastructure.
The Centre will set up 100 branches of India and post payments banks in the Northeast.
Here are the key highlights from the interim Union Budget FY24-25 presented earlier:
Social Justice and Welfare: The interim Budget reiterated the government's focus on the upliftment of the poor, women, youth and farmers through various schemes like PM Garib Kalyan Yojana, PM SVANidhi, PM Vishwakarma Yojana, PM-KISAN, PM Fasal Bima Yojana, Mudra loans for women entrepreneurs etc. Over 25 crore people were assisted out of multi-dimensional poverty in the last 10 years through schemes like PM-SVANidhi for street vendors and PM-Vishwakarma for artisans. Welfare of Farmers Initiatives like PM-KISAN provided financial assistance to 11.8 crore farmers, while PM Fasal Bima Yojana gave crop insurance cover to four crore farmers. e-NAM integrated 1,361 mandis benefiting 1.8 crore farmers. Over 30 crore Mudra loans were given to women entrepreneurs. Female enrolment in higher education increased by 28%, with women constituting 43% in STEM courses.
Housing & Electricity: Despite COVID challenges, the target of three crore houses under PMAY-Gramin will be achieved soon with two crore more houses planned in the next five years. Over 70% houses under PMAY-Gramin are given to women from rural areas. One crore households will get 300 units of free electricity per month through rooftop solarization under the new scheme - PM Surya Ghar Muft Bijli YoJana. The government has received 1.28 crore registrations and 14 lakh applications so far post announcement of this scheme.
Healthcare cover under Ayushman Bharat will be extended to all ASHA, Anganwadi workers and helpers.
The PM Kisan Sampada Yojana has benefitted 38 lakh farmers, while the PM formalisation of micro food processing enterprises scheme assisted 2.4 lakh SHGs.
A Rs1 lakh crore corpus with 50-year interest-free loans will provide long-term financing for research and innovation. A new scheme for deep-tech in defence was announced.
The key focus area for infrastructure include - Railway corridor development under PM Gati Shakti. About 40,000 normal rail bogies to be converted to Vande Bharat standards. Expansion of the aviation sector, with the number of airports doubling to 149.
Green Energy - Coal gasification capacity of 100 MT to be set up by 2030. Blending of biogas in CNG and PNG to be made mandatory in phases. Phased mandatory blending of compressed biogas (CBG) in compressed natural gas (CNG) for transport and piped natural gas (PNG) for domestic purposes to be mandated.
States to be encouraged to develop iconic tourist centers with interest-free loans and a rating framework. An interest-free loan of Rs75,000 crore over 50 years was proposed by states to incentivize milestone-based reforms.
The Union Budget FY24-25 built upon the interim Budget to lay down a comprehensive roadmap for India's future growth and development through tax rationalization, boost to infrastructure and manufacturing, incentives for employment generation, focus on research and innovation, and support for key sectors like agriculture and tourism.
