INDIA’S ECONOMIC GROWTH CONTINUES TO BE THE SHINING EXCEPTION DESPITE GLOBAL UNCERTAINTITES

While presenting the Union Budget 2024-25 in Parliament today, the Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman said the global economy, while performing better than expected, is still in the grip of policy uncertainties. Elevated asset prices, political uncertainties and shipping disruptions continue to pose significant downside risks for growth and upside risks to inflation. Yet, India’s economic growth continues to be the shining exception and will remain so in the years ahead, the Finance Minister said.

Elaborating the features of the Union Budget 2024-25, smt. Nirmala Sitharaman said that this budget focuses on 9 priority areas with potential for transformative changes. The budget also covers some of the previously made announcements with an intent to strengthen them and step up their implementation for expediting the goal of Viksit Bharat. These 9 priority areas include:

1) Productivity and resilience in Agriculture

2) Employment & Skilling

3) Inclusive Human Resource Development and Social Justice

4) Manufacturing & Services

5) Urban Development

6) Energy Security

7) Infrastructure

8) Innovation, Research & Development and

9) Next Generation Reforms

She further added that subsequent budgets will build on these, and add more priorities and actions. A more detailed formulation will also be carried out as part of the ‘Economic Policy Framework’.

Giving details of Budget Estimates 2024-25, she said the total receipts other than borrowings and the total expenditure are estimated at ₹32.07 lakh crore and ₹48.21 lakh crore respectively. The net tax receipts are estimated at ₹25.83 lakh crore. The fiscal deficit is estimated at 4.9 per cent of GDP. The gross and net market borrowings through dated securities during 2024-25 are estimated at ₹14.01 lakh crore and ₹11.63 lakh crore respectively. Both will be less than that in 2023-24.

She expressed that the fiscal consolidation path announced in 2021 has served the economy very well, and Government aims to reach a deficit below 4.5 per cent next year. The Government is committed to staying the course. From 2026-27 onwards, endeavour will be to keep the fiscal deficit each year such that the Central Government debt will be on a declining path as percentage of GDP.

HIGHLIGHTS OF THE UNION BUDGET 2024-25

Posted On: 23 JUL 2024 1:17PM by PIB Delhi

The Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman presented the Union Budget 2024-25 in Parliament today. The highlights of the budget are as follows:

Part-A

Budget Estimates 2024-25:

• • Total receipts other than borrowings: `32.07 lakh crore.
  • Total expenditure: `48.21 lakh crore.
  • Net tax receipt: `25.83 lakh crore.
  • Fiscal deficit: 4.9 per cent of GDP.
• Government aims to reach a deficit below 4.5 per cent next year.
• Inflation continues to be low, stable and moving towards the 4% target; Core inflation (non-food, non-fuel) at 3.1%.

• The focus of budget is on EMPLOYMENT, SKILLING, MSMEs, and the MIDDLE CLASS.

Package of PM’s five schemes for Employment and Skilling

•  Prime Minister’s Package of 5 Schemes and Initiatives for employment, skilling and other opportunities for 4.1 crore youth over a 5-year period.
  1. Scheme A – First Timers: One-month salary of up to `15,000 to be provided in 3 installments to first-time employees, as registered in the EPFO.
  2. Scheme B – Job Creation in manufacturing: Incentive to be provided at specified scale directly, both employee and employer, with respect to their EPFO contribution in the first 4 years of employment.
  3. Scheme C – Support to employers: Government to reimburse up to `3,000 per month for 2 years towards EPFO contribution of employers, for each additional employee.
  4. New centrally sponsored scheme for Skilling
     • 20 lakh youth to be skilled over a 5-year period.
     • 1,000 Industrial Training Institutes to be upgraded in hub and spoke arrangements.
  5. New Scheme for Internship in  500 Top Companies  to 1 crore youth in 5 years

Nine Budget Priorities in pursuit of ‘Viksit Bharat’:

1. 1. Productivity and resilience in Agriculture
   2. Employment & Skilling
   3. Inclusive Human Resource Development and Social Justice
   4. Manufacturing & Services
   5. Urban Development
   6. Energy Security
   7. Infrastructure
   8. Innovation, Research & Development and
   9. Next Generation Reforms

Priority 1: Productivity and resilience in Agriculture

• Allocation of  `1.52 lakh crore for agriculture and allied sectors.
• New 109 high-yielding and climate-resilient varieties of 32 field and horticulture crops to be released for cultivation by farmers.
• 1 crore farmers across the country to be initiated into natural farming, with certification and branding in next 2 years.
• 10,000 need-based bio-input resource centres to be established for natural farming.
• Digital Public Infrastructure (DPI) for Agriculture to be implemented for coverage of farmers and their lands in 3 years.

Priority 2: Employment & Skilling

• As part of the Prime Minister’s package, 3 schemes for ‘Employment Linked Incentive’ to be implemented – Scheme A – First Timers; Scheme B – Job Creation in manufacturing;  Scheme C – Support to employers.
• To facilitate higher participation of women in the workforce,
  • working women hostels and crèches to be established with industrial collaboration
  • women-specific skilling programmes to be organized
  • market access for women SHG enterprises to be promoted

Skill Development

• New centrally sponsored scheme for Skilling under Prime Minister’s Package for 20 lakh youth over a 5-year period.
• Model Skill Loan Scheme to be revised to facilitate loans up to
  `7.5 lakh.
• Financial support for loans upto `10 lakh for higher education in domestic institutions to be provided to youth who have not been eligible for any benefit under government schemes and policies.

Priority 3: Inclusive Human Resource Development and Social Justice

Purvodaya

• Industrial node at Gaya to be developed along the Amritsar-Kolkata Industrial Corridor.
• Power projects, including new 2400 MW power plant at Pirpainti, to be taken up at a cost of  `21,400 crore.

Andhra Pradesh Reorganization Act

• • • Special financial support through multilateral development agencies of `15,000 crore in the current financial year.
    • Industrial node at Kopparthy along Vishakhapatnam-Chennai Industrial Corridor and at Orvakal along Hyderabad-Bengaluru Industrial Corridor.

Women-led development

• Total allocation of more than `3 lakh crore for schemes benefitting women and girls.

Pradhan Mantri Janjatiya Unnat Gram Abhiyan

• Socio-economic development of tribal families in tribal-majority villages and aspirational districts, covering 63,000 villages benefitting 5 crore tribal people.

Bank branches in North-Eastern Region

• 100 branches of India Post Payment Bank to be set up in the North East region.

Priority 4: Manufacturing & Services

Credit Guarantee Scheme for MSMEs in the Manufacturing Sector

• A credit guarantee scheme without collateral or third-party guarantee in term loans to MSMEs for purchase of machinery and equipment.

Credit Support to MSMEs during Stress Period

• New mechanism to facilitate continuation of bank credit to MSMEs during their stress period.

Mudra Loans

• The limit of Mudra loans under ‘Tarun’ category to be enhanced to `20 lakh from `10 lakh for those who have successfully repaid previous loans.

Enhanced scope for mandatory onboarding in TReDS

•  Turnover threshold of buyers for mandatory onboarding on the TReDS platform to be reduced from `500 crore to `250 crore..

MSME Units for Food Irradiation, Quality & Safety Testing

• Financial support to set up 50 multi-product food irradiation units in the MSME sector .

E-Commerce Export Hubs

• E-Commerce Export Hubs to be set up under public-private-partnership (PPP) mode for MSMEs and traditional artisans to sell their products in international markets.

Critical Mineral Mission

• Critical Mineral Mission to be set up for domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets.

Offshore mining of minerals

• Auction of the first tranche of offshore blocks for mining, building on the exploration already carried out.

Digital Public Infrastructure (DPI) Applications

• Development of DPI applications in the areas of credit, e-commerce, education, health, law and justice, logistics, MSME, services delivery, and urban governance.

Priority 5: Urban Development

Transit Oriented Development

• Formulation of Transit Oriented Development plans and strategies to implement and finance 14 large cities above 30 lakh population.

Urban Housing

• Investment of  `10 lakh crore, including the central assistance of `2.2 lakh crore in next 5 years,  under PM Awas Yojana Urban 2.0 proposed to address the , housing needs of 1 crore urban poor and middle-class families.

Street Markets

• New scheme to support the development of 100 weekly ‘haats’ or street food hubs every year for the next 5 years in select cities.

Priority 6: Energy Security

Energy Transition

• Policy document on ‘Energy Transition Pathways’ to balance the imperatives of employment, growth and environmental sustainability to be brought out.

Pumped Storage Policy

• Policy for promoting pumped storage projects for electricity storage to be brought out.

Research and development of small and modular nuclear reactors

• Government to partner with private sector for R&D of Bharat Small Modular Reactor and newer technologies for nuclear energy, and to set up Bharat Small Reactors.

Advanced Ultra Super Critical Thermal Power Plants

• Joint venture proposed between NTPC and BHEL to set up a full scale 800 MW commercial plant using Advanced Ultra Super Critical (AUSC) technology.

Roadmap for ‘hard to abate’ industries

• Appropriate regulations for transition of ‘hard to abate’ industries from the current ‘Perform, Achieve and Trade’ mode to ‘Indian Carbon Market’ mode to be put in place.

Priority 7: Infrastructure

Infrastructure investment by Central Government

• `11,11,111 crore (3.4 % of GDP) to be provided for capital expenditure.

Infrastructure investment by state governments

• Provision of `1.5 lakh crore for long-term interest free loans to support states in infrastructure investment.

Pradhan Mantri Gram SadakYojana (PMGSY)

• Launch of phase IV of PMGSY to provide all-weather connectivity to 25,000 rural habitations.

Irrigation and Flood Mitigation

• Financial support of  `11,500 crore to projects such as the Kosi-Mechi intra-state link and other schemes in Bihar.
• Government to provide assistance to Assam, Himachal Pradesh, Uttarakhand and Sikkim for floods, landslides and other related projects.

 Tourism

• Comprehensive development of Vishnupad Temple Corridor, Mahabodhi Temple Corridor and Rajgir.
• Assistance for development of temples, monuments, craftsmanship, wildlife sanctuaries, natural landscapes and pristine beaches of Odisha.

Priority 8: Innovation, Research & Development

• Anusandhan National Research Fund for basic research and prototype development to be operationalised.
• Financing pool of  `1 lakh crore for spurring private sector-driven research and innovation at commercial scale.

Space Economy

• Venture capital fund of  `1,000 crore to be set up for expanding the space economy by 5 times in the next 10 years.

Priority 9: Next Generation Reforms

Rural Land Related Actions

• Unique Land Parcel Identification Number (ULPIN) or Bhu-Aadhaar for all lands
• Digitization of cadastral maps
• Survey of map sub-divisions as per current ownership
• Establishment of land registry
• Linking to the farmers registry

Urban Land Related Actions

• Land records in urban areas to be digitized with GIS mapping.

Services to Labour

• Integration of e-shram portal with other portals to facilitate such one-stop solution.
• Open architecture databases for the rapidly changing labour market, skill requirements and available job roles.
• Mechanism to connect job-aspirants with potential employers and skill providers.

NPS Vatsalya

• NPS-Vatsalya as a plan for contribution by parents and guardians for minors.

PART B

Indirect Taxes

GST

• Buoyed by GST’s success, tax structure to be simplified and rationalised to expand GST to remaining sectors.

Sector specific customs duty proposals

Medicines and Medical Equipment

• Three cancer drugs namely TrastuzumabDeruxtecan, Osimertinib and Durvalumab fully exempted from custom duty.
• Changes in Basic Customs Duty (BCD) on x-ray tubes & flat panel detectors for use in medical x-ray machines under the Phased Manufacturing Programme.

Mobile Phone and Related Parts

• BCD on mobile phone, mobile Printed Circuit Board Assembly (PCBA) and mobile charger reduced to 15 per cent.

Precious Metals

• Customs duties on gold and silver reduced to 6 per cent and that on platinum to 6.4 per cent.

Other Metals

• BCD removed on ferro nickel and blister copper.
• BCD removed on ferrous scrap and nickel cathode.
• Concessional BCD of 2.5 per cent on copper scrap.

Electronics

• BCD removed, subject to conditions, on oxygen free copper for manufacture of resistors.

Chemicals and Petrochemicals

• BCD on ammonium nitrate increased from 7.5 to 10 per cent.

Plastics

• BCD on PVC flex banners increased from 10 to 25 per cent.

Telecommunication Equipment

• BCD increased from 10 to 15 per cent on PCBA of specified telecom equipment.

Trade facilitation

• For promotion of domestic aviation and boat & ship MRO, time period for export of goods imported for repairs extended from six months to one year.
• Time-limit for re-import of goods for repairs under warranty extended from three to five years.

Critical Minerals

• 25 critical minerals fully exempted from customs duties.
• BCD on two critical minerals reduced.

Solar Energy

• Capital goods for use in manufacture of solar cells and panels exempted from customs duty.

Marine products

• BCD on certain broodstock, polychaete worms, shrimp and fish feed reduced to 5 per cent.
• Various inputs for manufacture of shrimp and fish feed exempted from customs duty.

Leather and Textile

• BCD reduced on real down filling material from duck or goose.
• BCD reduced, subject to conditions, on methylene diphenyl diisocyanate (MDI) for manufacture of spandex yarn from 7.5 to 5 per cent.

Direct Taxes

• Efforts to simplify taxes, improve tax payer services, provide tax certainty and reduce litigation to be continued.
• Enhance revenues for funding development and welfare schemes of government.
• 58 per cent of corporate tax from simplified tax regime in FY23, more than two-thirds taxpayers availed simplified tax regime for personal income tax in FY 24.

Simplification for Charities and of TDS

• Two tax exemption regimes for charities to be merged into one.
• 5 per cent TDS rate on many payments merged into 2 per cent TDS rate.
• 20 per cent TDS rate on repurchase of units by mutual funds or UTI withdrawn.
• TDS rate on e-commerce operators reduced from one to 0.1 per cent.
• Delay for payment of TDS up to due date of filing statement decriminalized.

Simplification of Reassessment

• Assessment can be reopened beyond three years upto five years from the end of Assessment Year only if the escaped income is ₹ 50 lakh or more.
• In search cases, time limit reduced from ten to six years before the year of search.

Simplification and Rationalisation of Capital Gains

• Short term gains on certain financial assets to attract a tax rate of 20 per cent.
• Long term gains on all financial and non-financial assets to attract a tax rate of 12.5 per cent.
• Exemption limit of capital gains on certain financial assets increased to ₹ 1.25 lakh per year.

Tax Payer Services

• All remaining services of Customs and Income Tax including rectification and order giving effect to appellate orders to be digitalized over the next two years.

Litigation and Appeals

• ‘Vivad Se Vishwas Scheme, 2024’ for resolution of income tax disputes pending in appeal.
• Monetary limits for filing direct taxes, excise and service tax related appeals in Tax Tribunals, High Courts and Supreme Court increased to ₹60 lakh, ₹2 crore and ₹5 crore respectively.
• Safe harbour rules expanded to reduce litigation and provide certainty in international taxation.

Employment and Investment

• Angel tax for all classes of investors abolished to bolster start-up eco-system,.
• Simpler tax regime for foreign shipping companies operating domestic cruises to promote cruise tourism in India.
• Safe harbour rates for foreign mining companies selling raw diamonds in the country.
• Corporate tax rate on foreign companies reduced from 40 to 35 per cent.

Deepening tax base

• Security Transactions Tax on futures and options of securities increased to 0.02 per cent and 0.1 per cent respectively.
• Income received on buy back of shares in the hands of recipient to be taxed.

Social Security Benefits.

• Deduction of expenditure by employers towards NPS to be increased from 10 to 14 per cent of the employee’s salary.
• Non-reporting of small movable foreign assets up to ₹20 lakh de-penalised.

Other major proposal in Finance Bill

• Equalization levy of 2 per cent withdrawn.

Changes in Personal Income Tax under new tax regime

• Standard deduction for salaried employees increased from ₹50,000 to ₹75,000.
• Deduction on family pension for pensioners enhanced from ₹15,000/- to ₹25,000/-
• Revised tax rate structure:

0-3 lakh rupees	Nil
3-7 lakh rupees	5 per cent
7-10 lakh rupees	10 per cent
10-12 lakh rupees	15 per cent
12-15 lakh rupees	20 per cent
Above 15 lakh rupees	30 per cent

• Salaried employee in the new tax regime stands to save up to ₹ 17,500/- in income tax.

*’ANGEL TAX’ ABOLISHED FOR ALL CLASSES OF INVESTORS

The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman proposed to abolish ‘angel tax’ for all classes of investors, while presenting the Union Budget 2024-25 in Parliament today. She added that this move is aimed to bolster the Indian start-up eco-system, boost the entrepreneurial spirit and support innovation.

The Minister also proposed to reduce the corporate tax rate on foreign companies from 40 to 35 per cent to attract foreign capital for India’s development needs.

Smt. Sitharaman announced to bring out a financial sector vision and strategy document to meet financing needs of the economy and prepare the sector in terms of size, capacity and skills. She added that this would set the agenda for the upcoming five years and guide the work of the government, regulators, financial institutions and market participants.

The Minister further proposed to develop taxonomy for climate finance. This is expected to enhance the availability of capital for climate adaptation and mitigation, which can help achieve India’s climate commitments and green transition.

“Our government will seek the required legislative approval for providing an efficient and flexible mode for financing leasing of aircrafts and ships, and pooled funds of private equity through a ‘variable company structure’,” added Smt. Sitharaman.

To facilitate foreign direct investments, nudge prioritization, and promote opportunities for using Indian Rupee as a currency for overseas investments, the Finance Minister announced that the rules and regulations for Foreign Direct Investment and Overseas Investments will be simplified.

To promote the development of diamond cutting and polishing industry which employs a large number of skilled workers, the Finance Minister proposed to provide for safe harbor rates for foreign mining companies selling raw diamonds.

Further, Smt. Sitharaman proposed a simpler tax regime for foreign shipping companies operating domestic cruises in the country. This will help in realizing the tremendous potential of cruise tourism and give a fillip to this employment generating industry in the country.

The Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman has announced several measures to step up adoption of technology towards digitalization of the economy. While presenting the Union Budget 2024-2025 in the Parliament today, the Union Minister said that the country has successfully used technology for improving productivity and bridging inequality in the economy during past 10 years. She said public investment in digital infrastructure and innovations by the private sector have helped in improving access of all citizens, particularly the common people, to market resources, education, health and services.

Following measures were announced as part of adoption of technology and improving digitalization efforts.

DATA AND STATISTICS

For improving data governance, collection, processing and management of data and statistics, different sectoral data bases, including those established under the Digital India mission, will be utilized with active use of technology tools,  the Union Finance Minister announced.

MOBILE PHONE AND RELATED PARTS

The Finance Minister emphasized that with a three-fold increase in domestic production and almost 100-fold jump in exports of mobile phones over the last six years, the Indian mobile phone industry has matured. In the interest of consumers, the budget proposes to reduce the Customs duty on mobile phone, mobile PCBA and mobile charger to 15 per cent.

ELECTRONICS

The Finance Minister also said that to increase value addition in the domestic electronics industry, the government proposes to remove the customs duty, subject to conditions, on oxygen free copper for manufacture of resistors and to exempt certain parts for manufacture of connectors.

TELECOMMUNICATION EQUIPMENT

To incentivise domestic manufacturing, the Finance Minister also proposes to increase the Customs duty from 10 to 15 per cent on PCBA of specified telecom equipment.

DIGITAL PUBLIC INFRASTRUCTURE (DPI) APPLICATIONS

Turning to the services sector, the Finance Minister proposes development of DPI applications at population scale for productivity gains, business opportunities, and innovation by the private sector. These are planned in the areas of credit, e-commerce, education, health, law and justice, logistics, MSME, services delivery, and urban governance.

The Finance Minister also said that with continued emphasis on expanding the space economy by 5 times in the next 10 years, a venture capital fund of Rs. 1,000 crore will be set up.

“Our government will facilitate development of investment-ready “plug and play” industrial parks with complete infrastructure in or near 100 cities, in partnership with the states and private sector, by better using town planning schemes.” proposed the Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman in the Union Budget 2024-25 towards fulfillment of the priority of ‘Manufacturing & Services’.  The Budget proposes that creation of Twelve industrial parks under the National Industrial Corridor Development Programme will also be sanctioned.

CRITICAL MINERAL MISSION

Prioritizing further the ‘Manufacturing & Services’ sector, the Union Budget 2024-25 proposes to set up a Critical Mineral Mission for domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets. Its mandate will include technology development, skilled workforce, extended producer responsibility framework, and a suitable financing mechanism.

With a focus on offshore mining of minerals, the Union   Finance Minister proposed to launch the auction of the first tranche of offshore blocks for mining, building on the exploration already carried out.

LABOUR RELATED REFORMS

Union Budget 2024-25 also proposes to facilitate the provision of a wide array of services to labour, including those for employment and skilling. “A comprehensive integration of e-shram portal with other portals will facilitate such one-stop solution.” proposed the Finance Minister. Open architecture databases for the rapidly changing labour market, skill requirements and available job roles, and a mechanism to connect job-aspirants with potential employers and skill providers will be covered in these services.

Focusing on ‘Next Gen Reforms’ the Union Budget 2024-25 proposes to revamp ShramSuvidha and Samadhan portals to enhance ease of compliance for industry and trade, with intent to strengthen them and step up their implementation for expediting our journey towards the goal of Viksit Bharat.

SUMMARY OF THE UNION BUDGET 2024-2025

Posted On: 23 JUL 2024 1:21PM by PIB Delhi

INDIA’S INFLATION CONTINUES TO BE LOW, STABLE AND MOVING TOWARDS THE 4 PER CENT TARGET

PM’S PACKAGE OF 5 SCHEMES AND INITIATIVES WITH AN OUTLAY OF  ₹ 2 LAKH CRORE TO FACILITATE EMPLOYMENT, SKILLING AND OTHER OPPORTUNITIES FOR 4.1 CRORE YOUTH IN  5 YEARS

FOR PURSUIT OF ‘VIKSIT BHARAT’, THE BUDGET ENVISAGES SUSTAINED EFFORTS ON 9 PRIORITIES FOR GENERATING AMPLE OPPORTUNITIES FOR ALL

BUDGET 2024-25 FOCUSES ON EMPLOYMENT, SKILLING, MSME’s AND MIDDLE CLASS

NEW 109 HIGH-YIELDING AND CLIMATE-RESILIENT VARIETIES OF 32 FIELD AND HORTICULTURE CROPS WILL BE RELEASED FOR CULTIVATION BY FARMERS

IN THE NEXT TWO YEARS, 1 CRORE FARMERS ACROSS THE COUNTRY WILL BE INITIATED INTO NATURAL FARMING

A PROVISION OF ₹ 1.52 LAKH CRORE FOR AGRICULTURE AND ALLIED SECTOR ANNOUNCED FOR THIS YEAR.

1,000 INDUSTRIAL TRAINING INSTITUTES WILL BE UPGRADED

GOVERNMENT WILL FORMULATE A PLAN, PURVODAYA, FOR THE ALL-ROUND DEVELOPMENT OF THE EASTERN REGION COVERING BIHAR, JHARKHAND, WEST BENGAL, ODISHA AND ANDHRA PRADESH

FOR PROMOTING WOMEN-LED DEVELOPMENT, THE BUDGET CARRIES AN ALLOCATION OF MORE THAN ` 3 LAKH CRORE FOR SCHEMES BENEFITTING WOMEN AND GIRLS

A PROVISION OF  ₹ 2.66 LAKH CRORE FOR RURAL DEVELOPMENT INCLUDING RURAL INFRASTRUCTURE MADE THIS YEAR

THE LIMIT OF MUDRA LOANS WILL BE ENHANCED TO ₹ 20 LAKH FROM THE CURRENT  ₹ 10 LAKH

GOVERNMENT TO LAUNCH A COMPREHENSIVE SCHEME FOR PROVIDING INTERNSHIP OPPORTUNITIES IN 500 TOP COMPANIES TO 1 CRORE YOUTH IN 5 YEARS

UNDER PM AWAS YOJANA URBAN 2.0, HOUSING NEEDS OF 1 CRORE URBAN POOR AND MIDDLE-CLASS FAMILIES WILL BE ADDRESSED WITH AN INVESTMENT OF  ₹ 10 LAKH CRORE

PHASE IV OF PMGSY WILL BE LAUNCHED TO PROVIDE ALL-WEATHER CONNECTIVITY TO 25,000 RURAL HABITATIONS

EMPHASIS ON EXPANDING THE SPACE ECONOMY BY 5 TIMES IN THE NEXT 10 YEARS WITH A VENTURE CAPITAL FUND OF  ₹ 1,000 CRORE

MAJOR RELIEF TO 4 CRORE SALARIED INDIVIDUALS AND PENSIONERS IN INCOME TAX

STANDARD DEDUCTION INCREASED FROM  ₹ 50,000 TO  ₹ 75,000/- FOR THOSE IN NEW TAX REGIME

DEDUCTION ON FAMILY PENSION INCREASED FROM  ₹ 15,000/- TO  ₹ 25,000/-

OVER 58 PER CENT CORPORATE TAX RECEIPTS COLLECTED UNDER THE NEW REGIME
TWO THIRD OF INDIVIDUAL INCOME TAX PAYERS SWITCHED OVER TO NEW INCOME TAX REGIME

ANGEL TAX ABOLISHED FOR ALL CLASS OF INVESTORS TO BOOST START-UPS AND INVESTMENTS

CORPORATE TAX ON FOREIGN COMPANIES REDUCED FROM 40 TO 35 PER CENT TO INVITE INVESTMENTS

5 PER CENT TDS ON MANY PAYMENTS MERGED TO 2 PER CENT TDS

CAPITAL GAIN EXEMPTION LIMIT INCREASED TO ₹ 1.25 LAKH PER YEAR TO BENEFIT LOWER AND MIDDLE INCOME CLASSES

CUSTOM DUTY ON X-RAY PANELS, MOBILE PHONES & PCBA REDUCED TO 15 PER CENT

PRECIOUS METALS INCLUDING GOLD AND SILVER TO BECOME CHEAPER, CUSTOM DUTY REDUCED TO 6 PER CENT

PART A

Despite global economy remaining under the grip of policy uncertainties, India’s economic growth continues to be the shining exception and will remain so in the years ahead. Minister of Finance and Corporate Affairs Smt Nirmala Sitharaman, while presenting the Union Budget 2024-25 in Parliament today said that India’s inflation continues to be low, stable and moving towards the 4 per cent target. Core inflation (non-food, non-fuel) currently is 3.1 per cent and steps are being taken to ensure supplies of perishable goods reach market adequately.

Interim Budget

The Finance Minister said that as mentioned in the interim budget, the focus is on 4 major castes, namely  ‘Garib’ (Poor), ‘Mahilayen’ (Women), ‘Yuva’ (Youth) and  ‘Annadata’ (Farmer).

Budget Theme

Dwelling on the Budget theme, Smt Sitharaman said, turning attention to the full year and beyond, in this budget, we particularly focus on employment, skilling, MSMEs, and the middle class. She announced the Prime Minister’s package of 5 schemes and initiatives to facilitate employment, skilling and other opportunities for 4.1 crore youth over a 5-year period with a central outlay of ₹2 lakh crore. This year, ₹1.48 lakh crore has been allocated for education, employment and skilling.

Budget Priorities

The Finance Minister said, for pursuit of ‘Viksit Bharat’, the budget envisages sustained efforts on the following 9 priorities for generating ample opportunities for all.

1. Productivity and resilience in Agriculture
2. Employment & Skilling
3. Inclusive Human Resource Development and Social Justice
4. Manufacturing & Services
5. Urban Development
6. Energy Security
7. Infrastructure
8. Innovation, Research & Development and
9. Next Generation Reforms

Priority 1: Productivity and resilience in Agriculture

The Finance Minister announced that the government will undertake a comprehensive review of the agriculture research setup to bring the focus on raising productivity. New 109 high-yielding and climate-resilient varieties of 32 field and horticulture crops will be released for cultivation by farmers.

In the next two years, 1 crore farmers across the country will be initiated into natural farming supported by certification and branding.

10,000 need-based bio-input resource centres will be established.

For achieving self-sufficiency in pulses and oilseeds, government will strengthen their production, storage and marketing and to achieve ‘atmanirbharta’ for oil seeds such as mustard, groundnut, sesame, soybean, and sunflower.

Government, in partnership with the states, will facilitate the implementation of the Digital Public Infrastructure (DPI) in agriculture for coverage of farmers and their lands in 3 years.

Smt Sitharaman announced a provision of ₹1.52 lakh crore for agriculture and allied sector this year.

Priority 2: Employment & Skilling

The Finance Minister said that the government will implement 3 schemes for ‘Employment Linked Incentive’, as part of the Prime Minister’s package. These will be based on enrolment in the EPFO, and focus on recognition of first-time employees, and support to employees and employers.

Government will also facilitate higher participation of women in the workforce through setting up of working women hostels in collaboration with industry, and establishing creches.

Referring to the Skilling programme, the Finance Minister announced a new centrally sponsored scheme, as the 4^th scheme under the Prime Minister’s package, for skilling in collaboration with state governments and Industry. 20 lakh youth will be skilled over a 5-year period and 1,000 Industrial Training Institutes will be upgraded in hub and spoke arrangements with outcome orientation.

She also announced that the Model Skill Loan Scheme will be revised to facilitate loans up to
₹7.5 lakh with a guarantee from a government promoted Fund, which is expected to help 25,000 students every year.

For helping the youth, who have not been eligible for any benefit under government schemes and policies, she announced a financial support for loans upto ₹10 lakh for higher education in domestic institutions. E-vouchers for this purpose will be given directly to 1 lakh students every year for annual interest subvention of 3 per cent of the loan amount.

Priority 3: Inclusive Human Resource Development and Social Justice

Talking about the Saturation approach, the Finance Minister emphasised that implementation of schemes meant for supporting economic activities by craftsmen, artisans, self-help groups, scheduled caste, schedule tribe and women entrepreneurs, and street vendors, such as PM Vishwakarma, PM SVANidhi,  National Livelihood Missions, and Stand-Up India will be stepped up.

Purvodaya

Government will formulate a plan, Purvodaya, for the all-round development of the eastern region of the country covering Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh.  This will cover human resource development, infrastructure, and generation of economic opportunities to make the region an engine to attain Viksit Bharat.

Pradhan Mantri Janjatiya Unnat Gram Abhiyan

The Finance Minister announced that for improving the socio-economic condition of tribal communities, government will launch the Pradhan Mantri Janjatiya Unnat Gram Abhiyan by adopting saturation coverage for tribal families in tribal-majority villages and aspirational districts covering 63,000 villages and benefitting 5 crore tribal people.

More than 100 branches of India Post Payment Bank will be set up in the North East region to expand the banking services.

She said, a provision of ₹2.66 lakh crore for rural development including rural infrastructure was made this year.

Priority 4: Manufacturing & Services

Support for promotion of MSMEs

Smt Sitharaman said, this budget provides special attention to MSMEs and manufacturing, particularly labour-intensive manufacturing. A separately constituted self-financing guarantee fund will provide, to each applicant, guarantee cover up to ₹100 crore, while the loan amount may be larger. Similarly, Public sector banks will build their in-house capability to assess MSMEs for credit, instead of relying on external assessment. She also announced a new mechanism for facilitating continuation of bank credit to MSMEs during their stress period.

Mudra Loans

The limit of Mudra loans will be enhanced to  ₹ 20 lakh from the current  ₹ 10 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category.

MSME Units for Food Irradiation, Quality & Safety Testing

Financial support for setting up of 50 multi-product food irradiation units in the MSME sector will be provided.  Setting up of 100 food quality and safety testing labs with NABL accreditation will also be facilitated. To enable MSMEs and traditional artisans to sell their products in international markets, E-Commerce Export Hubs will be set up in public-private-partnership (PPP) mode .

Internship in Top Companies

The Finance Minister said that as the 5^th scheme under the Prime Minister’s package,  government will launch a comprehensive scheme for providing internship opportunities in 500 top companies to 1 crore youth in 5 years.

Priority 5: Urban Development        

Urban Housing

Under the PM AwasYojana Urban 2.0, housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of  ₹ 10 lakh crore. This will include the central assistance of ₹ 2.2 lakh crore in the next 5 years.

Water Supply and Sanitation

In partnership with the State Governments and Multilateral Development Banks, government  will promote water supply, sewage treatment and solid waste management projects and services for 100 large cities through bankable projects.

PM SVANidhi

She added that building on the success of PM SVANidhi Scheme in transforming the lives of street vendors, Government envisions a scheme to support each year, over the next five years, the development of 100 weekly ‘haats’ or street food hubs in select cities.

Priority 6: Energy Security

The Finance Minister said, in line with the announcement in the interim budget, PM Surya Ghar Muft Bijli Yojana has been launched to install rooftop solar plants to enable 1 crore households obtain free electricity up to 300 units every month. The scheme has generated remarkable response with more than 1.28 crore registrations and 14 lakh applications.

Nuclear energy is expected to form a very significant part of the energy mix for Viksit Bharat.

Priority 7: Infrastructure

The Finance Minister underlined that significant investment the Central Government has made over the years in building and improving infrastructure has had a strong multiplier effect on the economy. Government will endeavour to maintain strong fiscal support for infrastructure over the next 5 years, in conjunction with imperatives of other priorities and fiscal consolidation. ₹11,11,111 crore for capital expenditure has been allocated this year, which is 3.4 per cent of our GDP.

Pradhan Mantri Gram SadakYojana (PMGSY)

The Finance Minister announced that Phase IV of PMGSY will be launched to provide all-weather connectivity to 25,000 rural habitations which have become eligible in view of their population increase.

For Irrigation and Flood Mitigation in Bihar, through the Accelerated Irrigation Benefit Programme and other sources, government will provide financial support for projects with estimated cost of ₹11,500 crore such as the Kosi-Mechi intra-state link and 20 other ongoing and new schemes including barrages, river pollution abatement and irrigation projects.  Government will also provide assistance to Assam, Himachal Pradesh, Uttarakhand and Sikkim for flood management, landslides and related projects.

Priority 8: Innovation, Research & Development

The Finance Minister said that government will operationalize the Anusandhan National Research Fund for basic research and prototype development and set up a mechanism for spurring private sector-driven research and innovation at commercial scale with a financing pool of ₹1 lakh crore in line with the announcement in the interim budget.

Space Economy

With our continued emphasis on expanding the space economy by 5 times in the next 10 years, a venture capital fund of ₹1,000 crore will be set up.

Priority 9: Next Generation Reforms

Economic Policy Framework

The Finance Minister said that the government will formulate an Economic Policy Framework to delineate the overarching approach to economic development and set the scope of the next generation of reforms for facilitating employment opportunities and sustaining high growth.

Labour related reforms

Government will facilitate the provision of a wide array of services to labour, including those for employment and skilling. A comprehensive integration of e-shram portal with other portals will facilitate such one-stop solution. Shram Suvidha and Samadhan portals will be revamped to enhance ease of compliance for industry and trade.

Government will develop a taxonomy for climate finance for enhancing the availability of capital for climate adaptation and mitigation.

Foreign Direct Investment and Overseas Investment

The rules and regulations for Foreign Direct Investment and Overseas Investments will be simplified to (1) facilitate foreign direct investments, (2) nudge prioritization, and (3) promote opportunities for using Indian Rupee as a currency for overseas investments.

NPS Vatsalya

NPS-Vatsalya, a plan for contribution by parents and guardians for minors will be started. On attaining the age of majority, the plan can be converted seamlessly into a normal NPS account.

New Pension Scheme (NPS)

The Finance Minister said that the Committee to review the NPS has made considerable progress in its work and a solution will be evolved which addresses the relevant issues while maintaining fiscal prudence to protect the common citizens.

Budget Estimates 2024-25

The Finance Minister informed that for the year 2024-25, the total receipts other than borrowings and the total expenditure are estimated at ₹32.07 lakh crore and ₹48.21 lakh crore respectively. The net tax receipts are estimated at ₹25.83 lakh crore and the fiscal deficit is estimated at 4.9 per cent of GDP.

She said, the gross and net market borrowings through dated securities during 2024-25 are estimated at ₹14.01 lakh crore and ₹11.63 lakh crore respectively.

Smt Sitharaman emphasised that the fiscal consolidation path announced by her in 2021 has served economy very well, and the government will aim to reach a deficit below 4.5 per cent next year.

PART B

Apart from giving relief to four crore salaried individuals and pensioners of the country in the direct taxes, Union Budget 2024-25 seeks to comprehensively review the direct and indirect taxes in the next six months, simplifying them, reducing tax incidence and compliance burdens and broadening the tax nets. The Budget proposes comprehensive rationalization of GST tax structure along with review of the Custom Duty rate structure to improve the tax base and support domestic manufacturing. A comprehensive review of Income – Tax Act is targeted at reducing disputes and litigations and to make the act lucid, concise and easy to read. Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman said that simplification of tax regimes without exemptions and deductions for corporate and personal income tax has been appreciated by tax payers as over 58 per cent of corporate tax came from simplified tax regime in 2022-23 and more than two third tax payers have switched over to the new personal income tax regime.

Budget 2024-25 increased standard deduction of salaried employees from ₹ 50,000/- to ₹ 75,000/- for those opting for new tax regime. Similarly, deduction on family pension for pensioners enhanced from ₹ 15,000/- to ₹ 25,000/-. Assessments now, can be reopened beyond three years up to 5 years from end of year of assessment, only if, the escaped income is more than ₹ 50 Lakh. The new tax regime rate structure is also revised to give a salaried employee benefits up to ₹ 17,500/- in income tax.

Income Slabs	Tax Rate
0 – 3 Lakh rupees	NIL
3 – 7 Lakh rupees	5 per cent
7 – 10 Lakh rupees	10 per cent
10 – 12 Lakh rupees	15 per cent
12 – 15 Lakh rupees	20 per cent
Above 15 Lakh rupees	30 per cent

Table 1: New Tax Regime Tax Structure

To promote investment and foster employment, Budget has given boost to entrepreneurial spirit and start-up ecosystem, abolishing angel tax for all classes of investors. Further, a simpler tax regime for foreign shipping companies operating domestic cruises is proposed looking at the tremendous potential of cruise tourism. Foreign mining companies selling raw diamonds in the country can now benefit from safe harbor rates which will benefit the diamond industry. Further, corporate tax rate on foreign companies reduced from 40 to 35 per cent to attract foreign capital.

Budget further simplified the direct tax regime for charities, TDS rate structure and capital gains taxation. The two tax exemption regimes for charities will be merged into one. 5 per cent TDS on many payments to be merged into 2 per cent TDS and 20 per cent TDS on repurchase of units by mutual funds or UTI stands withdrawn. TDS rate on e-commerce operators reduced from 1 per cent to 0.1 per cent. Now credit of TCS will be given on TDS deducted from salary. Budget decriminalized delay of payment of TDS up to the due date of filing of TDS statement. Standard Operating Procedure soon for simplified and rationalized compounding guidelines for TDS defaults.

On Capital gains, short term gains shall henceforth attract a rate of 20 per cent on certain financial assets. Long term gains on all financial and non-financial assets to attract 12.5 per cent rate. Limit of exemption of capital gains has been increased to ₹1.25 Lakh per year to benefit lower and middle-income classes. Listed financial assets held for more than a year and unlisted assets (financial and non-financial) held for more than two years to be classified as long term assets. Unlisted bonds and debentures, debt mutual funds and market linked debentures will continue to attract applicable capital gains tax.

Acknowledging that GST has decreased tax incidence on common man and terming it as a success of vast proportions, Union Finance Minister Smt Nirmala Sitharaman said that GST has reduced compliance burden and logistics cost for trade and industry. Now the Government envisages further simplifying and rationalizing the tax structure to expand it to remaining sectors. Budget also proposed to further digitalise and make paperless the remaining services of Customs and Income Tax including rectification and order giving effect to appellate orders over the next two years.

Custom duties have been revised to rationalize and revise them for ease of trade and reduction of disputes. Giving relief to cancer patients, Budget fully exempted three more cancer treating medicines from custom duties, namely, Trastuzumab Deruxtecan, Osimertinib and Durvalumab. There will be reduction in Basic Customs Duty (BCD) on X-ray machines tubes and flat panel detectors. BCD on mobile phones, Printed Circuit Board Assembly (PCBA) and mobile chargers reduced to 15 per cent. To give a fillip to processing and refining of critical minerals, Budget fully exempted custom duties on 25 rare earth minerals like lithium and reduced BCD on two of them. Budget proposed to exempt capital goods for manufacturing of solar panels. To boost India’s seafood exports, BCD on broodstock, polychaete worms, shrimps and fish feed reduced to 5 per cent. Budget will foster competitiveness of Indian leather and textiles articles of export. BCD reduced from 7.5 per cent to 5 per cent in Methylene Diphenyl Diisocyanate (MDI) used for manufacture of spandex yarn. Custom duties on gold and silver reduced to 6 per cent and on platinum to 6.4 per cent. BCD on ferro nickel and blister copper removed, while, BCD on ammonium nitrate increased from 7.5 to 10 per cent to support existing and new capacities in pipeline. Similarly, BCD on PVC flex banners increased from 10 to 25 per cent considering the hazard to environment. To incentivize domestic manufacturing, BCD on PCBA of specific telecom equipments increased from 10 to 15 per cent.

For dispute resolution and dispose-off backlogs, Union Finance Minister proposed Vivad se Vishwas Scheme, 2024 for resolsution of certain income tax disputes pending in appeal. The monetary limits for filing appeals related to direct taxes, excise and service tax in High Courts, Supreme Courts and tribunals has been increased to ₹ 60 Lakh, ₹ 2 Crore and ₹ 5 Crore, respectively. Further to reduce litigation and provide certainty in international taxation, scope of safe harbour rules to be expanded and transfer pricing assessment procedure to be streamlined.