Ira Singh
Khabar Khabaron Ki,23 July’24
Union Finance Minister Nirmala Sitharaman presented the Budget for the fiscal year 2024-25 on Tuesday, marking her seventh consecutive presentation. This achievement surpasses the record previously held by former Prime Minister Morarji Desai (record of six consecutive budgets). The Budget, presented in the Lok Sabha, is the first under Prime Minister Narendra Modi’s third term. Sitharaman presented the Union Budget 2024, prioritizing the needs of the poor, women, youth, and farmers.Sitharaman reportedly stated that the Budget is focused on middle-class, employment, skilling, employment and MSMEs
Key highlights include a substantial allocation of Rs 2 lakh crore for job creation initiatives, aimed at reducing unemployment and boosting skill development. Union Finance Minister Nirmala Sitharaman in her Budget speech proposed creation of employment of about 4.1 crore youth over the next five years. The Budget also sets aside Rs.10 lakh crore for urban housing projects to address the housing needs of the growing urban population. Additionally, Rs 1.52 lakh crore has been allocated to support the agricultural sector, focusing on improving productivity and farmers’ welfare.Among the major announcements were new agricultural schemes focusing on modernizing farming practices and improving irrigation infrastructure. Job-linked schemes were introduced to create employment opportunities across multiple sectors. Furthermore, the Budget outlined substantial infrastructure projects in Bihar and Andhra Pradesh, designed to improve regional connectivity and stimulate local economies.
Key Economic Highlights
●In the Union Budget 2024 presented by Finance Minister Nirmala Sitharaman, the fiscal deficit for the current fiscal year is estimated at 4.9% of GDP. The government has outlined an ambitious plan to reduce the fiscal deficit to 4.5% by the end of the next fiscal year. Additionally, the government has decided to keep market borrowing unchanged at Rs 14.13 lakh crore.
●Finance Minister Nirmala Sitharaman announced that the government is committed to providing substantial fiscal support for infrastructure development over the next five years. A significant capital expenditure outlay of Rs 11.11 lakh crore has been earmarked for this purpose, representing 3.4% of the country’s GDP.
●Sitharaman further mentions that India’s economic growth continues to be the shining exception and will remain so in years ahead. India’s inflation continues to be low and stable moving towards the 4% target. Core inflation (non-food, non-fuel) at 3.1%.
●Finance Minister Nirmala Sitharaman has introduced revisions to the capital gains tax, affecting both short-term and long-term gains. She also raised the exemption limit for capital gains, offering additional relief to middle class. A hike has been announced in the limit capital gains exemption limit to Rs 1.25 lakh per year.The short term capital gains (STCG) tax on some financial assets has been increased from 15 per cent to 20 per cent while the long term capital gains (LTCG) tax will rise from 10 per cent to 12.5 per cent. The Budget has a potential to propel FII (Foreign Institutional Investment) in large scale.
Union Budget 2024- Income Tax announcements
Finance Minister Nirmala Sitharaman has announced a comprehensive review of the Income Tax Act of 1961, aimed at providing relief to the middle class and simplifying the tax system.
Additionally, Sitharaman said that the government will introduce.a “standard operating procedure” (SoP) for TDS defaults and streamline the process of compounding such offences.
The government reportedly announced the withdrawal of the 2% equalisation levy, expansion of tax benefits to certain funds and entities in the IFSC, and changes to the Benami Transaction Act enforcement.
The finance minister added that salaried employees under the new tax regime will save up to ₹17,500 annually in taxes due to the changes proposed in the FY25 Budget.
FM Sitharaman made two announcement with regards to new tax regime:
Finance Minister Nirmala Sitharaman stated the standard deduction for salaried employees will be hiked to ₹75,000, from ₹50,000 under new income tax regime in FY25. Similarly, deduction for family pension for pensioners to be enhanced from ₹15,000 to ₹25,000. This will provide relief to about 4 crore salaried and pensioner individuals, the FM said.
The government raised the deduction limit to 14% from 10% for employers’ contribution for the National Pension System (NPS).
●The standard deduction for salaried employees is proposed to be increased from ₹50,000 to ₹75,000
●Deduction on family pension for pensioners is proposed to be enhanced from ₹ 15,000 to ₹ 25,000
New Tax Slab
Up to Rs 3 lakh no tax
Rs 3 -7 lakh 5 percent
Rs 7-10 lakh 10 percent
Rs 10-12 lakh 15 percent
Rs 15 lakh 30 percent
The FM announced that for space economy, with the govt’s continued emphasis on expanding it by 5 times in the next ten years, a venture capital fund of ₹1,000 crore will be set up. “We will formulate an economic policy framework to delineate the strategy for sustaining high growth with next generation reforms. These reforms will cover all factors of production, including land, labour and capital. This will require collaboration of the Centre and States,” she said.
Finance Minister Nirmala Sitharaman announced plans to develop a taxonomy for climate finance to improve the availability of capital for climate adaptation and mitigation efforts. This initiative aims to provide clearer guidelines and standards for investments in climate-related projects. Sitharaman emphasized that the new taxonomy will help streamline and enhance the flow of financial resources toward climate resilience and environmental sustainability. By establishing a structured framework, the government seeks to attract more investment into climate-focused initiatives.
Stock markets turned highly volatile amid the Union Budget presentation. Sensex tanked 1,266.17 points to 79,235.91,Nifty tumbles 435.05 points to 24,074.20,after FM hikes STT (Securities Transaction Tax )on F&O securities by 0.02 per cent and 0.1 per cent in order to discourage retail investors from trading in the risky market segment.
Prime Minister Narendra Modi praised the Union Budget 2024, calling it progressive and visionary. He stated that that the Union Budget, which was presented by Nirmala Sitharaman, is aimed at empowering every section of the society. While highlighting the measures announced for jobs, PM Modi said that it will open many new opportunities for youngsters. He further said, “We will together make India a global manufacturing hub. The MSME sector of the country is connected to the middle class. The ownership of the MSME sector is with the middle class. This sector provides maximum employment to the poor.”
The Congress while slamming the budget stated that it failed to address the issues concerning common man particularly farmers.Leader of Opposition Rahul Gandhi, on Tuesday slammed Finance Minister Nirmala Sitharaman’s Union Budget, saying it was aimed at appeasing the BJP’s allies and “cronies”.The Congress leader described the document as the “Kursi Bachao” Budget and alleged that it was plagiarized from the Congress party’s Lok Sabha polls manifesto.