>>Introduces PM’s package of 5 schemes
>>Boost to entrepreneurship, start-up spirit
New Delhi: The Union Minister of Finance and Corporate Affairs, Nirmala Sitharaman, presented the Union Budget 2024-25 in Parliament Tuesday.
The budget aims to balance economic growth with social welfare, focusing on employment, skilling, MSMEs, and the middle class.
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).
The budget estimates for 2024-25 include total receipts (excluding borrowings) of ₹32.07 lakh crore, total expenditure of ₹48.21 lakh crore, net tax receipts of ₹25.83 lakh crore, and a fiscal deficit of 4.9% of GDP, with a target to reduce it below 4.5% next year. Inflation remains stable and is moving towards the 4% target, with core inflation at 3.1%.
The budget introduces the Prime Minister’s Package of 5 Schemes and Initiatives for employment and skilling, aiming to benefit 4.1 crore youth over a five-year period.
These schemes include incentives for first-time employees, job creation in manufacturing, and support to employers through reimbursements for EPFO contributions. Additionally, a new centrally sponsored skilling scheme will upgrade 1,000 Industrial Training Institutes and provide internships in 500 top companies to 1 crore youth over five years.
Nine budget priorities were outlined in pursuit of ‘Viksit Bharat,’ including productivity and resilience in agriculture, employment and skilling, inclusive human resource development and social justice, manufacturing and services, urban development, energy security, infrastructure, innovation, research and development, and next-generation reforms.
Key allocations include ₹1.52 lakh crore for agriculture and allied sectors, with initiatives like introducing high-yielding crop varieties and promoting natural farming. Employment and skilling initiatives will see the establishment of working women hostels and women-specific skilling programs, along with a revised Model Skill Loan Scheme.
In terms of social justice, significant investments will be made in the socio-economic development of tribal families and the establishment of bank branches in the North-Eastern region.
The manufacturing and services sector will benefit from a new credit guarantee scheme for MSMEs, enhanced Mudra loan limits, and the setup of e-commerce export hubs. Urban development will see investment in transit-oriented development, urban housing, and the creation of street markets.
Energy security measures include policies for energy transition, promotion of pumped storage projects, and research in small and modular nuclear reactors.
Infrastructure investment by the central and state governments is set to receive significant boosts, with allocations for projects like the Pradhan Mantri Gram Sadak Yojana and irrigation and flood mitigation schemes. Tourism development projects in key regions are also highlighted.
Innovation and research will be supported through the Anusandhan National Research Fund and a financing pool for private sector-driven research. Next-generation reforms focus on digitizing land records and integrating labor market databases.
On the tax front, indirect tax changes include simplifications to the GST structure and various sector-specific customs duty adjustments.
Direct tax measures aim to simplify processes, enhance taxpayer services, and reduce litigation, with notable changes like the merger of tax exemption regimes for charities and reduced TDS rates.
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 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.
The budget also proposes significant reforms in capital gains taxation, taxpayer services, and litigation and appeals.
To foster employment and investment, the budget abolishes the angel tax for all classes of investors, introduces simpler tax regimes for foreign shipping companies, and expands safe harbor rules.
Measures to deepen the tax base include increases in the Security Transactions Tax and taxation of income from buybacks of shares. Social security benefits see enhancements in deductions for employer contributions to the NPS and de-penalization of non-reporting small foreign assets.
Overall, the Union Budget 2024-25 aims to stimulate economic growth while ensuring social welfare and equity, with strategic investments and reforms across various sectors.
Highlights
– India’s inflation is low, stable, and moving towards the 4% target.
– PM’s ₹2 lakh crore package to facilitate employment and skilling for 4.1 crore youth in 5 years.
– Budget 2024-25 focuses on employment, skilling, MSMEs, and the middle class.
– 109 new high-yielding, climate-resilient crop varieties to be released.
– 1 crore farmers to be initiated into natural farming in 2 years.
– ₹1.52 lakh crore allocated for agriculture and allied sectors.
– 1,000 Industrial Training Institutes to be upgraded.
– Purvodaya plan for development in Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh.
– Over ₹3 lakh crore allocated for women and girls’ development schemes.
– ₹2.66 lakh crore for rural development and infrastructure.
– Mudra loan limit increased to ₹20 lakh from ₹10 lakh.
– Internship scheme for 1 crore youth in 500 top companies over 5 years.
