Union Budget 2024

Let us have a look at what the new Union Budget is holding for the people of India in the financial year of 2024-2025.

What is the Union Budget?

At the beginning of every financial year, the Government of India comes up with a blueprint of how the expenditures and revenues of the country will be taken care of that year. The Finance Minister presents the budget in February so that it can be finalized before the start of the new fiscal year, that is, April. Under Article 112 of the Constitution of India, the Union Budget is a detailed statement of the country's estimated upcoming expenses and revenue sources.

In general, the Union Budget is classified into 2 parts:

1. Capital Budget

   The Capital budget comprises 2 major sub-heads: Capital receipts and Capital expenditures. On the one hand, capital receipts include 

   • Capital receipts: Loans from RBI (Reserve Bank of India), foreign government, or citizens

   • Capital expenditures: incurred for the maintenance and development of health facilities, buildings, machinery, etc.

2. Revenue Budget

   The Revenue budget comprises 2 major sub-heads: Revenue receipts and Revenue expenditures. On one hand, revenue receipts include:

   • Tax revenues: Excise duty tax, income tax, corporate tax, etc.

   • Non-tax revenues: Government fees, fines, profits, etc.

   On the other hand, revenue expenditures include the day-to-day expenditures incurred by the government for their regular functioning.

Fiscal Outlook and Budget Estimates in Budget 2024

For the fiscal year 2024-25, total receipts are estimated at ₹32.07 lakh crore, with total expenditure at ₹48.21 lakh crore. The fiscal deficit is targeted at 4.9% of GDP, with efforts to reduce it further in subsequent years.

Union Budget Highlights 2024

Presented by honourable Finance Minister Nirmala Sitharaman on February 1st, 2024, the following are the key highlights put forth in the 2024 Union Budget.

• India's Inflation and Economic Focus: India's inflation remains low and stable, progressing towards the 4% target.

• Prime Minister's Employment and Skill Development Initiative: A ₹2 lakh crore package introduces 5 schemes to empower 4.1 crore youth in 5 years.

• Agricultural Innovations and Initiatives: 109 high-yielding, climate-resilient crop varieties released; 1 crore farmers to adopt natural farming.

• Investment in Agriculture: ₹1.52 lakh crore allocated this year for the agriculture and allied sectors.

• Infrastructure and Development: 1,000 industrial training institutes to be upgraded; 'Purvodaya' plan for Eastern region development.

• Women's Development and Rural Infrastructure: Over ₹3 lakh crore allocated for schemes benefiting women; ₹2.66 lakh crore allocated for rural development.

• Financial Inclusion and Support: MUDRA loan limit increased to ₹20 lakh; internship scheme for 1 crore youth in top companies.

• Urban Housing and Rural Connectivity: ₹10 lakh crore announced for PM Awas Yojana Urban 2.0; Phase IV of PMGSY to start for rural connectivity.

• Space Economy and Tax Reforms: Venture capital fund of ₹1,000 crore for expanding the space economy providing tax relief and exemptions.

• Customs Duty Adjustments: Customs duty reduced to 15% on X-ray panels, mobile phones, PCBA; precious metals duty lowered to 6%.

• Budget Priorities and Themes: The budget focuses on four major pillars identified in the interim budget: 'Garib' (Poor), 'Mahilayen' (Women), 'Yuva' (Youth), and 'Annadata' (Farmer).

• Employment and Skilling Initiatives: Emphasizing on employment and skilling, the Finance Minister announced a ₹2 lakh crore package comprising 5 schemes aimed at empowering 4.1 crore youth over 5 years. This year, ₹1.48 lakh crore has been allocated to education, employment, and skilling.

Key Budget Priorities: 

The budget outlines 9 priorities to achieve 'Viksit Bharat':

• Productivity and Resilience in Agriculture: Introduction of 109 high-yielding, climate-resilient crop varieties and support for natural farming.

• Employment & Skilling: Launch of schemes for employment-linked incentives and skilling of 20 lakh youth.

• Inclusive Human Resource Development and Social Justice: Strengthening support for economic activities among disadvantaged groups.

• Manufacturing & Services: Focus on MSMEs and manufacturing through financial support and infrastructure enhancement.

• Urban Development: Addressing housing needs and improving urban infrastructure.

• Energy Security: Initiatives like PM Surya Ghar Muft Bijli Yojana for solar energy adoption.

• Infrastructure: Significant investments in infrastructure projects, including PMGSY Phase IV.

• Innovation, Research & Development: Setting up Anusandhan National Research Fund and boosting space economy.

• Next Generation Reforms: Introduction of economic policy framework and reforms in labour and foreign investment policies.

New Tax Regime Benefits

Union Budget 2024-25 aims to streamline and simplify India's tax regime, benefiting both individuals and businesses.

The new income tax rate structure offers significant benefits to salaried employees, with potential savings up to ₹17,500 annually. Standard deduction for those opting for the new regime increased from ₹50,000 to ₹75,000. The deductions for family pensioners increased to ₹25,000 from the previous ₹ 15,000 under the new tax regime.

Changes in New Tax Regime Tax Slabs 

The Union Budget 2024 declares some changes in the new tax regime slabs as per the following: 

Capital Gains and Other Reforms

Capital gains tax exemption limit raised to ₹1.25 lakh per year. Simplified tax exemptions and deductions for charities and TDS reforms are also introduced to ease compliance.

GST Rationalization

The GST tax structure will undergo comprehensive rationalization to enhance efficiency and reduce compliance burdens across sectors.

Custom Duty Adjustments

Custom duties revised to promote domestic manufacturing and reduce disputes. Duty exemptions for critical sectors such as healthcare and rare earth minerals. Reductions in duties on items like mobile phones and X-ray machines.

Other Initiatives Announced in Union Budget 2024

1. International Taxation and Dispute Resolution

   Expansion of safe harbour rules and streamlined transfer pricing assessments to provide certainty in international taxation. Introduction of Vivad se Vishwas Scheme 2024 for resolving pending income tax disputes.

2. Sector-Specific Boosts

   Special focus on sectors like cruise tourism, seafood exports, and manufacturing of solar panels through targeted tax incentives and duty reductions.

Conclusion

The Union Budget 2024-25 underscores the government's commitment to simplify taxation, promote investment, and bolster economic growth by reducing compliance burdens, rationalizing tax structures, and fostering a competitive business environment.