Union Budget 2024 Key Highlights: Empowering India’s Growth

Union Budget 2024 Live Updates: Finance Minister Nirmala Sitharaman Aims to Simplify Taxation with Lower Capital Gains

The Union Budget 2024 was presented by Finance Minister Nirmala Sitharaman. The budget includes various changes and new proposals that will affect income tax, social security benefits, capital gains, and more. We will now take a look at the main points from the budget.

Income Tax Changes

• New Income Tax Regime:
  • Standard Deduction: Increased from Rs 50,000 to Rs 75,000.
  • Tax Slabs for FY 2024-25:
    • Up to Rs 3 lakh: Nil
    • Rs 3 lakh to Rs 7 lakh: 5%
    • Rs 7 lakh to Rs 10 lakh: 10%
    • Rs 10 lakh to Rs 12 lakh: 15%
    • Rs 12 lakh to Rs 15 lakh: 20%
    • Above Rs 15 lakh: 30%
  • Capital Gains Tax: Rates increased; regime revamped.
  • Old Tax Regime: No changes to incentivize the new regime.

Social Security Benefits

• NPS Contributions:
  • Employer’s contribution deduction increased from 10% to 14% of employee’s salary.
  • Deduction up to 14% of salary for private sector, public sector banks, and undertakings opting for the new tax regime.

Revenue Impact

• Revenue Forgone: Rs 37,000 crore (Rs 29,000 crore in direct taxes, Rs 8,000 crore in indirect taxes).
• Additional Revenue: Rs 30,000 crore.
• Net Revenue Forgone: Rs 7,000 crore annually.

Widening Tax Base

• Buy-Back of Shares: Income from buy-back to be taxed as dividend in recipient’s hands; cost treated as capital loss.
• Securities Transaction Tax (STT):
  • Options: Increased from 0.0625% to 0.1% of the option premium.
  • Futures: Increased from 0.0125% to 0.02% of traded price.
• Income from House Property: Taxable under ‘income from house property’ instead of ‘profits and gains of business or profession’.
• Transfer of Capital Assets: Transfer under a gift, will, or irrevocable trust by entities other than individuals or HUFs treated as transfer for capital gain calculation.
• TDS on Partner Payments: Payments to partners subject to TDS at 10% for amounts over Rs 20,000 annually.
• TCS on Luxury Goods: 1% TCS on notified luxury goods exceeding Rs 10 lakh in value.
• TDS on Sale of Immovable Property: Aggregate consideration paid by all transferors/transferees considered for TDS.
• TDS on FRSB 2020: Interest exceeding Rs 10,000 on Floating Rate Savings Bonds subject to TDS.
• Non-Business Expenditure for Life Insurance Companies: Non-admissible expenses included in life insurance business profits.
• Taxes Withheld Outside India: Income tax paid outside India considered as income received for calculating total income.
• Section 194J Exclusion: Fees for professional/technical services not considered ‘work’ for TDS under section 194C.
• Business Expenditure Settlement: Settlement fees for legal contraventions disallowed as business expenses.
• Fair Market Value Calculation: Method for FMV on 31.01.18 for unlisted equity shares in an IPO provided.

Long-Term Capital Gains

• Unlisted Assets: Long-term asset classification revised to 24 months for all unlisted assets.

New Income Tax Regime Suitability

• Income Threshold: New regime beneficial if gross income exceeds Rs 15.75 lakh and deductions/exemptions are less than Rs 4,33,333 (excluding standard deduction).

Simplifying Income Tax Regimes

• Continued efforts to simplify taxes, improve taxpayer services, provide tax certainty, reduce litigation, and enhance revenue for development and welfare schemes.
• Simplified tax regimes for corporate and personal income tax well-received.

Securities Transaction Tax (STT)

• Option Sales: Increased to 0.1% from 0.0625%.
• Futures Sales: Increased to 0.02% from 0.0125%.

E-Commerce TDS

• Reduction: TDS on e-commerce cut to 0.1% from 1%.

Customs Duty Changes

• Gold and Silver: Basic customs duty reduced to 6%.
• Platinum: Duty reduced to 6.4%.
• Telecom Equipment: Duty increased to 15% from 10%.
• Certain Brood Stocks, Shrimps, Fish Feed: Duty reduced to 5%.
• Ammonium Nitrate: Duty raised to 10%.
• Non-Biodegradable Plastics: Duty raised to 25%.
• Mobile Phones, PCBA, Chargers: Duty reduced to 15%.
• Critical Minerals: Custom duties fully exempted.
• Plastic Products: Custom duty hiked.

Government Borrowing

• Gross Market Borrowing: Lowered by Rs 12,000 crore to Rs 14.01 lakh crore for FY 2025.

Pradhan Mantri Janjatiya Unnat Gram Abhiyan

• New Program: Announced for 63,000 tribal villages, benefiting 5 crore tribals.
• Objective: Achieve saturation coverage for tribal families in tribal-majority villages and aspirational districts.

Agriculture and Rural Development

• Budget Allocation: ₹2.66 lakh crore provision for rural development.
• Agricultural Research: Transformation to focus on productivity and climate-resilient crop varieties.
• Natural Farming Initiative: Introduction of 1 crore farmers to natural farming over 2 years.

Infrastructure and Regional Development

• Rental Housing: Public-Private Partnership (PPP) mode rental housing for industrial workers.
• Financial Support for Andhra Pradesh: Special allocation of ₹15,000 crore.
• New Developments for Bihar: Establishment of new airports, medical facilities, and sports infrastructure.

Economic Outlook

• Inflation: Moving towards a target of 4%.
• Economic Growth: India described as a “shining exception” in economic growth.
• Job Creation and Consumption: Focus on boosting job creation and consumption, potentially benefiting consumer goods, real estate, and auto sectors.

MSME and Manufacturing Support

• Attention to MSMEs and Manufacturing: Special support and initiatives.
• Credit Guarantee Scheme: Term loans for machinery purchase.
• Technology Support Package: For MSMEs.
• SIDBI Expansion: 24 new branches to serve MSME clusters.

Financial Initiatives

• Mudra Loan Limit Increase: From ₹10 lakh to ₹20 lakh for previous borrowers.
• Higher Education Loans: Financial support for loans up to ₹10 lakh in domestic institutions.
• IBC Technology System: Integrated technology system for the Insolvency and Bankruptcy Code.

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