Budget 2024 Highlights: Increased Taxes on Capital Gains, Changes in New Tax Regime, Focus on Employment & Skilling

Finance Minister Nirmala Sitharaman presented the Union Budget 2024-25 in parliament on July 23. The Budget emphasized support for the agricultural sector, the introduction of employment schemes, loan initiatives, financial assistance for the MSME sector, infrastructural development, and a fiscal deficit projection of 4.9%, with a commitment to reduce it to 4.5%.

The government announced cuts in customs duties and changes to capital gains taxes for the financial year. The “Taxation Budget” includes a revision of tax slabs under the new tax policy.

Budget 2024 Highlights

Union Budget 2024-25 Highlights:

Income Tax and Taxation:

• Comprehensive review of Income Tax Act 1961 to help the middle class, to be completed in six months.
• New tax slabs under the New Tax Regime:
• No tax up to Rs 3 lakh income
• Rs 3-7 lakh: 5%
• Rs 7-10 lakh: 10%
• Rs 10-12 lakh: 15%
• Rs 12-15 lakh: 20%
• Above Rs 15 lakh: 30%
• Standard deduction under the New Tax Regime raised from Rs 30,000 to Rs 75,000.
• Deduction on family pension for pensioners increased from Rs 15,000 to Rs 25,000.
• Simplified capital gains taxation: Short-term capital gains increased to 20%, LTCG to 12.5% for some assets.
• Securities Transaction Tax (STT) on sale of an option increased to 0.1% from 0.0625%; STT on F&O securities hiked by 0.02% and 0.1%.
• Removal of indexation benefit on immovable assets like real estate.
• Long-term capital gains (LTCG) tax on immovable properties reduced to 12.5% from 20%, but indexation benefits removed.
• TDS on e-commerce cut to 0.1% from 1%.
• Angel tax abolished for all investors.

Customs Duties:

• Customs duty on gold and silver reduced to 6%, and platinum to 6.4%.
• Customs duty cut on ferronickel, blister copper.
• Duty hiked to 15% from 10% on specified telecom equipment.
• Duty reduced to 15% on mobile phones, mobile PCBA, and chargers.
• Duty reduced to 5% on certain brood stocks, shrimps, and fish feed.
• Duty raised to 10% on ammonium nitrate and 25% on non-biodegradable plastics.
• Duties exempted for 25 critical minerals.
• Custom duty hiked on plastic products.
• Duty on Methylene diphenyl diisocyanate (MDI) for spandex yarn manufacture reduced from 7.5% to 5%.
• Duty changes proposed for x-ray tubes & flat panel detectors for use in medical x-ray machines.

Other Announcements:

• Employer NPS deduction increased to 14% from 10%.
• NPS solution for Central Government employees to be developed based on review committee recommendations.
• Corporate tax rate for foreign companies reduced from 40% to 35%.
• Relaxation of rules for reopening and reassessment: assessments can be reopened beyond three years only if undisclosed income is Rs 50 lakh or more, with a maximum period of five years.
• Non-reporting of movable foreign assets by Indian professionals will not incur penalties if the value is up to Rs 20 lakh.
• Capex outlay retained at Rs 11.1 lakh crore.
• Record capital expenditure allocation of Rs 2,62,200 crore for railways, with gross budgetary support of Rs 2,52,200 crore.
• Fiscal deficit projected at 4.9% of GDP, with a target to reduce to 4.5% next year.
• Gross market borrowing target for FY 2025 reduced to Rs 14.01 lakh crore from Rs 14.13 lakh crore.
• Pradhan Mantri Janjatiya Unnat Gram Abhiyan for 63,000 tribal villages.
• Centre to ask states to lower stamp duty and consider further reductions for properties purchased by women.
• 100 branches of India Post Payments Bank to be set up in North East.
• Twelve industrial parks to be set up under the National Industrial Corridor Development Programme.
• Rs 10 lakh crore allocated for providing 1 crore houses to urban poor and middle class.
• Critical mineral mission announced for domestic production, recycling, and overseas acquisition.
• Auction of first offshore mining blocks to be launched.
• Rental housing scheme for industrial workers in PPP mode.
• Integrated Technology Platform to improve Insolvency and Bankruptcy Code (IBC) outcomes.
• Mudra Loan eligibility limit increased to Rs 20 lakh from Rs 10 lakh for successful TARUN category borrowers.
• Turnover threshold for mandatory onboarding on the TReDS platform reduced from Rs 500 crore to Rs 250 crore.
• Credit Guarantee schemes for MSMEs with a guarantee cover of Rs 100 crore.
• SIDBI to open 24 new branches within three years.
• Financial support for 50 multi-product food irradiation units and 100 food quality and safety testing labs.
• E-Commerce Export Hubs to be set up in PPP mode.

Regional Allocations:

Andhra Pradesh:

• Social and infra funds for Andhra Pradesh.
• Rs 15,000 crore financial assistance for Amaravati development.
• Polavaram Irrigation project to receive government financing for early completion.
• Infrastructure funds for backward regions of Rayalaseema, Prakasam, and North coastal Andhra Pradesh.

Bihar:

• Road and expressways development for Bihar.
• Industrial node at Gaya on Amritsar Kolkata Industrial Corridor.
• Rs 26,000 crore road connectivity projects:
• Patna-Purnia Expressway
• Buxar-Bhagalpur Expressway
• Bodhgaya, Rajgir, Vaishali, and Darbhanga Spur
• Additional 2-lane bridge over river Ganga at Buxar

Flood Assistance:

• Govt to provide assistance to flood-affected states like Himachal Pradesh, Uttarakhand, Sikkim, and Assam.

Also read: Budget 2024: What’s Cheaper and What’s Costlier? Here’s the Full List

Employment and Skilling:

• Three employment-linked schemes based on EPFO enrolment.
• Rs 2 lakh crore allocated for job creation over 5 years.
• New employment skilling scheme to provide skills to 20 lakh youth in 5 years.
• One-month wage to all new employees as a direct benefit transfer in three instalments, up to Rs 15,000. Eligibility salary limit: Rs 1 lakh per month.
• Govt to reimburse employers up to Rs 3,000 per month for 2 years towards EPFO contribution for each additional employee, incentivizing employment of 50 lakh persons.
• Working women hostels and creches to be opened to facilitate higher participation of women in the workforce.
• Internship scheme for 1 crore youth in 500 top companies with Rs 5,000 per month as internship allowance and one-time assistance of Rs 6,000.
• Financial support for loans up to Rs 10 lakh for higher education in domestic institutions. E-vouchers for 1 lakh students annually for 3% interest subvention on loans.

Agriculture:

• Comprehensive review of agriculture research for increasing productivity and developing climate-resilient varieties.
• Rs 1.52 lakh crore allocated for agriculture and allied sectors.
• Promotion of shrimp production.
• Release of 109 high-yielding and climate-resilient varieties of 32 crops. Initiation of 1 crore farmers into natural farming in the next 2 years. Establishment of 10,000 bio-input resource centres.
• Aatmanirbharta mission for pulses and oilseeds such as mustard, groundnut, sesame, soybean, and sunflower.
• Development of large-scale clusters for vegetable production near major consumption centres. Promotion of Farmer-Producer Organizations, cooperatives, and start-ups for vegetable supply chains.
• Financial support for setting up Nucleus Breeding Centres for Shrimp Broodstocks. NABARD financing for shrimp farming, processing, and export.

General Focus:

• Focus on middle-class, employment, skilling, employment, and MSMEs.
• Rs 3 lakh crore allocation for women-centric schemes.
• Nine priorities for generating employment: productivity, jobs, social justice, urban development, energy security, infrastructure, and reforms.
• Rs 2 lakh crore package for 5 schemes.

Tourism:

• Vishnupad Temple at Gaya and Mahabodhi Temple at Bodh Gaya in Bihar to be transformed into world-class tourist destinations on the lines of Kashi Vishwanath Temple Corridor.