Budget 2024 Highlights | How Will it Benefit Taxpayers

Budget 2024 Key Numbers

• Total Receipts (FY25): ₹32.07 lakh crore
• Total Expenditure (FY25): ₹48.21 lakh crore
• Net Tax Receipts (FY25): ₹25.83 lakh crore
• Gross Market Borrowings (FY25): ₹14.01 lakh crore
• Net Market Borrowings (FY25): ₹11.63 lakh crore
• Fiscal Deficit (FY25): Estimated at 4.9% of GDP

Finance Minister Nirmala Sitharaman highlighted that the fiscal consolidation path announced in 2021 has been beneficial for the economy. The goal is to reduce the fiscal deficit below 4.5% of GDP next year.

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Budget 2024: Download Budget 2024

Click here to download the Budget 2024 speech PDF - ttps://www.indiabudget.gov.in/doc/budget_speech.pdf
Click here to download Finance Bill 2024 - https://www.indiabudget.gov.in/doc/Finance_Bill.pdf
Click here to download Economic Survey 2024 - https://www.indiabudget.gov.in/economicsurvey/doc/echapter.pdf

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Budget 2024 Key Highlights

Reduction in Custom Duties

• Customs duties on gold and silver were reduced to 6% and platinum to 6.4%.
• Lithium, copper, and cobalt are exempted from customs duties.
• Expand the list of exempted capital goods used in manufacturing solar cells and panels.
• Reduced Basic Customs Duty (BCD) on MDI for manufacturing spandex yarn from 7.5% to 5%, subject to conditions.
• Customs duty exemption on the manufacturing of connectors.
• Customs duty exempted on oxygen-free copper.

Capital Gains Tax - Updates

Given below are the major updates in capital gains taxes -

Long-term capital gains

• Exemption on LTCG has been increased from Rs.1 lakh to Rs.1.25 lakhs per annum.
• LTCG rate on all financial as well as non-financial assets has been increased to 12.5%.

Short-term capital gains

• STCG on specified financial assets will be charged at 20%.
• STCG on other non-financial assets will be taxed at applicable slab rates.
• Unlisted bonds and debentures, debt mutual funds, and market linked debentures, irrespective of holding period, however, will attract tax on capital gains at applicable rates.

Securities Transaction Tax (STT)

• STT on Futures and options has been increased to 0.02% and 0.01% respectively.
• Listed financial assets held for more than a year will be classified as long term, while unlisted financial assets and all non-financial assets will have to be held for at least two years to be classified as long-term.

Changes in Personal Tax

• The standard deduction under the new tax regime has been increased from Rs.50,000 to Rs.75,000.
• Family pension deduction has been increased from Rs.15,000 to Rs.25,000.
• The slab rates under the new regime have been revised. Here’s the updated tax slabs under the new regime -

The above change is set to help individuals save Rs.17,500 in taxes.

Other Tax Updates

• The government has announced the abolishment of the Angel tax.
• NPS Benefits: The deduction for employer contributions to the NPS is proposed to increase from 10% to 14% of the employee’s salary. Similarly, employees in the private sector, public sector banks, and undertakings who opt for the new tax regime can also avail a deduction of up to 14% of their salary for this expenditure.
• De-penalization of Small Foreign Assets: Indian professionals working in multinationals often receive ESOPs and invest in social security schemes and other movable assets abroad. Currently, non-reporting of such small foreign assets can lead to penalties under the Black Money Act. It is proposed to de-penalize the non-reporting of movable assets up to Rs 20 lakh.
• Rationalisation of TDS Rates:
  

  Section	Current TDS Rate	Proposed TDS Rate
  Section 194D	5%	2%
  Section 194DA	5%	2%
  Section 194G	5%	2%
  Section 194H	5%	2%
  Section 194IB	5%	2%
  Section 194M	5%	2%
  Section 194O	1%	0.1%
  Section 194F	Proposed to be omitted

• New measures to be taken to reduce litigation and appeals. It was also announced that the Income Tax Act of 1961 will be reviewed and made simpler and less complex over the next 6 months.
• Effective from October 1, 2024, credit for tax collected at source (TCS) will be available against the tax withheld on salary income by the employer.
• TDS on Payments to Partners: Payments made by a firm to its partner will now be subject to TDS at 10% for aggregate amounts exceeding ₹20,000 in a financial year.
• TCS on Notified Luxury Goods: A 1% TCS will be levied on notified luxury goods valued over ₹10 lakh.
• TDS on Floating Rate Savings Bonds: TDS will be applied to interest exceeding ₹10,000 on Floating Rate Savings (Taxable) Bonds (FRSB) 2020 or any other notified securities of the Central or State Governments.
• The Budget 2024 proposes to reduce the income tax rate on the income of foreign companies (excluding income charged at special rates) from 40% to 35%.
• Withdrawal of Equalization Levy: The 2% equalization levy will be withdrawn.
• Expansion of Tax Benefits: Tax benefits will be expanded for certain funds and entities in International Financial Services Centres (IFSCs).
• Immunity for Benamidars: Immunity from penalty and prosecution will be granted to benamidars who make a full and true disclosure, aiming to improve conviction rates under the Benami Transactions (Prohibition) Act, 1988.
• The Budget 2024 proposes that income from share buy-backs by companies be taxed as dividend income in the hands of the recipient investor, replacing the current regime where the company pays additional income tax. Additionally, the cost of such shares will be considered a capital loss for the investor.

9 Key Priority Areas

The government highlighted nine priority areas underscoring the government’s commitment to economic growth and sustainable development. These priority areas are -

1. Productivity and Resilience in Agriculture
2. Employment and Skilling
3. Inclusive human resource development
4. Social justice
5. Urban development
6. Energy security
7. Infrastructure
8. Innovation, research, and development
9. Next generation reforms

Agriculture Sector

• Allocated ₹1.52 lakh crore for agriculture and related sectors.
• 10,000 bio-research centers to be established.
• In the next two years, 1 crore farmers will get into natural farming, supported by branding and certification efforts.
• Large vegetable production and supply chain clusters will be developed near consumption centers.
• Financial support will be provided for shrimp breeding centers, with export facilitation through NABARD.
• Kisan Credit Cards will be launched in 5 states.
• 109 varieties of 32 crops will be released.
• Natural farmers will receive help with verification and branding.
• To ensure self-sufficiency in pulses and oil seeds, 6 crore farmers and their land will be added to the farmer and land registry.

3 Schemes Announced for ‘Employment Linked Incentive’

Three employment-linked incentive schemes were announced based on EPFO enrollment, focusing on first-time employees.

Scheme A: First-timers

• First-time employees in all formal sectors will receive one month's wage upon entering the workforce. A direct benefit transfer (DBT) of up to ₹15,000 will be provided in three installments.

Scheme B: Job Creation in Manufacturing

• This scheme incentivizes job creation in the manufacturing sector by supporting first-time employees. Both employees and employers will receive incentives based on their EPFO contributions for the first four years of employment.

Scheme C: Support to Employers

• Employers will be reimbursed up to ₹3,000 per month for two years for their EPFO contribution for each additional employee. This scheme targets employees earning up to ₹1 lakh per month and is expected to benefit 2.1 lakh youths.

Revising the Model Skill Loan Scheme

Establishing working women's hostels and creches in partnership with industry.

• Revising the Model Skill Loan Scheme to offer loans up to ₹7.5 lakh with a guarantee from a government-promoted fund.
• Providing e-vouchers for loans up to ₹10 lakh for higher education in domestic institutions, directly benefiting 1 lakh students annually with an interest subvention of 3% of the loan amount.

Skilling Programme and Upgradation of Industrial Training Institutes

• Upgrade 1,000 ITIs in a hub-and-spoke model over five years.
• Emphasize outcome and quality through collaboration with states and industry.

Internship in Top Companies

• Skill 1 crore youth with India's top companies over five years.
• Offer a 12-month Prime Minister's Internship with a monthly allowance of ₹5,000.

Announcements for MSMEs

• A mechanism to facilitate continued bank credit for MSMEs during periods of stress was introduced.
• The limit of Mudra loans was increased from ₹10 lakh to ₹20 lakh.
• The turnover threshold for mandatory onboarding on the TReDS platform was reduced from ₹500 crore to ₹250 crore.
• Financial support for 50 multi-product food irradiation units will be provided in the MSME sector.
• Establish E-Commerce Export Hubs in a PPP mode to help MSMEs and traditional artisans sell their products internationally.

Industrial parks to be developed in 100 cities

• Develop investment-ready "plug and play" industrial parks in or near 100 cities.
• Sanction 12 industrial parks under the National Industrial Corridor Development Programme.
• Establish the Critical Mineral Mission to focus on domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets.

The Budget 2024 brings a balanced approach towards the economic development of the country and simplifies taxes for everyone.

The newly revised tax slabs and deductions will be applicable from FY 24-25. In Budget 2023, the new tax regime was made the default tax regime. Notably, the government received 58% of its tax revenue from the new regime and 2/3rd of the taxpayers opted for the new regime as against previous years. This year’s budget was highly focused on making the new tax regime more attractive for taxpayers. Having said that, taxpayers can now save Rs.17,500 in taxes under the new regime.

The last date to file ITR for FY 23-24 is 31st July. With only a few days left, if you have not filed your ITR yet, file it now to avoid penalties and notices. File now!

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