On 23-07-2024, Union Minister for Finance and Corporate Affairs Nirmala Sitharaman announced the Union Budget 2024-2025.
Major highlights of India Union Budget 2024-2025, including the vision, change in tax slabs, sector specific focus, allocation of budget, are as follows:
Nine priorities for achieving ‘Viksit Bharat’:
- 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 & Development
-
Next generation reforms
“India’s economic growth continues to be the shining exception and will remain so in the years ahead”
– Nirmala Sitharaman
1. PRODUCTIVITY AND RESILIENCE IN AGRICULTURE
Budget allocation of Rs. 1.52 lakh crores for agriculture and allied sectors.
Addition of 109 high-yielding and climate-resilient varieties of 32 field and horticulture crops for cultivation by farmers.
1 crore farmers across the country to be initiated into natural farming, with certification and branding in next 2 years.
For coverage of farmers and their lands Digital Public Infrastructure for Agriculture to be implemented.
2. EMPLOYMENT AND SKILLING
PM’s five schemes for Employment and Skilling
Five schemes worth Rs. 2 lakh crores for more than 4 crore youth were announced.
- Direct benefit transfer of one-month salary in three instalments up to Rs 15,000 to first-time employees registered in EPFO.
- Incentive to be provided directly to both employees and employer as per their EPFO contribution, in the first four years of employment.
- Government to reimburse up to Rs. 3,000 per month for 2 years towards EPFO contribution of employers, for each additional employee.
- 20 lakh youth to be skilled over a 5-year period and 1,000 Industrial Training Institutes to be upgraded in hub and spoke arrangements, with Schemes sponsored by Central Government.
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Internship in 500 Top Companies to 1 crore youth in 5 years.
Education loan upto 10 lakhs to eligible individuals will be offered by the Central Government, for higher education in the country. Those who are ineligible for any other government schemes or policies can avail this loan.
E-vouchers for loans upto Rs 10 lakhs for higher education in domestic institutions to 1 lakh students every year for annual interest subvention of 3% of loan amount, to be provided.
“The increase in standard deduction would, at the maximum, have the effect of reducing the tax liability by Rs 7,500 at the maximum slab rate. Employment Linked Scheme is intended to generate more employment. Further, employment in organized sector alone is eligible for the benefits sought to be extended. Only those employees who are registered with the EPFO would be counted in for extending the benefit. This is a move towards bringing more organisations into organized sector. The benefit to “first time employees”, earning salary upto Rs 1 Lakh per month, is capped at Rs 15,000 per employee. The benefit would be provided as direct transfer to the employee. This will reduce the burden on the employers seeking to recruit fresh employees. The creation of additional employment in “manufacturing sector” would be incentivized in the form of reimbursement of part of EPFO contribution by the employer and employee. This scheme intends to operate for a longer period of 4 years. The rules relating to (a) determination of new employment generation, (b) determination of remuneration payable to them, (c) form and manner of application for the scheme, and (d) manner of receipt of the subsidy, are yet to be notified by the Government”- Badri Narayanan, Executive Partner, Lakshmikumaran & Sridharan
3. INCLUSIVE HUMAN RESOURCE DEVELOPMENT AND SOCIAL JUSTICE
New 2400 MW power plant at Pirpainti, to be taken up at a cost of Rs. 21,400 crores.
For Women-led development, total allocation of more than Rs. 3 lakh crore for schemes benefitting women and girls.
Pradhan Mantri Janjatiya Unnat Gram Abhiyan
Socio-economic development of tribal families, covering 63,000 villages benefitting 5 crore tribal people.
Bank branches in North-Eastern Region
100 branches of India Post Payment Bank to be set up in the North East region.
4. MANUFACTURING AND SERVICES
A credit guarantee scheme without collateral or third-party guarantee in term loans to MSMEs for purchase of machinery and equipment.
For Credit Support to MSMEs during stress period, new mechanism will be developed to facilitate continuation of bank credit to MSMEs.
The limit of Mudra loans under ‘Tarun’ category to be enhanced from Rs. 10 lakhs to Rs. 20 Lakhs for those who have successfully repaid previous loans.
Turnover threshold of buyers for mandatory onboarding on the TReDS platform to be reduced from Rs. 500 crores to Rs. 250 crores.
Financial support to set up 50 multi-product food irradiation units in the MSME sector.
E-Commerce Export Hubs set up under public-private-partnership (PPP) mode for MSMEs and traditional artisans for selling their products in international markets.
Critical Mineral Mission for domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets.
Development of Digital Public Infrastructure applications in credit, e-commerce, education, health, law and justice, logistics, MSME, services delivery, and urban governance.
5. URBAN DEVELOPMENT
Transit Oriented Development plans and strategies to finance 14 large cities having population of more than 30 lakh.
PM-Awas Yojana Urban 2.0
1) More focus on housing for poor and middle class.
2) Government to allocate Rs. 2.2 lakh crore for urban housing plans under PMAY-U for five years.
3) Interest subsidy under PMAY-U will also be provided.
4) States have been urged to lower stamp duty for women homeowners.
New scheme to support the development of 100 weekly ‘haats’ or street food hubs every year for the next 5 years in select cities.
Andhra Pradesh Reorganization Act, 2014
Special financial support Rs. 15,000 crores in the current financial year.
Industrial node at Kopparthy along Vishakhapatnam-Chennai Industrial Corridor and at Orvakal along Hyderabad-Bengaluru Industrial Corridor.
6. ENERGY SECURITY
Policy document on ‘Energy Transition Pathways’ to balance the imperatives of employment, growth and environmental sustainability. Development of Policy for promoting pumped storage projects for electricity storage.
Joint venture proposed between NTPC and BHEL to set up a full scale 800 MW commercial plant using Advanced Ultra Super Critical (AUSC) technology.
7. INFRASTRUCTURE
Budget allocation of Rs. 11,11,111 crores (3.4 % of GDP) for capital expenditure.
Launch of phase IV of Pradhan Mantri Gram Sadak Yojana to provide all-weather connectivity to 25,000 rural habitations.
Financial support of Rs. 11,500 crores to Kosi-Mechi intra-state link project and other schemes in Bihar.
Assistance to Assam, Himachal Pradesh, Uttarakhand and Sikkim for floods, landslides and other related projects.
Tourism
Vishnupad Temple Corridor and Mahabodhi Temple Corridor to be supported to transform Vishnupad Temple at Gaya and Mahabodhi Temple at Bodh Gaya into world-class pilgrim and tourist destinations.
Nalanda to be developed as a tourist Centre, Nalanda University to be revived to its glorious stature Assistance to make Odisha an ultimate tourism destination.
8. INNOVATION, RESEARCH AND DEVELOPMENT
Anusandhan National Research Fund for basic research and prototype development to be operationalised.
Rs. 1 lakh crore for spurring private sector-driven research and innovation at commercial scale.
Venture capital fund of Rs. 1,000 crores for expanding the space economy by five times in the next 10 years.
9. NEXT GENERATION REFORMS
Rural Land Related Actions
- Unique Land Parcel Identification Number (ULPIN) or Bhu-Aadhaar for all lands
- Digitization of cadastral maps
- Survey of map sub-divisions as per current ownership
- Establishment of land registry
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Linking to the farmers registry
Urban Land Related Actions
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Land records in urban areas to be digitized with GIS mapping.
Services to Labour
- Integration of e-shram portal with other portals to facilitate such one-stop solution.
- Open architecture databases for the rapidly changing labour market, skill requirements and available job roles.
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Mechanism to connect job-aspirants with potential employers and skill providers.
NPS Vatsalya
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NPS-Vatsalya as a plan for contribution by parents and guardians for minors. Once, the child becomes adult, the account can be transferred to child.
PERSONAL INCOME TAX UNDER NEW TAX REGIME
- Standard deduction for salaried employees increased from Rs. 50,000 to Rs. 75,000.
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Deduction on family pension for pensioners enhanced from Rs. 15,000 to Rs. 25,000
The revised tax rate structure under New Regime as per Budget 2024-2025:
|
0-3 lakh rupees |
Nil |
|
3-7 lakh rupees |
5 per cent |
|
7-10 lakh rupees |
10 per cent |
|
10-12 lakh rupees |
15 per cent |
|
12-15 lakh rupees |
20 per cent |
|
Above 15 lakh rupees |
30 per cent |
Rates under the New Regime as per Budget 2023-2024 were as follows:
|
0-3 lakh rupees |
Nil |
|
3-6 lakh rupees |
5 per cent |
|
6-9 lakh rupees |
10 per cent |
|
9-12 lakh rupees |
15 per cent |
|
12-15 lakh rupees |
20 per cent |
|
Above 15 lakh rupees |
30 per cent |
DIRECT TAXES
58 per cent of corporate tax from simplified tax regime in FY23, more than two-thirds taxpayers availed simplified tax regime for personal income tax in FY 24.
“The Budget 2024 has brought in a bouquet of significant changes with an aim to clearing the ambiguity surrounding specific sectors and beneficial changes for trade and industry. This Budget has granted relief from taxability of undenatured ENA or rectified spirit used for manufacture of alcoholic liquor under GST by specifically excluding it from the purview of GST. A beneficial provision has been brought in whereby the Government can regularise any non-levy or short levy of GST owing to a generally prevalent practice. Similar provisions existed in pre-GST regime under Customs, Excise and Service tax laws as well” – Shivam Mehta, Executive Partner, Lakshmikumaran & Sridharan
Charities and TDS- Simplification
Two tax exemption regimes for charities to be merged into one.
5 per cent TDS rate on many payments merged into 2 per cent TDS rate.
20 per cent TDS rate on repurchase of units by mutual funds or UTI withdrawn.
TDS rate on e-commerce operators reduced from one to 0.1 per cent.
Delay for payment of TDS up to due date of filing statement decriminalized.
Simplification of Reassessment
Assessment can be reopened beyond three years upto five years from the end of Assessment Year only if the escaped income is Rs. 50 lakh or more.
In search cases, time limit reduced from ten to six years before the year of search.
“A uniform limitation period has been brought in for the financial year 2024 onwards regardless of whether fraud or suppression is involved. An Amnesty Scheme granting waiver of interest and penalty has been introduced for the demands from 1-07-2017 till 31-03-2020 for the cases not involving fraud, willful misstatement etc. As a welcome relief to tax-payers, the time limit for availment of credit for period till March 2021 has been extended till 30-11-2021. In order to facilitate trade, the maximum amount of pre-deposit for filing appeal with the Appellate Authority and the Appellate Tribunal is being reduced to Rs. 40 crores (IGST)” – Shivam Mehta, Executive Partner, Lakshmikumaran & Sridharan
Simplification and Rationalisation of Capital Gains
Short term gains on certain financial assets to attract a tax rate of 20 per cent.
Long term gains on all financial and non-financial assets to attract a tax rate of 12.5 per cent.
Exemption limit of capital gains on certain financial assets increased to Rs. 1.25 lakh per year.
“Tax levied on excess capital raised by companies (generally referred to as angel tax) is sought to be withdrawn with effect 01-04-2024, i.e. in relation to capital raised post 01-04-2024, bringing a big sigh of relief to start ups and budding industries. It would however not affect the ongoing litigation, or potential litigation in relation to capital raised till 31-03-2024. But withdrawal of the levy would certainly influence the pending litigation in Courts. The tax was introduced to curb unaccounted money being ploughed in as capital in closely held companies. With the robust digital evolution brought out in the larger financial environment, the avenues for generating unaccounted money had reduced significantly. The tax had achieved its purpose, and hence its withdrawal would be a welcome move for many genuine investors” – Sriram S, Partner, Lakshmikumaran & Sridharan
Litigation and Appeals
‘Vivad Se Vishwas Scheme, 2024’ for resolution of income tax disputes pending in appeal.
Monetary limits for filing direct taxes, excise and service tax related appeals in Tax Tribunals, High Courts and Supreme Court increased to ₹60 lakh, ₹2 crore and ₹5 crore respectively.
Safe harbour rules expanded to reduce litigation and provide certainty in international taxation.
“The Union Budget 2024-25 endeavors to reinforce the Government’s ambitious vision of the Viksit Bharat by 2047 by creating a robust and all-encompassing economy. Pursuing the agenda of simplification & ease of doing business, the Finance Minister announced a comprehensive review of the Income Tax Act, 1961 within the next 6 months. As an immediate measure, the budget has proposed simplification of the tax structure for charities, rationalizing tax rates for TDS & Capital Gains, simplifying provisions related to reassessment and decriminalization of certain offences for TDS. In another measure to reduce pending litigation & disputes, the Finance Minister has proposed to increase the monetary limits for filing of appeals and announced the ‘Vivad se Vishwas Scheme 2024’ for matters already pending in appeal” – S Vasudevan, Executive Partner, Lakshmikumaran & Sridharan
Employment and Investment
Abolishment of Angel tax for all classes of investors to bolster start-up eco-system.
Simpler tax regime for foreign shipping companies operating domestic cruises.
Safe harbour rates for foreign mining companies selling raw diamonds in the country.
Corporate tax rate on foreign companies reduced from 40 to 35 per cent.
“The initiative taken with regards to reduction in the corporate tax rate for the foreign companies, expanding tax benefits to funds & entities in IFSC, abolition of equalization levy for e-commerce, abolition of angel tax etc. are also aimed at providing much needed boost to the Indian economy by attracting more investments in India” – S Vasudevan, Executive Partner, Lakshmikumaran & Sridharan
Deepening tax base
Security Transactions Tax on futures and options of securities increased to 0.02 per cent and 0.1 per cent respectively. Income received on buy back of shares in the hands of recipient to be taxed.
Social Security Benefits
Deduction of expenditure by employers towards National Pension Scheme to be increased from 10 to 14 per cent of the employee’s salary.
Non-reporting of small movable foreign assets up to Rs. 20 lakh de-penalised.
CUSTOM DUTY
Medicines and Medical Equipment
Three cancer drugs namely Trastuzumab deruxtecan, Osimertinib and Durvalumab fully exempted from custom duty.
Changes in Basic Customs Duty (BCD) on X-ray tubes & flat panel detectors for use in medical X-ray machines under the Phased Manufacturing Programme.
Mobile Phone and Related Parts
BCD on mobile phone, mobile Printed Circuit Board Assembly (PCBA) and mobile charger reduced to 15 per cent.
Precious Metals
Customs duties on gold and silver reduced to 6 per cent and that on platinum to 6.4 per cent.
Other Metals
BCD removed on ferro nickel, blister copper, ferrous scrap and nickel cathode.
Concessional BCD of 2.5 per cent on copper scrap.
Electronics
BCD removed, subject to conditions, on oxygen free copper for manufacture of resistors.
Chemicals and Petrochemicals
BCD on ammonium nitrate increased from 7.5 to 10 per cent.
Plastics
BCD on PVC flex banners increased from 10 to 25 per cent.
Telecommunication Equipment
BCD increased from 10 to 15 per cent on PCBA of specified telecom equipment.
Critical Minerals
25 critical minerals fully exempted from customs duties.
BCD on two critical minerals reduced.
Solar Energy
Capital goods for use in manufacture of solar cells and panels exempted from customs duty.
Marine products
BCD on certain broodstock, polychaete worms, shrimp and fish feed reduced to 5 per cent.
Various inputs for manufacture of shrimp and fish feed exempted from customs duty.
Leather and Textile
BCD on methylene diphenyl diisocyanate (MDI) for manufacture of spandex yarn reduced from 7.5 to 5 per cent.