Understanding the Union Budget 2024

The 2024 Union Budget, presented by the finance minister, outlines India's economic strategy focusing on 'Viksit Bharat'. Under this, it focused on nine key areas, including agriculture, employment, and infrastructure. It revised tax slabs under the new regime, potentially saving salaried employees up to ₹17,500. The budget also addressed indirect taxes, reducing customs duty on various items and exempting certain cancer drugs. The TDS rate on e-commerce was reduced, and long-term capital gains tax was revised to 12.5%. It allocated substantial funds for housing by expanding the PM Awas Yojana. Moreover, it introduced a free solar electricity scheme under the PM Surya Ghar Muft Bijli Yojana. New initiatives like the NPS-Vatsalya scheme for minors and enhanced Mudra Loans under the ‘Tarun’ category were also highlighted. The finance minister also gave due importance to support the MSME sector, aid in developing tourism in Bihar and Odisha, and bolster youth education. Major investments were also announced in state-specific development projects, particularly for flood-prone regions. These included Bihar, Assam, Himachal Pradesh, Uttarakhand, and Andhra Pradesh. The budget also addresses capital gains taxes, customs duties, and introduces new schemes for youth employment and skilling. With its multifaceted approach, the budget aims to boost economic growth, enhance social welfare, and promote inclusive development across various sectors.

The Union Budget 2024 introduces significant changes to India's tax structure, impacting salaried individuals and investors alike. For salaried employees, the new tax regime offers an increased standard deduction of ₹75,000 and revised tax slabs, potentially reducing tax liability. Consider the example of an IT professional Sunil, who earns ₹10 Lakhs annually. As per the changes announced in the budget, if he files his taxes in the new regime, he can now save up to ₹10,000 in taxes. The budget also modifies capital gains taxation on listed investments. Short-term capital gains (STCG) tax has been increased from 15% to 20%. For long-term capital gains (LTCG), the tax rate has been raised to 12.5%, but with an increased exemption limit of ₹1.25 Lakhs. So, if Sunil chooses to sell off his investments after earning a profit of ₹10,500 in 9 months, he will have to pay 20% tax or ₹2,100. Alternatively, suppose he holds on to his shares for 2 years and earns around ₹23,000. Now, he will have to pay LTCG tax. But since his returns are less than ₹1 Lakh, he is tax-exempt. The budget brings a notable shift in property taxation by eliminating indexation benefits for LTCG on property sales. Despite reducing the LTCG tax rate to 12.5% for property, the removal of indexation could result in higher taxable gains. These alterations could lead to increased tax liability on property sales, notwithstanding the lower tax rate. These changes collectively reshape the landscape of personal finance and investment strategies in India.

The Union Budget 2024 introduces four groundbreaking EPFO-linked employment schemes. These aim to create 4.1 crore jobs over five years. It has a planned investment worth ₹2 Lakh Crores. Scheme A is for employees entering the formal workforce for the first time. It will offer them up to ₹15,000 as a one-month salary contribution, paid in instalments. Scheme B incentivises companies to hire new employees by subsidising 8-24% of newcomers' salaries. Scheme C reimburses companies for EPFO contributions up to ₹3,000 per month per employee. A fourth scheme targets India's top 500 companies, promoting internships with government and company contributions. These initiatives aim to formalise employment, upskill the workforce, and stimulate economic growth. The schemes particularly benefit young workers and those earning under ₹1 Lakh monthly. Only 21% of India's 64.3 crore employed people are regular salaried workers. Hence, the government's ambitious plan addresses this current employment landscape. By encouraging formal employment and labour-intensive industries, these schemes create a potential domino effect. Increased jobs will lead to higher productivity, economic growth, and further job creation. This scheme offers opportunities for fresh graduates, job seekers, and employers alike. Thus, the success of these initiatives hinges on the collaborative efforts of both the government and Corporate India.

If you’re starting a new venture or managing an MSME, the Union Budget has several key updates for you. Firstly, angel tax has been abolished, implying you can now raise funds without worrying about tax burdens. Additionally, the government is introducing a Rs. 1,000 Crore venture capital fund dedicated to the space economy, which could be a great opportunity if your start-up is in that sector. As an MSME, you might find it easier to tap into international markets through newly established e-commerce export hubs facilitated by public-private partnerships. You could also benefit from an enhanced credit guarantee scheme, that allows you to access collateral-free loans for machinery and equipment. Moreover, the Mudra loan limit has been increased to Rs. 20 Lakhs from the previous Rs. 10 Lakhs. The TReDS platform will be expanded to help unlock working capital by converting receivables into cash. The reduction of the TDS rate to 0.1% for e-commerce operators might positively impact your cash flow. Short-term capital gains tax has been reduced to 20% and long-term gains to 12.5%. Furthermore, corporate tax for foreign companies has been reduced to 35%. The fiscal deficit is projected at 4.9% of GDP, with Rs. 11.11 Lakh Crores allocated for capital expenditure, which could support infrastructure and growth.