Union Budget 2024 Recap

Key Highlights

• The 2024-25 union budget focused on employment, skilling, MSMEs, and the middle class.
• ₹2 lakh crore package was announced to create opportunities for the youth.
• ₹1.48 lakh crore was allocated for education, employment, and skill development.

The Union Budget for the financial year 2025-26 is just around the corner, with the nation eagerly awaiting the announcements on 1 February 2025. But before we delve into what’s ahead, let’s take a moment to reflect on the highlights and key proposals of the previous year’s budget.

Finance Minister Nirmala Sitharaman emphasised that budget 2024-25 focuses on employment, skilling, MSMEs, and the middle class.

• A ₹2 lakh crore package was announced to create opportunities for 4.1 crore youth over five years.
• ₹1.48 lakh crore was allocated this year for education, employment, and skill development.

Some of the significant budget highlights of 2024 are discussed below.

Read on to learn the impact of Budget 2024-25 on personal finance and taxation:

To boost consumer spending and address economic disparities, the government revised income tax rates for certain income brackets.The new tax structure imposes a 5% tax rate on annual incomes ranging from ₹3,00,000 to ₹7,00,000, an increase from the previous upper limit of ₹6,00,000. This adjustment is part of a framework that taxes annual incomes up to ₹15,00,000 at rates between 5% and 20%, while incomes exceeding ₹15,00,000 are taxed at 30%.

The standard deduction for salaried employees was raised from ₹50,000 to ₹75,000, providing additional relief to the middle class.

Enhanced Deductions

The budget introduced higher tax deductions for family pension contributions and for non-government employees contributing to the New Pension Scheme. This was done to encourage savings and provide financial security. The family pension deduction for pensioners was increased from ₹15,000 to ₹25,000.

Streamlined Taxation for Capital Gains and TDS

The government has revised capital gains tax rates, setting 12.5% for long-term gains on specified assets and 20% for short-term gains. Unlisted bonds and debt mutual funds remain taxed at applicable rates, with the capital gains exemption limit increased to ₹1.25 lakh annually.TDS rates were also simplified, reducing e-commerce TDS to 0.1% and merging 5% TDS into 2%. Holding period classifications for listed and unlisted assets were clarified to ensure consistency.

Encouraging Start-Ups and Investments

Angel tax was abolished for all investor categories, and corporate tax for foreign companies was reduced from 40% to 35% to attract foreign capital. The diamond industry gained from safe harbour rates for foreign mining companies, while cruise tourism benefitted from a simplified tax regime for foreign shipping companies.

TDS rates were streamlined, including a reduction of e-commerce TDS from 1% to 0.1% and merging 5% TDS into 2%.

Customs Duty Revisions

Relief was extended to cancer patients through exemptions on specific medicines. Duties on mobile phones, chargers, and solar panel manufacturing goods were lowered to promote domestic production. Seafood exports and textiles also benefited from reduced duties, while eco-friendly measures increased duties on PVC flex banners.

Streamlining GST and Digital Initiatives

GST compliance was further simplified, and digitalisation was extended to the remaining services of Customs and Income Tax, aiming for a paperless system within two years.

The other sectors saw the following important proposals which form a considerable part of the 2024 budget highlights: Infrastructure Investment A record allocation of ₹11.11 lakh crore (3.4% of GDP) was designated for infrastructure development, underscoring the government's commitment to enhancing the nation's physical framework. This includes ₹1.5 lakh crore in long-term, interest-free loans to states to support resource allocation. Rural Development and Job Creation The budget allocated ₹2.66 trillion for rural development and outlined a ₹2 trillion plan over five years to create jobs, particularly in the manufacturing sector. This includes incentives linked to the employment of first-time employees, benefiting 30 lakh youth and aiming to incentivise the additional employment of 50 lakh people. Agriculture Sector Boost A comprehensive review of the agricultural research setup was announced to increase productivity and develop climate-resilient crop varieties. To boost self-reliance, oilseed and pulse production will be strengthened.Digital infrastructure for agriculture to cover farmers and land in three years was also introduced. Additionally, 10,000 bio-input centres were expected to be set up, with ₹1.52 lakh crore allocated to agriculture and allied sectors. Energy Security Initiatives The budget proposed the establishment of a joint venture between NTPC and BHEL to set up a full-scale 800 MW commercial plant. Additionally, plans were laid out for the development of Bharat Small Modular Reactors and newer technologies for nuclear energy, aiming to enhance the country's energy security. Tourism Development Significant investments were planned for the development of key religious and cultural sites, including the Vishnupad Temple Corridor and the Mahabodhi Temple Corridor, modelled on the Kashi Vishwanath Temple Corridor.Comprehensive initiatives for Rajgir and Nalanda were also announced, aiming to boost tourism and preserve cultural heritage. Urban Development The government was expected to invest ₹10 lakh crore under PM Awas Yojana Urban 2.0 to address housing needs for 1 crore urban poor and middle-class families, with ₹2.2 lakh crore in central assistance. It was also said to promote water, sewage, and waste management projects in 100 cities and support 100 weekly street food hubs annually under PM SVANidhi. Innovation and Research The operationalisation of the Anusandhan National Research Fund was announced to support basic research and prototype development. A private sector-driven research and innovation fund with a financing pool of ₹1 lakh crore was also proposed to foster advancements in various sectors. Next Generation Reforms The budget introduced the Unique Land Parcel Identification Number (Bhu-Aadhaar) for all lands, aiming to digitise land records and improve data governance. Additionally, a taxonomy for climate finance was proposed to enhance the availability of capital for climate adaptation and mitigation investments. The Road Ahead The Union Budget 2024-25 reflected a strong focus on growth, infrastructure, and sustainability. With key initiatives in agriculture, urban housing, and financial reforms, it aimed to empower citizens, foster innovation, and promote inclusive development for a prosperous future.All eyes will now be on the Union Budget 2025 and the informative and revolutionary proposals it might offer. Also Read: https://www.adityabirlacapital.com/abc-of-money/budget-2025-expectations-on-income-tax