The Union Budget 2024-25, which was tabled by Finance Minister Nirmala Sitharaman on Tuesday, gave a fillip to almost all segments, especially middle class and MSMEs. Industry players across sectors welcomed the measures to boost MSMEs, startups, disposable income of salaried class and job creation, while maintaining fiscal prudence.
Union Budget 2024 PDF Download: Read Full Text of FM Nirmala Sitharaman’s Speech 2024-25
Although the government has announced a number of reliefs for various sectors, it has made no compromise on its capex plans. Following the fiscal consolidation path, the government has reduced its FY25 fiscal deficit target to 4.9 per cent against 5.1 per cent fixed earlier, and pegged the deficit for FY26 at 4.5 per cent.
“It is a positive for medium-term debt sustainability,” said Abheek Barua, chief economist and executive vice-president at HDFC Bank.
Income Tax Relief
Presenting the Union Budget 2024-25, Sitharaman announced that the standard deduction in the new tax regime will be increased from Rs 50,000 to Rs 75,000.
The revised tax slabs are as follows: No tax up to Rs 3 lakh, Rs 3-7 lakh at 5 per cent, Rs 7-10 lakh at 10 per cent, Rs 10-12 lakh at 15 per cent, Rs 12-15 lakh at 20 per cent and above Rs 15 lakh at 30 per cent.
Salaried employees under new tax regime will save up to Rs 17,500 annually in taxes due to changes proposed in FY25 Budget, said the finance minister.
Apart from this, two tax incentive regimes for charity sector will be merged into one. Also, 58 per cent of corporate tax has come from simplified tax regime in FY23.
MSMEs, Startups Get A Support
The Finance Minister announced various measures to support micro, small and medium enterprises (MSMEs), including a credit guarantee scheme for facilitating term loans to purchase machinery and equipment without collateral or third-party guarantee.
“We have formulated a package, covering financing, regulatory changes and technology support, for MSMEs to help them grow and also compete globally, as mentioned in the interim budget,” she said. Sitharaman also announced a new mechanism to facilitate the continuation of bank credit to MSMEs during their stress period.
The Finance Minister abolished angel tax on all classes of assets. Startup and venture funds cheered this Budget decision, terming it a “game-changer”.
Angel tax refers to the tax that the government imposes on funding raised by unlisted companies, or startups if their valuation exceeds the company’s fair market value.
Customs Duty Cut On Gold, Silver, Mobile Phones
Sitharaman reduced customs duty on a range of products, including gold, silver, critical minerals, mobile phones and other electronic items, to cut input costs, increase value addition, promote export competitiveness and boost domestic manufacturing.
The duty on shea nuts; marine sector goods such as prawn and shrimp feed, and fish feed; inputs for the manufacture of these feeds like lipid oil; cancer drugs; other precious metals like silver and platinum; textile, steel, copper, capital goods, shipping, medical equipment and leather sector items has also been reduced.
The basic customs duty on coins of precious metals, gold/silver findings, and gold and silver bars has been reduced to 6 per cent from 15 per cent. It has been cut to 5.35 per cent from 14.35 per cent for gold and silver dore.
On platinum, palladium, osmium, ruthenium and iridium, the levy has been cut to 6.4 per cent from 15.4 per cent.
Education, Employment
The finance minister has announced three schemes worth Rs 1.07 lakh crore to boost employment through retirement fund body EPFO for new entrants in the organised sector.
Scheme A: One-month wage will be provided to all persons newly entering the workforce in all formal sectors. The direct benefit transfer of one-month salary in three installments to first-time employees, as registered in the EPFO, will be up to Rs 15,000. The eligibility limit will be a salary of Rs 1 lakh per month. The scheme is expected to benefit 210 lakh youth.
Scheme B: It will incentivise additional employment in the manufacturing sector, linked to the employment of first-time employees. An incentive will be provided at a specified scale directly, both to the employee and the employer, with respect to their EPFO contribution in the first four years of employment. The scheme is expected to benefit 30 lakh youth entering employment, and their employers.
Scheme C: It will support employers and will cover additional employment in all sectors. All additional employment within a salary of Rs 1 lakh per month will be counted. The government will reimburse to employers up to Rs 3,000 per month for two years towards their EPFO contribution for each additional employee. The scheme is expected to incentivise additional employment of 50 lakh persons, she added.
On education, the government will provide financial support for loans up to Rs 10 lakh for higher education in domestic institutions. Sitharaman said e-vouchers for this purpose will be given directly to one lakh students every year with interest subvention of 3 per cent of the loan amount.
Sops to Bihar, Andhra Pradesh
Sitharaman has made big announcements for Bihar and Andhra Pradesh, the two states ruled by Bharatiya Janata Party (BJP) allies Janata Dal United (JDU) and Telugu Desam Party (TDP). It includes Rs 26,000 crore for highways and Rs 11,500 crore for flood mitigation for Bihar, and Rs 15,000 crore to develop the capital of Andhra Pradesh.
Other Key Announcements
Sitharaman announced a scheme to provide internship opportunities in 500 top companies to one crore youth in five years. An allowance of Rs 5,000 per month, along with a one-time assistance of Rs 6,000 through the CSR funds, will be provided. The Finance Minister also announced a Rs 10-lakh-crore outlay for Prime Minister’s urban housing plan. Sitharaman announced the PM Suryaghar Muft Bijli Yojana for one crore houses. Sitharaman said that states will be encouraged to bring down stamp duty. The Finance Minister also announced flood relief assistance for Assam, Himachal Pradesh and Uttarakhand.
Summing up the Budget, Ranen Banerjee, partner and leader economic advisory, PwC India, said, “Fiscal prudence is the highlight of the full Union Budget 2024-25. The government has gone with realistic projections on its revenue and expenditure estimates and refrained from announcing overly populist measures. The majority of the allocations, including the capex allocation, are as outlined in the interim budget, thus providing continuity.”
The capex being kept at Rs 11.11 lakh crore was expected, given that the ability to consume this allocation is limited due to the disruption owing to the elections in the first quarter and the second quarter being typically slowed down by the monsoon. The urgency around skilling requirements has been rightly reflected through announcements related to skilling loans, interest subvention on higher education loans and incentives to corporates for providing internship opportunities, he added.
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