Finance Minister Nirmala Sitharaman announced her seventh consecutive budget today for the fiscal year 2024-25, making history by surpassing former Prime Minister Morarji Desai's record. This budget is the first one to be presented by the BJP-led NDA government after its re-election in June.
The 2024-25 Union Budget focused on nine key areas aimed at creating opportunities, covering agriculture productivity, employment, social justice, urban development, energy security, and innovation.
Let's break down the key highlights:
Tax Changes
One of the most talked-about changes is the tweak to the new tax regime. The standard deduction has been bumped up to Rs 75,000 from Rs 50,000. The tax rates have also been revised, making it a bit easier on the wallet for salaried folks. Here’s the new structure:
If you earn up to Rs 3 lakh, you pay nothing. Earnings between Rs 3-7 lakh are taxed at 5%, Rs 7-10 lakh at 10%, Rs 10-12 lakh at 15%, and Rs 12-15 lakh at 20%. Anything over Rs 15 lakh is taxed at 30%.
Employment and Skilling
Creating more jobs and improving skills is a big focus. The PM Package includes five schemes worth Rs 2 lakh crore aimed at boosting employment. There's a neat incentive for first-time employees, where they get one month’s wage as a direct benefit transfer. Employers can also get up to Rs 3,000 reimbursed for each new hire.
Agriculture
Farmers haven't been forgotten. The budget emphasizes increasing productivity and developing climate-resilient crop varieties. Expect a comprehensive review of agricultural research to ensure our farmers are better equipped to handle changing climates.
Education
In what’s good news for students and those seeking to upskill, the budget includes loans up to Rs 10 lakh for higher education. There's also a significant Rs 1.48 lakh crore set aside for education, employment, and skilling initiatives.
Real Estate
The realty sector sees a significant push with Rs 10 lakh crore allocated under the PM Awas Yojana, Urban 2.0. This aims to make housing more affordable, especially for the urban poor and middle class. States charging high stamp duties have been encouraged to moderate their rates and there's a consideration for reduced duties on properties purchased by women.
Corporate Sector and Startups
For the corporate world, there’s a welcome reduction in the corporate tax rate for foreign companies, going from 40% to 35%. Startups also get a boost with the abolition of the ‘Angel Tax’ for all investor classes, which should make raising funds a bit easier.
Customs and Duties
In a move that could make gold and silver more accessible, import levies on these metals have been slashed from 15% to 6%. Additionally, customs duties on three cancer medications have been waived, which should provide some relief to patients.
Stock Markets
Investors will need to note the increase in the Securities Transaction Tax (STT) on futures and options. Futures STT will go up to 0.02% from 0.0125%, and options STT will rise to 0.10% from 0.0625%.
Infrastructure
A whopping Rs 11.11 lakh crore has been allocated for capital expenditure on infrastructure, which makes up 3.4% of our GDP. This includes a Rs 26,000 crore boost for road connectivity projects and the sanctioning of 12 new industrial parks.
Social Security and Health
Employers’ deductions towards the National Pension Scheme (NPS) are proposed to increase, going from 10% to 14% of the employee's salary. The health sector receives Rs 89,287 crore, which will be aimed at improving medical facilities across the country.
Defence
The defence budget stands at Rs 4.56 lakh crore, ensuring continued support and development for the armed forces.
Energy and Environment
There’s a significant push towards energy security and sustainability, with a partnership between the government and the private sector for developing small modular reactors and new nuclear technologies. The government is also set to release a policy document on energy transition pathways focusing on job creation and sustainability.
Small Businesses
For small and medium enterprises, a new credit scheme will provide guarantees of up to Rs 100 crore for purchasing machinery and equipment without collateral.
Urban Development
The urban development plan includes creating 100 weekly street food hubs in select cities and improving water management projects for 100 large cities through bankable projects.
The 2024 budget has shaken things up a bit in terms of what's going to pinch your wallet and what might give it a little relief. On the pricier side, you’ll see higher costs for ammonium nitrate, which could impact industries and agriculture as well as PVC flex films and banners, meaning those big advertisements might cost more. Laboratory chemicals and non-biodegradable plastics also see a rise, so expect a bump in prices for various scientific and everyday products. Solar glass used to manufacture solar cells or modules has also taken a hit, potentially affecting green energy initiatives.
On the flip side, some good news: mobile phones and chargers are set to get cheaper, along with essential tech components like printed circuit board assemblies (PCBA) and oxygen-free copper, which are crucial for making resistors. Precious metals like gold, silver, and platinum are also expected to be more affordable, along with blister copper and ferro-nickel. Cancer patients will benefit significantly from reduced costs on life-saving drugs like Trastuzumab Deruxtecan, Osimertinib, and Durvalumab. Components for vessel manufacturing and solar energy panels are also set to drop in price. Certain medical products, orthopaedic implants, and artificial body parts will also now be cheaper. A reduction in the price of specific brood stock, shrimp, and fish feed, should also lower overall costs in the seafood industry.
Overall, the 2024 budget appears to be a balanced mix of support for various sectors that is aimed at driving economic growth while ensuring social security and infrastructure development. Whether you’re a student, a farmer, a small business owner, or a corporate entity, there’s something in it for everyone.
You can read the 2024-25 Budget in its entirety here.
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