India’s Budget 2024 for FY25: A quick guide

Union Finance Minister Nirmala Sitharaman presented Budget 2024 for the fiscal year 2024-’25, or FY25, in Lok Sabha on Tuesday. She started her speech, which lasted for a little below two hours, saying while global economy was grappling with uncertainty, India’s inflation rate was currently stable and low.

Among notable sops that the first Budget of Modi 3.0 offered was a revision in income tax for the salaried class. The standard deduction has been raised to Rs 75,000 from Rs 50,000, which will help salaried employees save Rs 17,500 in income tax. An assessment of the Income Tax Act of 1961 will be concluded in six months’ time.

Sitharaman further lowered the fiscal deficit for FY25 to 4.9 per cent of GDP, 5.1 per cent in the Interim Budget that was presented in February 2024.

Overall, the Centre plans to spend Rs 11.11 trillion for capex in FY25, with infrastructure of the nation being in focus.

Here are the salient features of Budget 2024:

KEY SCHEMES

The Budget allots Rs 2 lakh crore for five key schemes that focus on the middle class and on skilling of 4.1 crore youth over a period of five years.

This apart, there are three schemes of incentives linked to employment. These are:
1. First timers will get a month’s wage across all formal sectors, besides Direct Benefit Transfer (DBT) of one-month salary up to Rs 15,000, which will benefit 210 lakh youth.
2. Job creation in manufacturing, with incentive to employers and employees within Employees’ Provident Fund Organisation (EPFO) guidelines.
3. Scheme to incentivise additional employment across sectors, of 50 lakh people.

The finance minister also listed nine sectors as priorities to augment development in the country. These are agriculture, employment and skilling, inclusive development, manufacturing and services, urban development, energy, infrastructure, innovation and research & development, and NextGen reforms.

SOPS FOR BIHAR & ANDHRA PRADESH

The two states ruled by coalition partners of the BJP, which were demanding Special State status, have been richly showered with sops.

For Bihar, medical facilities, airports and sports infrastructure have been promised, and Rs 26,000 crore allotted for highway construction and maintenance in the state.

For Andhra Pradesh, Sitharaman announced Rs 15,000 crore with more amounts coming.

NORTHEAST-SPECIFIC SOP

Over 100 branches of India Post Payment Bank will launched across the Northeast region

INCOME TAX

The standard deduction has been raised to Rs 75,000 from Rs 50,000, which will help salaried employees save Rs 17,500 in income tax. An assessment of the Income Tax Act of 1961 will be concluded in six months’ time.

The new income tax brackets announced in Budget are:
Up to Rs 3,00,000: Nil
From Rs 3,00,001 to Rs 7,00,000: 5 per cent
From Rs 7,00,001 to Rs 10,00,000: 10 per cent
From Rs 10,00,001 to Rs 12,00,000: 15 per cent
From Rs 12,00,001 to Rs 15,00,000: 20 per cent
Above Rs 15,00,000: 30 per cent

OTHER TAXES

The TDS rate on e-commerce operators is being reduced to 0.1 per cent from 1 per cent.

Angel tax has been abolished to further boost the start-up ecosystem.

Long Term Capital Gains (LTCG) tax has been raised to 12.5 per cent from 10 per cent while Short Term Capital Gains (STCG) tax has been raised to 20 per cent from 15 per cent. India’s benchmark indices BSE Sensex and Nifty took a hit after the announcement.

Listed financial assets held for over a year will be classified as long-term assets from now.

RURAL & TRIBAL SCHEMES

The Budget has announced that promoting employment opportunity in the rural sector will continue being a policy goal while fast-tracking of growth in rural economy is a priority.

Pradhan Mantri Garib Kalyan Anna Yojana has been extended for five years to benefit over 80 crore people.

Pradhan Mantri Janjatiya Unnat Gram Abhiyan will be launched for raising the socio-economic condition of tribal communities. The scheme will cover 5 crore tribal people across 63,000 villages benefitting.

URBAN SCHEMES

An urban housing outlay worth Rs 10 lakh crore has been announced by the finance minister, to meet the housing needs of 1 crore urban poor and middle-class families.

The ‘Cities As Growth Hubs’ plan has a three-pronged approach:
1. One crore urban poor and middle-class families will get the benefit of Pradhan Mantri Awas Yojana Urban 2.0.
2. Fourteen large cities with population of more than 30 lakh will have Transit Oriented Development plans.
3. One hundred weekly ‘Haats’ or street food hubs will be set up in select cities.

HOUSING

Overall, under Pradhan Mantri Awas Yojana, 3 crore new houses will be built in rural and urban areas.

The government will create dormitory-type rental housing facilities for industrial workers in Public-Private Partnerships (PPP) mode.

EDUCATION

The finance minister announced the National Pension System (NPS) Vatsalya in the Budget. The scheme is aimed at helping parents save for their minor children. When the child starts working, the plan can be converted into an NPS account.

EMPLOYMENT & SKILLING

A new scheme, sponsored by the Centre, has been announced to skill 20 lakh youth over a period of five years. The skilling loan scheme will gradually see a revision to facilitate loans up to Rs 7.5 lakh.

WOMEN-LED DEVELOPMENT

The Budget has put extra focus on higher participation of women in the workforce.

Over Rs 3 lakh crore has been allotted to schemes aimed at benefitting girls and women to enhance their role in development.

The Budget has focussed on inclusive human resource development and social justice for all.

AGRI SECTOR

Rs 1.52 lakh crore has been allocated for agriculture and allied sectors.

Climate-resilient varieties of 32 field and horticulture crops that have high-yield capacity will be released for cultivation

The government has drawn up a plan to support and finance shrimp farming and marketing.

The government aims at bolstering production, marketing and storage of pulses.

The government aims to complete the Polavaram Irrigation Project to boost food supply

MANUFACTURING 

Creation of jobs in the manufacturing sector and EPFO-based incentive are the sops promised to this sector. Around 30 lakh new employees stand to benefit.

LOANS

For students, there is the revision of the Model Skill Loan Scheme in order to help 25,000 students annually.

Mudra loans are being raised to Rs 20 lakh from Rs 10 lakh, for people who have repaid previous loans

ENERGY SECURITY

Pradhan Mantri Surya Ghar Muft Bijli Scheme aims at installing rooftop solar panels in 1 crore households. The scheme has seen a good response so far, attracting 1.28 crore registrations and 14 lakh applications.

The Pumped Storage Policy will be launched to facilitate the storage of electricity storage and also integrate renewable energy with mainstream energy resources.

A joint venture between National Thermal Power Corporation (NTPC) and Bharat Heavy Electricals Limited (BHEL) will launch an 800 MW commercial thermal plant using Advanced Ultra Supercritical (AUSC) technology.

SPACE

The government has allotted venture capital fund worth Rs 1,000 crore for space economy in Budget 2024.

GOLD & SILVER

For domestic value addition in precious metal jewellery, the finance minister reduced customs duties of gold and silver to 6 per cent.

MINING & MINERALS

The government will launch a Critical Mineral Mission to buy assets abroad.

The government will introduce the auction of the first offshore mining blocks.