Union Budget 2024-25

Finance Minister Nirmala Sitharaman is presenting the Union Budget for the fiscal year 2024-25 on 23 July 2024. This budget is the first full-year budget of the new government following its re-election for a third term. Expectations are high that Sitharaman will introduce measures aimed at alleviating the financial burden of middle-class taxpayers.

The Finance Minister Nirmala Sitharaman is delivering the Union Budget 2024-25 in the Lok Sabha today, with an anticipated focus on the government’s plan for ‘Viksit Bharat’ by 2047, while maintaining the 5.1% fiscal deficit target for FY25.

The Finance Minister, Nirmala Sitharaman, is scheduled to present the Union Budget for 2024-25 in the Lok Sabha today. This budget holds significance as it marks the first budget for Prime Minister Narendra Modi’s third term in office.

Anticipated to focus on the government’s vision for ‘Viksit Bharat’ by 2047, the budget is expected to prioritise fiscal responsibility, capital expenditure for job creation, and targeted social sector spending aimed at enhancing access to physical, social, and digital infrastructure.

Keep up to date with the latest developments by following our live blog for Budget 2024 Key Highlights, where we will cover updates on Income Tax Slabs, Impact on the Share Market, Budget Key Highlights, and Corporate Reactions.

The Channels or mediums through which you can access Union Budget 2024-25

All documents related to the Union Budget, such as the Annual Financial Statement (commonly known as Budget), Demand for Grants (DG), Finance Bill, etc., will be accessible on the “Union Budget Mobile App” for easy access by Members of Parliament (MPs) and the general public using the most user-friendly digital means.

The app is bilingual, supporting English and Hindi, and will be accessible on both Android and iOS platforms. It can also be obtained from the Union Budget Web Portal (www.indiabudget.gov.in). Union budget for this year and previous years are also available on the above-mentioned website.

Once the Union Finance Minister completes the Budget Speech in Parliament on 23rd July 2024, the documents will be accessible on the Mobile App.

During the Budget 2024 Key Highlights Live session, several crucial announcements were made for the agriculture and allied sectors, including:

– Allocation of ₹1.52 lakh crore for the agriculture and allied sectors.

– Establishment of 10,000 bioresearch centers.

– Initiation of 1 crore farmers into natural farming within the next two years, supported by branding and certification.

– Development of large clusters for vegetable production and supply chain closer to consumption centers.

– Provision of financial support for shrimp breeding centers and facilitation of exports through NABARD.

– Launch of Kisan Credit Cards in 5 states.

– Release of 109 varieties of 32 crops.

– Support for Natural Farmers with verification and branding.

– Entry of 6 crore farmers and their land into the farmer and land registry to ensure self-sufficiency in pulses and oilseeds.

During the Budget 2024 Key Highlights Live session, the Finance Minister increased the limit of MUDRA loans to Rs 20 lakh

– The Finance Minister announced an increase in the limit of MUDRA loans to Rs 20 lakh from the current Rs 10 lakh for individuals who have successfully availed and repaid loans under the TARUN category.

During the Budget 2024 Key Highlights Live session, FM announces education loan up to 10 lakh

– The central government will offer education loans up to Rs 10 lakh to eligible individuals who are not covered by other government schemes or policies. Additionally, e-vouchers for loans up to Rs 10 lakh will be provided annually to 1 lakh students for higher education in domestic institutions, with an interest subvention of 3% on the loan amount.

During the Budget 2024 Key Highlights Live session, FM discusses about the PM Awas Yojana Urban 2.0

In the 2024 income tax budget Live session, FM Sitharaman discussed the PM Awas Yojana Urban 2.0. The Union Budget 2024-25 proposes Transit-Oriented Development plans for 14 large cities with a population above 30 lakh.

Under the PM Awas Yojana Urban 2.0, the plan aims to cover one crore urban poor and middle-class families. Additionally, the budget proposes establishing one hundred weekly haats or street food hubs in select cities.

Finance Minister Nirmala Sitharaman unveiled a significant investment of Rs 10 lakh crore interest subsidy scheme for urban housing targeted at people experiencing poverty as part of the PM Awas Yojana-Urban 2.0.

This investment includes Rs 2.2 lakh crore in central assistance to be disbursed over the next five years.

In addition, the Finance Minister also announced an allocation of Rs 2.66 lakh crore for rural development, focusing on enhancing rural infrastructure. Furthermore, she revealed plans to construct three crore additional houses under the PM Awas Yojana, encompassing both rural and urban areas.

During the Budget 2024 Key Highlights Live session, Centre announces 3 schemes under the ‘Employment Linked Incentive’

Finance Minister Nirmala Sitharaman announced three schemes under the ‘Employment Linked Incentive’:

Scheme A for first-timers:

• Direct benefit transfer of one-month salary in three instalments up to Rs 15,000 to first-time employees registered in EPFO, which will benefit more than 21 million youths. 

Scheme B to create in-manufacturing:

• Incentive provided directly to both employees and employers based on their EPFO contribution for the first four years of employment.

During the Budget 2024 Key Highlights Live session, FM announces on energy security and PM Surya Ghar Muft Bijli Yojana

The Finance Minister underscored the government’s emphasis on energy security, announcing a forthcoming policy document on energy transition pathways that will focus on employment and sustainability. She also introduced the PM Surya Ghar Muft Bijli Yojana, aimed at installing rooftop solar plants to provide up to 300 units of free electricity per month to 1 crore households. The initiative has already seen 1.28 crore registrations and 14 lakh applications, marking significant progress.

During the Budget 2024 Key Highlights Live session, centre retains capital expenditure target

The Finance Minister stated that the government will continue to provide robust fiscal support for infrastructure development. For this fiscal year, an allocation of Rs 11.11 lakh crore has been designated for capital expenditure, which represents 3.4% of India’s GDP.

During the Budget 2024 Key Highlights Live session, changes in the customs duty of gold, silver, and platinum

Nirmala Sitharaman said that to increase domestic value, the customs duty on gold and silver will be reduced to 6%, whereas the duty on platinum will be brought down to 6.4% 

During the Budget 2024 Key Highlights Live session, government cuts duty on mobiles and its accessories

The Finance Minister announced that the Indian mobile industry has matured and proposed to reduce the Basic Customs Duty (BCD) on mobile phones, mobile Printed Circuit Design Assembly (PCDA), and mobile chargers to 15%.

During the Budget 2024 Key Highlights Live session, centre hikes STT on future and options

The Finance Minister announced an increase in the Securities Transaction Tax (STT) on Futures and Options. The STT on futures will rise from 0.0125% to 0.02%, while the STT on options will increase from 0.0625% to 0.10%.

During the Budget 2024 Key Highlights Live session, FM announces relief for taxpayers under new income tax regime

The government announced significant changes to the new tax regime. The standard deduction has been increased from Rs 50,000 to Rs 75,000. Pensioners will benefit from a higher deduction on family pension, raised from Rs 15,000 to Rs 25,000.

Under the new tax regime, the tax slabs have been revised as follows:

• Income up to Rs 3 lakh: Nil tax
• Income between Rs 3 lakh and Rs 7 lakh: 5% tax
• Income between Rs 7 lakh and Rs 10 lakh: 10% tax
• Income between Rs 10 lakh and Rs 12 lakh: 15% tax
• Income above Rs 15 lakh: 30% tax

During the Budget 2024 Key Highlights Live session, the Government allocates funds for Andhra Pradesh 

Sitharaman said, “Our government has made efforts to fulfil the commitments in the Andhra Pradesh Reorganisation Act. Recognising the state’s need for capital, we will facilitate special financial support through multilateral agencies. In the current FY, Rs 15,000 crore will be arranged with additional amounts in future years.”

During the Budget 2024 Key Highlights Live session, FM proposes waiver of customs for 25 crucial minerals

In her first budget for Modi 3.0, Finance Minister Nirmala Sitharaman suggests a complete waiver of customs duties on 25 essential minerals, including lithium, cobalt, and rare earth elements, which are vital for industries like nuclear energy, renewable energy, space, defence, and telecommunications.

Updates in the Capital Gain Tax

The Finance Minister has proposed changes to the Income Tax Act of 1961 to make it more accessible and easier to understand for taxpayers.

The proposed changes include allowing the reopening of assessments beyond three years from the end of the assessment year only if the escaped income is 50 lakh or more, up to a maximum period of five years from the end of the assessment year.

In addition, the time limit for search cases is set to be reduced from 10 years to 6 years before the year of the search.

Short-term gains on certain financial assets will be taxed at 20%, while long-term gains on all financial and non-financial assets will be taxed at 12.5%. Furthermore, listed financial assets held for over a year will be classified as long-term.

Moreover, the proposed Vivad Se Vishwas Scheme provides a mechanism for taxpayers to settle certain income tax disputes pending appeal.

Updates on 2024 Budget for Income Tax: Proposed Changes in Customs Duties

Reduction of basic customs duty (BCD) to 5% for specific broodstock, polychaete worms, shrimp, and fish feed

Decrease in BCD for authentic down-filling material from duck or goose

Reduction of BCD on methylene diphenyl diisocyanate (MDI) used in the production of spandex yarn from 7.5% to 5%

Updates on the 2024 Income Tax Budget: Proposed Changes in Customs Duties

Finance Minister Nirmala Sitharaman proposes removing customs duty on three additional medicines to relieve cancer patients.

The list of exempted capital goods for use in the manufacture of solar cells and panels in the country will be expanded.

Additionally, customs duty is proposed to be eliminated on oxygen-free copper used to manufacture resistors, and certain parts used to manufacture connectors will be exempt.

Changes in TDS Rates

TDS Sections	Current TDS Rate	Proposed TDS Rate	Effective from
Section 194D – Payment of insurance commission in case of other than company	5%	2%	1st April 2025
Section 194DA – Payment in respect of life insurance policy	5%	2%	1st Oct 2024
Section 194G -Commission on sale of lottery tickets	5%	2%	1st Oct 2024
Section 194H – Payment of commission or brokerage	5%	2%	1st Oct 2024
Section 194-IB – Payment of Rent by certain individuals or HUF	5%	2%	1st Oct 2024
Section 194M – Payment of certain sums by certain individuals or HUFs	5%	2%	1st Oct 2024
Section 194-O – Payment of a certain sum by e-commerce operator to e-commerce participants	1%	0.10%	1st Oct 2024
Section 194F – Payment on account of repurchase of units by mutual funds or UTI	Proposed to be Omitted	Proposed to be Omitted	1st Oct 2024

TDS to be applied for payments made to partners by firms (under Section 194T)

The budget has introduced a new TDS rule for payments made by firms to partners, including partnership firms and LLPs. This rule applies to salary, remuneration, interest, bonus, or commission payments. Any payment of this nature by a firm that exceeds Rs. 20,000 will be subject to TDS at a rate of 10% under section 194T.

Abolition of Angel Tax

The requirement for Angel tax as per Section 56(2)(viii) is proposed for elimination.
Angel Tax is imposed on companies that issue new shares to investors at a value higher than the Company’s Fair Market Value. The surplus amount above the FMV was previously taxed under section 56(2)(viii) as an angel tax for the Company. This proposal suggests its removal.

The potential for increased fundraising will benefit the startup ecosystem, especially given startups’ frequent fundraising activities. The time and compliance costs associated with this provision during a startup’s fundraising process will be notably reduced, leading to an optimistic outlook.

Corporate taxes on Foreign companies decreased to 35%

Corporate taxes are levied on the net income or profit of the company. In the 2024 Budget, Finance Minister Nirmala Sitharaman suggested a decrease in the corporate tax rate for foreign companies from 40% to 35%.

Increased Deduction Limit for Employer Contributions to Pension Scheme

In her Budget 2024 speech, FM Nirmala Sitharaman proposed increasing the NPS deduction limit to 14% of an employee’s salary, both for employer contributions and employee deductions, for those opting for the new tax regime.

The contribution limit for the National Pension System (NPS) has been increased to 14% of the employee’s basic salary for both private and public sector employees, but only under the new tax regime. 

This higher limit applies to both employee deductions and employer contributions. According to Shalini Jain from EY India, this change allows employees to save more on taxes and build a larger pension fund for future security. Previously, this benefit was only available to central and state government employees.

Under current tax laws, the benefits of investing in the NPS vary based on the tax regime chosen. The old tax regime offered three deductions: sections 80CCD (1), 80CCD (1B), and 80CCD (2). The new tax regime provides only one deduction under section 80CCD (2).

Here’s a summary of the NPS deductions under current income tax laws:

• Section 80CCD (1): Deduct up to 10% of salary or Rs 1.5 lakh (whichever is lower) for NPS Tier-I investments. This deduction falls within the Rs 1.5 lakh limit of Section 80C and is available only under the old tax regime.
• Section 80CCD (1B): Offers an additional deduction of up to Rs 50,000 for NPS Tier-I investments, above the Section 80C limit. This is also available only under the old tax regime.
• Section 80CCD (2): Allows a deduction of up to 10% of salary for employer contributions to an employee’s NPS Tier-I account. This deduction is available under both the old and new tax regimes.

In the new tax regime, you can only claim a deduction of up to Rs 7.5 lakh for NPS under Section 80CCD (2).

Other Direct Tax Updates:

• Reopening of ITR: Assessments can only be reopened beyond three years if the escaped income is Rs 50 lakh or more, up to five years from the end of the assessment year. For search cases, the limit is reduced to six years.
• Income Tax Appeals: To reduce pending cases, the limits for filing appeals are raised to Rs 60 lakh for tax tribunals, Rs 1 crore for high courts, and Rs 2 crore for the Supreme Court.
• Vivaad se Vishwas Scheme: This scheme is reintroduced to help settle income tax disputes and reduce litigation.

Major GST Reforms and Amendments

• Un-denatured Alcohol: GST will not apply to un-denatured extra neutral alcohol used in making alcoholic liquor.
• Section 74A: Introduces a process for addressing unpaid or underpaid tax from FY 2024-25 onwards. Notices for less than Rs 1,000 won’t be issued. Time limits for notices are 42 months, and penalties can be reduced if paid within 60 days.
• Section 11A: Allows the government to regularize non-levy or short levy of central tax due to common trade practices.
• Section 13(3): Amends time of supply rules to the invoice date if issued by the recipient.
• Section 16: Allows ITC claims on past invoices and debit notes from FY 2017-18 onwards, under certain conditions.
• Blocked Credits: ITC on taxes under Section 74 is blocked for demands up to FY 2023-24.
• Section 30: Adds conditions for revoking GST registration cancellations.
• Section 31(3)(f): Sets a time limit for issuing invoices for reverse charge supplies.
• GSTR-7: Must be filed even if no TDS is deducted.
• Section 54(15): GST refund for zero-rated exports with export duty is not allowed.
• Section 70(1A): Allows a representative to appear for summoned persons.
• Sections 73(12) and 74(12): Restrict tax demand provisions for FY up to 2023-24.
• Section 107: Reduces maximum pre-deposit for appeals to Rs 20 crore for CGST and Rs 40 crore for IGST.
• Section 112: Effective 1st August 2024, appeal deadlines and pre-deposit requirements are adjusted.
• Section 122(1B): Penalties apply only to e-commerce operators subject to TCS from 1st October 2023.
• Section 128A: Conditional waiver of interest and penalty for FY 2017-18 to 2019-20 under certain conditions.
• Section 140: Allows transitional credit for CENVAT credit on input services by ISD.
• Anti-profiteering: Appellate authority will handle anti-profiteering cases from a future notified date.
• Schedule III: Specifies certain insurance-related activities as neither goods nor services.
• Section 146: No refunds for taxes or ITC that wouldn’t have been paid or reversed under new rules.