Union Budget 2024 Highlights and Tax Reforms

The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, marks her seventh budget announcement. This budget introduces a series of measures aimed at boosting various sectors, revising tax structures, and enhancing social security benefits. From increasing the standard deduction to proposing new tax rates and enhancing expenditure in key areas, the budget outlines comprehensive changes that promise to impact the economic landscape significantly.

A) Tax

Standard deduction was proposed to be increased to Rs 75,000 from Rs 50,000.

In new tax regime, the tax rate structure will be revised. Below is the new structure:

The finance minister said, Salaried employees in new tax regime will save up to Rs. 17,500 in income tax.

Monetary limits for filling appeals have been increased related to Direct Tax, Excise & Service Tax Rs. 60 lakhs, High Court Rs. 2 Crore, Supreme Court Rs. 5 Crore, in the Tax Tribunals.

The finance minister announced that the TDS rate on e-commerce operators to be reduced from 1 to 0.1 %. Moreover, credit of TCS is proposed to be given in the TDS to be deducted on the salary.

To improve social security benefits, the deduction of expenditure by employers towards NPS is proposed to be increased from 10 to 14% of the employee’s salary.

FM Sitharaman announced changes in new tax regime.

B) Stock markets

It was announced that long-term capital gains on all financial and non-financial assets will attract a tax rate of 12.5%. Additionally, the limit of exemption for capital gains will be set at Rs 1.25 lakh per year.

The FM 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%.

Also, the 20% TDS on repurchase by MF or UTI was proposed to be withdrawn.

The new moves are basically these:

1. LTCG on specified certain assets will be hiked to 12.5%

2. Unlisted bonds, debt mutual funds will continue to be taxed at applicable tax rate.

3. STCG on certain assets will attract 20% and all other on financial and non-financial assets will be taxed at tax rate applicable.

4. Hike in the limit capital gains exemption limit to Rs 1.25 lakh per year.

C) Govt’s expenditure under major heads

1. Commerce & Industry: 56,501 crores

2. Health: 89,287 crores

3. Education: 1,25,638 crores

4. Agriculture and Allied Activities: 1,51,851 crores

5. Social Welfare: 56,501 crores

6. IT and Telecom: 1,16,342 crores

7. Rural Development: 2,65,808 crores

8. Defence: 4,54,773 crores

9. Energy: 68,769 crores

10. Home A airs: 1,50,983 cores.

D) Education

The Budget announced financial support for loans up to Rs 10 lakh for higher education.

This year, a provision of Rs 1.48 lakh crore has been made for education, employment, and skilling.

E) The budget laid out nine priorities for this year and coming years.

They are:

1. Productivity and resilience in Agriculture

2. Employment and skilling

3. Inclusive HRD and social justice

4. Mfg & services

5. Urban development

6. Energy security

7. Infra

8. Innovation, R&D

9. Next generation reforms

There is a need to focus on the Garib, Mahilaye, Yuva and Annadata, said the FM. One of the top Budget highlights pertained to a PM Package of 5 schemes to facilitate employment and skilling at an outlay of Rs 2 lakh crore.

F) Defence

The defence outlay has been set at Rs 4.56 lakh crore, compared to Rs 4.55 lakh crore previously

G) GST

To further enhance the benefits of GST, the govt will strive to rationalise the tax structure, the finance minister proposed in her budget. GST has significantly reduced tax incidents for the common man and eased compliance for industry, marking a success of vast proportions, the FM said.

H) Small Business

On credit guarantee schemes for MSMEs in manufacturing, FM said, “to facilitate term loans for MSMEs for the purchase of machinery and equipment without collateral and guarantee, a new scheme will be introduced. This guarantee fund will provide guarantees of up to Rs 100 crore.”

I) Indexation bonus on property sale

The indexation bonus that was offered on property sales was announced to be eliminated in the 2024 budget. Many property sellers will consequently be unable to increase their acquisition price and lower their capital gains.

Before the announcement, long-term capital gains from the sale of real estate were subject to a 20% indexation bene t tax. According to the budget documents, capital gains from the sale of property will now be subject to the new LTCG tax rate of 12.5% without indexation advantage, as opposed to the previous rate of 20% with indexation benefit.

According to the budget documents, capital gains from the sale of real estate will now be subject to the new 12.5% LTCG tax rate without the indexation benefit.

Conclusion: The Union Budget 2024 lays a solid foundation for economic growth, with significant reforms in taxation, increased government expenditure, and focused initiatives on employment, education, and infrastructure. By addressing key areas such as social welfare, defence, and small businesses, the budget aims to create a more resilient and inclusive economy. The strategic measures and financial support outlined in this budget reflect a commitment to sustainable development and prosperity for all citizens.