India’s Union Budget 2024-25: The Key Highlights

On Tuesday, July 23rd, 2024, Nirmala Sitharaman, the Hon’ble Finance Minister, presented the first budget of the current government. This marks FM Sitharaman’s record 7th Union Budget presentation. Since 1947, there have been 73 annual budgets, 14 interim budgets, and 4 special budgets, or mini-budgets.

The Union Budget 2024-25 summary covers major changes, tax adjustments, and significant economic strategies.

Key Features of Union Budget 2024-25

The Indian government is estimated to spend Rs 47,65,768 crore in 2024-25, 6% higher than the revised estimate of 2023-24. Below are the areas where this year’s budget will be impacted majorly:

Priority Areas:

• Agriculture: Initiatives for natural farming, self-sufficiency in pulses and oilseeds, and the development of digital public infrastructure. A substantial allocation of ₹2.66 lakh crore for rural development has been made​.
• Employment: Introduction of five schemes targeting 4.1 crore youth over five years with a central outlay of ₹2 lakh crore. This includes a comprehensive internship scheme and employment-linked incentives​​.
• Infrastructure: A significant increase in capital expenditure by 11.1%, raising the outlay to ₹11.11 lakh crore, which is 3.4% of the GDP. Expansion of significant rail corridors and airport development under the UDAN scheme​.

Economic Projections:

The fiscal deficit is projected at 5.1% of GDP for FY 2024-25, aligning to reduce it below 4.5% by FY 2025-26. The GDP growth is expected to be robust, driven by strong macroeconomic fundamentals​​.

Taxation:

The tax rates for direct and indirect taxes, including import duties, have not changed. The focus remains on stability and predictability in the tax regime, which is expected to benefit businesses in their financial planning​.

Tax Slabs: Old vs. New

The budget has introduced changes to the income tax slabs, aiming to provide relief and adjust the taxable income brackets.

Social Welfare:

The ‘Lakhpati Didi’ scheme aims to increase the target from 2 cr to 3 crore women, empowering rural women through self-help groups, increased funding and support for women’s skilling programs, and higher workforce participation​​.

Sustainable Development:

There is an emphasis on clean energy, with viability gap funding for wind energy projects aiming to harness offshore wind energy potential. This aligns with India’s commitment to sustainable and green energy sources​.

Abolishment of Angel Tax: 

The government has abolished the Angel Tax after 12 years, which previously taxed investments in startups at a higher rate. This change aims to create a more favourable investment environment for startups, encouraging more angel investments and growth in the startup ecosystem.

Innovation and Research:

Focus on transforming agricultural research towards productivity and climate-resilient crop varieties—support for innovation and R&D to drive future reforms in various sectors​.

Things That Have Got Cheaper

Several consumer goods have become more affordable with the new budget:

• Charger and Mobiles: Prices are expected to drop, making technology more accessible.
• Footwear: Reducing customs duties will make footwear more affordable for consumers.
• Seafood: The seafood industry is set to benefit from lower taxes, resulting in lower consumer prices.
• Precious Metals: Custom duties on precious metals like gold and silver have been reduced to 6%, making them more affordable.

Things That Have Got Costlier

Certain items have seen a rise in prices due to increased taxes and duties:

• Specified Telecom Equipment: The cost of specific telecom equipment has increased due to higher duties.
• Plastic Products (PVC): Plastic items will see a price hike due to new tax regulations.
• Ammonium Nitrate (Fertilisers): This fertiliser’s cost has increased, potentially impacting the agriculture sector.
• Air Travel: Increased duties and taxes have led to higher costs for air travel.
• Cigarettes: Higher excise duties have resulted in an increase in cigarette prices.
• Petrochemicals: The cost of petrochemical products has risen due to increased taxes and duties.

Taxes Increased on Capital Gains

Capital gains taxes have seen an increase, affecting both long-term and short-term investments:

• Long-term Capital Gains: The tax rate has been raised from 10% to 12.5%.
• Short-term Capital Gains: The tax rate has increased from 15% to 20%.

Conclusion

The Union Budget 2024-25 brings a mix of relief and adjustments, impacting various sectors and consumer goods. While some items have become more affordable, others have seen price increases due to higher taxes and duties. The revised tax slabs aim to provide some relief to taxpayers, especially in the middle-income brackets. The budget reflects the government’s priorities and strategic economic direction for the coming fiscal year.