On July 23, 2024, Finance Minister Nirmala Sitharaman presented the Union Budget for the fiscal year 2024-25, marking her seventh consecutive budget presentation. This budget is particularly significant as it is the first full budget of the Modi 3.0 government following its re-election in June 2024. The budget aims to address various economic challenges and set a roadmap for transforming India into a ‘Viksit Bharat’ (Developed India) by 2047.
Economic Context
The budget comes at a time when India’s economy is going through a complex scenario characterised by global uncertainties, inflationary pressures, and the need for sustainable growth. The Economic Survey presented prior to the budget projected a GDP growth rate of 6.5% to 7% for the fiscal year 2024-25, a decrease from the estimated 8.2% growth in the previous year. The fiscal deficit for FY 2023-24 was recorded at 5.63% of GDP, with a target of 5.1% for FY 2024-25.
Key Highlights of the Union Budget 2024-25
The Union Budget 2024-25 has been structured around nine priority areas aimed at fostering economic resilience and inclusive growth. Here are the key announcements:
1. Fiscal Discipline and Deficit Targets
Fiscal Deficit
The fiscal deficit for FY 2023-24 was revised to 5.8% of GDP, with a target of 5.1% for FY 2024-25 and further reduction to 4.5% by FY 2025-26. This commitment to fiscal consolidation is aimed at achieving a sovereign rating upgrade.
Revenue Projections
The government projects tax receipts for FY 2024-25 at ₹26.02 lakh crore, reflecting a robust growth in direct tax collections, which have tripled since 2014.
2. Capital Expenditure
Increased Allocation
The budget allocates ₹11.11 lakh crore for capital expenditure, marking an 11% increase from the previous fiscal year. This investment is crucial for infrastructure development and economic growth.
Railway Investment
The Indian Railways receives an allocation of ₹2.4 lakh crore, focusing on enhancing connectivity and safety through the introduction of new trains and infrastructure projects.
3. Agriculture and Rural Development
Support for Farmers
The government continues to provide direct financial assistance to 11.8 crore farmers under the PM-KISAN scheme. Additionally, the introduction of 109 new high-yielding and climate-resilient crop varieties aims to boost agricultural productivity.
Natural Farming Initiatives
A new initiative to promote natural farming practices among farmers is set to be rolled out, focusing on sustainable agricultural practices.
4. Employment and Skill Development
Youth Employment Schemes
The budget introduces schemes targeting the employment of 4.1 crore youth, with incentives provided to new formal sector workers.
Skill Development Programs
An allocation for training 20 lakh youth over the next five years has been announced, emphasising the importance of skill development in enhancing employability.
5. Social Welfare and Inclusivity
Women and Child Welfare
The budget includes provisions for the establishment of working women’s hostels and schemes worth ₹3 lakh crore aimed at the welfare of women and girls.
Housing Initiatives
The government plans to construct an additional 3 crore houses in rural and urban areas, enhancing housing availability and affordability.
6. Taxation Reforms
Tax Structure
There were no changes to the existing income tax slabs, maintaining the current tax rates for both direct and indirect taxes. However, tax breaks for start-up investments made by sovereign wealth funds have been extended until March 31, 2025.
Dispute Resolution
The budget proposes the withdrawal of old disputed direct tax demands up to ₹25,000 for FY 2009 and ₹10,000 for FY 2010-11 to FY 2014-15, benefiting approximately 1 crore taxpayers.
7. Infrastructure Development
Transportation Projects
The budget outlines plans for new expressways and airports, particularly in states like Bihar and Andhra Pradesh, with significant financial support aimed at enhancing regional connectivity.
Tourism Development
Interest-free loans will be provided to states for tourism development, with a focus on enhancing infrastructure in regions like Lakshadweep.
8. Energy and Sustainability
Renewable Energy Investments
The budget emphasises investments in renewable energy, with a commitment to achieving net-zero emissions by 2070.
Coal Gasification Projects
Initiatives for coal gasification and liquefaction capacity are also included, reflecting the government’s focus on sustainable energy solutions.
9. Digital and Financial Inclusion
Digital Infrastructure
The budget promotes the development of digital public infrastructure to enhance financial inclusion and formalisation of the economy.
Tax Base Expansion
The government aims to deepen and widen the tax base through the Goods and Services Tax (GST), which has seen significant growth in tax filings and collections.
The Union Budget 2024-25 reflects the government’s commitment to fostering economic growth, enhancing infrastructure, and promoting social welfare. With a focus on fiscal discipline, employment generation, and sustainable development, this budget sets the stage for India to navigate its economic challenges while striving towards the vision of a developed nation by 2047. The successful implementation of these initiatives will be crucial in determining the trajectory of India’s economic recovery and growth in the coming years.
New Tax Slabs for FY 2024-25
The Union Budget for the fiscal year 2024-25, presented on July 23, 2024, has maintained the existing income tax slabs under both the new and old tax regimes. Here’s a detailed overview of the tax slabs applicable for the assessment year 2025-26 (FY 2024-25).
New Tax Regime Slabs 2024-25
The new tax regime, introduced in 2020 and modified in subsequent budgets, is now the default tax regime unless taxpayers choose to opt for the old regime. The income tax slabs under the new tax regime for FY 2024-25 are as follows:
| Income Range (Rs) | Tax Rate (%) |
| Up to 3,00,000 | Nil |
| 3,00,001 – 7,00,000 | 5% |
| 7,00,001 – 10,00,000 | 10% |
| 10,00,001 – 12,00,000 | 15% |
| 12,00,001 – 15,00,000 | 20% |
| Above 15,00,000 | 30% |
Key Features of the New Tax Regime
Basic Exemption Limit
The basic exemption limit has been increased to ₹3 lakh, which means individuals earning up to this amount are not liable to pay any income tax.
Rebate Under Section 87A
The tax rebate under Section 87A has been enhanced to a taxable income of ₹7 lakh, allowing individuals with income up to this threshold to pay no tax.
Standard Deduction
A standard deduction of ₹50,000 is available for salaried individuals and pensioners, which helps reduce taxable income.
Surcharge
The highest surcharge rate has been reduced to 25% under the new tax regime.
Old Tax Regime Slabs
Taxpayers also have the option to choose the old tax regime, which allows for various deductions and exemptions. The tax slabs under the old regime for FY 2024-25 are as follows:
| Income Range (Rs) | Tax Rate (%) |
| Up to 2,50,000 | Nil |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Comparison of New and Old Tax Regimes
| Feature | New Tax Regime | Old Tax Regime |
| Basic Exemption Limit | ₹3,00,000 | ₹2,50,000 (₹3,00,000 for seniors) |
| Tax Rates | Lower rates, fewer slabs | Higher rates, more slabs |
| Deductions | Most deductions not allowed | Various deductions available |
| Standard Deduction | ₹50,000 | Not applicable |
| Rebate | Up to ₹7,00,000 | Up to ₹5,00,000 |
Budget 2024: A Youth-Centric Focus
The Union Budget 2024 introduced several key initiatives aimed at empowering and skilling the youth of India. Here’s a summary of the major youth-focused schemes:
Rs. 2 Lakh Crore Package for Youth Employment and Skilling
The government announced a substantial Rs. 2 lakh crore package to be invested over five years across five key schemes.These schemes are designed to create employment opportunities and provide skills training to approximately 4.1 crore youth.
Skill Development for 20 Lakh Youth
A dedicated scheme was unveiled to impart skills training to 20 lakh young individuals over the next five years. This initiative aims to enhance employability and equip youth with industry-relevant skills. The program will be implemented over a period of five years.
To enhance the quality of skill training, the government plans to upgrade approximately 1,000 Industrial Training Institutes (ITIs) using a hub-and-spoke model.
The upgraded ITIs will focus on delivering industry-relevant courses to better prepare youth for employment.
The government will revise the model skilling loan scheme to facilitate loans up to Rs. 7.5 lakh,making skill development more accessible.
Internships for 1 Crore Youth
To provide practical exposure and industry experience, the government announced a program to offer internships in top companies to 1 crore youth over a five-year period.
These internships will be provided by 500 top companies across various sectors, ensuring exposure to industry best practices.
Interns will receive a monthly stipend of Rs. 5,000 and a one-time assistance of Rs. 6,000 to support their internship experience.
Companies participating in the scheme will bear the cost of training interns and contribute 10% of the internship cost to their CSR funds.
Education Funding
₹1.48 lakh crore for Education and Employment. This allocation aims to improve educational facilities and vocational training, ensuring that the youth are equipped with necessary skills for the job market.
Government to Support Loans Up to Rs. 10 Lakhs for Higher Education
A significant announcement in the Union Budget 2024-25 was the government’s decision to provide financial support for loans up to Rs. 10 lakhs for higher education in domestic institutions.
- E-vouchers: The government will issue e-vouchers directly to 1 lakh students every year.
- Interest Subvention: Students will benefit from an annual interest subvention of 3% on the loan amount.
- Model Skill Loan Scheme: The government will revise the Model Skill Loan Scheme to facilitate loans up to Rs.7.5 lakh with a guarantee from a government-promoted fund. This scheme aims to benefit 25,000 students annually.
Focus on Women
The budget also highlighted the importance of women’s empowerment and announced plans to set up working women hostels in major industrial areas. This initiative aims to support women’s participation in the workforce.
Industry-government partnerships will be formed to launch women-specific skilling programs to enhance their employability. Efforts will be made to promote market access for women-led Self Help Groups (SHGs).
Overall, the Budget 2024 has placed a strong emphasis on youth development, skilling, and employment generation. These initiatives are expected to play a crucial role in India’s demographic dividend.
New Budget Policies for the MSME Sector
The Union Budget 2024-25 has introduced several new policies aimed at supporting the Micro, Small, and Medium Enterprises (MSME) sector, which plays a crucial role in India’s economy. Here are the key highlights:
1. Credit Guarantee Scheme
A new Credit Guarantee Scheme will facilitate term loans for MSMEs to purchase machinery and equipment without requiring collateral or third-party guarantees. This scheme includes a self-financing guarantee fund providing coverage of up to ₹100 crore per applicant, aimed at reducing credit risks and enhancing access to financing for MSMEs.
2. Enhanced Mudra Loans
The limit for **Mudra loans** has been increased from **₹10 lakh to ₹20 lakh** for entrepreneurs who have successfully repaid previous loans under the ‘Tarun’ category. This enhancement aims to provide greater financial support to small businesses.
3. New Credit Assessment Model
Public sector banks will develop new credit assessment models based on the digital footprints of MSMEs rather than traditional metrics like turnover. This change will help assess the creditworthiness of MSMEs without formal accounting systems.
4. Support During Stress Periods
A mechanism will be introduced to ensure continued bank credit to MSMEs during stressful periods, particularly when they are flagged as special mention accounts (SMA). This initiative aims to prevent MSMEs from falling into non-performing asset (NPA) status.
5. Mandatory Onboarding for TReDS
The turnover threshold for mandatory onboarding on the Trade Receivables Discounting System (TReDS) platform will be reduced from ₹500 crore to ₹250 crore. This move is expected to bring more MSMEs into the system, enhancing their access to working capital.
6. Financial Support for Food Safety
The budget includes financial support for establishing 50 multi-product food irradiation units and 100 NAB-accredited food quality and safety testing labs in the MSME sector to improve product quality and safety.
7. E-commerce Export Hubs
The establishment of e-commerce export hubs through public-private partnerships will enable MSMEs and traditional artisans to sell their products in international markets, providing them with a seamless regulatory framework for trade.
8. Expansion of SIDBI Branches
The Small Industries Development Bank of India (SIDBI) will open 24 new branches to serve major MSME clusters, expanding service coverage to **168 out of 245** major clusters over the next three years.
9. Ease of Doing Business Initiatives
The government is working on the Jan Vishwas Bill 2.0 to enhance the ease of doing business for MSMEs, alongside incentivizing states for implementing their Business Reforms Action Plans.
These measures reflect the government’s commitment to strengthening the MSME sector, enhancing access to finance, and promoting growth and competitiveness in the global market.
What Became Costlier and Cheaper in Union Budget 2024-25
The Union Budget 2024-25 introduced several changes that impacted the prices of various goods and services. Let’s break down what became costlier and cheaper:
Items That Became Costlier in Union Budget 2024-25
Precious Metals and Jewellery
The budget increased customs duties on gold, silver, diamonds, and platinum items, making them more expensive for consumers. This includes gold bars, imitation jewellery, and cut and polished diamonds.
Cigarettes
Cigarettes have become costlier due to higher taxes imposed in the budget.
Kitchen Appliances
Customs duties on kitchen electric chimneys and chimney heat coils have risen, leading to increased prices.
Lithium Batteries
The cost of lithium batteries, which are essential components for electric vehicles and electronic devices, has gone up due to increased duties.
Mobile Phones and Accessories
While mobile phones have become cheaper overall, certain components like chargers and cameras have seen a rise in customs duties, making them pricier for consumers.
Items That Became Cheaper in Union Budget 2024-25
Solar Equipment
Reduced customs duties on solar cells, modules, and inverters aim to promote renewable energy adoption and make these items more affordable.
Electric Vehicles
Some components of electric vehicles have become cheaper, encouraging the adoption of eco-friendly transportation.
Toys and Bicycles
Lower duties on toys and bicycles are intended to make them more affordable for consumers, especially children.
Farm Inputs
Seeds, tools, and other agricultural inputs have seen reduced costs to support farmers and boost productivity.
Leather Goods and Seafood
The cost of imported leather goods and seafood has decreased due to reduced customs duties.
Other Notable Changes
- Customs Duty on Imports: The government increased customs duty on several imported items to promote domestic manufacturing. This could lead to higher prices for these products.
- Focus on Affordable Housing: The budget emphasised affordable housing, which could lead to potential benefits for homebuyers.
It’s important to note that while these changes indicate potential price movements, actual prices in the market can be influenced by various factors such as supply and demand, global commodity prices, and retailer margins.
New Deductions Introduced in Union Budget 2024-25
The Union Budget 2024-25 brought significant changes to the income tax regime, including the introduction of new deductions and the enhancement of existing ones.
Here are the key changes:
Increased Standard Deduction
- New Tax Regime: The standard deduction for salaried individuals was increased from Rs. 50,000 to Rs. 75,000.This provides a tax benefit of up to Rs. 17,500. This deduction allows taxpayers to reduce their taxable income without needing to provide proof of expenses, benefiting approximately 4 crore salaried individuals and pensioners.
Old Tax Regime: The standard deduction remains unchanged at Rs. 50,000.
Enhanced Deduction for Family Pensioners
New Tax Regime: The deduction for family pensioners was raised from Rs. 15,000 to Rs. 25,000. This increase aims to provide additional financial relief to pensioners receiving family pensions.
Employer Contribution to NPS
Deductions for employer contributions to the National Pension System (NPS) under Section 80CCD(2) remain available under the new tax regime, allowing for further tax benefits related to retirement savings.
Other Notable Changes
While not strictly new deductions, certain modifications to existing provisions can impact taxpayers:
- Changes in Long-Term Capital Gains (LTCG) Tax: The LTCG tax rate was increased from 10% to 12.5%,which might affect the overall tax liability for those with capital gains.
- No Changes to Old Tax Regime: The government maintained the status quo for the old tax regime, preserving existing deductions and exemptions available under this regime.
- No Major Changes to Old Tax Regime: The government has focused on making the new tax regime more attractive, with minimal changes to the old regime.
The Union Budget 2024-25 presents a comprehensive roadmap for India’s economic growth and development, emphasizing strategic investments in key sectors, enhanced support for MSMEs, and a commitment to sustainability, while maintaining fiscal discipline with a targeted deficit of 5.1%. With projected GDP growth of 6.5% to 7%, the budget introduces new employment schemes and tax relief measures aimed at stimulating consumer spending and job creation, particularly for the youth, positioning India on a path toward achieving its long-term vision of becoming a developed nation by 2047 through inclusive progress and resilience in the face of global challenges.
Reference : https://www.indiabudget.gov.in/
Author: All Content is verified by SMC Global Securities.
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