By Namrata Singh, CFP & Chaitali Shah, MA (Economics)

The Union Budget for 2024-25, presented by Nirmala Sitharaman on 23rd July 2024, lays out a comprehensive plan aimed at propelling India towards the vision of ‘Viksit Bharat’ (Developed India).

The budget focuses on 4 major castes:

• Women (Mahilayen): Initiatives to facilitate higher workforce participation, such as setting up working women hostels and establishing crèches.

• Poor (Garib): Schemes to uplift economically weaker sections, ensuring access to essential services and financial support.

• Youth (Yuva): Employment generation schemes, skilling programs, and incentives for new entrants into the workforce.

• Farmers (Annadata): Enhanced support for agricultural productivity and resilience through natural farming initiatives and modern agricultural practices.

 

Nine Priorities for Viksit Bharat

1. Agricultural Advancements:

Allocation of 1.52 lakh crore for agriculture and allied sectors. Promotion of FPOs (Farmer Producer Organisations), cooperatives, and start-ups to streamline the vegetable supply chain. Digital Public Infrastructure (DPI) for Agriculture to be implemented for coverage of farmers and their lands in 3 years.

2. Employment and Skilling:

One-month wage for new formal sector entrants and reimbursement of EPFO contributions for employers hiring new employees. For training 20 lakh youth over five years and upgrading 1,000 Industrial Training Institutes (ITIs).

3. Inclusive Human Resource Development:

Development projects in Eastern states, including industrial corridors and economic opportunities. Pradhan Mantri Janjatiya Unnat Gram Abhiyan for improving socio-economic conditions of tribal communities.

4. Manufacturing & Services:

Establishment of twelve industrial parks under the National Industrial Corridor Development Programme. Provision of internships in top companies for 1 crore youth over five years. Credit guarantee schemes and support for MSMEs during economic downturns.

5. Urban Development:

Allocation of Rs10 Lakh Crore to PM Awas Yojana Urban 2.0. Development of weekly street food hubs, transit-oriented plans for large cities, and efficient water management projects.

6. Energy: Financial support for clean energy transitions and energy audits.

7. Infrastructure: Allocation of ₹1.5 lakh crore to states as long-term interest-free loans and extensive funding for rural connectivity and flood mitigation projects.

8. Innovation, Research & Development:

Operationalization of the Anusandhan National Research Fund.

Establishment of a ₹1,000 crore venture capital fund for space-related innovations.

9. Next Generation Reforms:

Land records in urban areas to be digitized with GIS (Geographic Information System) mapping.

Unique Land Parcel Identification Number (ULPIN) or Bhu-Aadhaar for all land in rural areas.

 

TAX PROPOSALS:

1. Direct Taxes: Simplification of tax regimes, reduction in tax rates, and increased exemptions for salaried employees.

The revised slabs under New Tax Regime to result in Tax savings upto Rs 17,500/-

Standard Deduction for salaried employees increased from Rs 50,000 to Rs 75,000

Detailed Summary of Tax Implications for Various Listed and Unlisted Assets:

Listed Assets
Asset Type	Earlier STCG Tax Rate	Now STCG Tax Rate	Holding Period for LTCG	Changes in Holding Period	Earlier LTCG Tax Rate	Now LTCG Tax Rate
Stocks and Equity Mutual Funds	15%	20%	12 months	No change	10%	12.5% *
Debt and Non-Equity Mutual Funds	Slab rate	Slab rate	N/A	No change	Slab rate	Slab rate
Bonds (Listed)	Slab rate	20%	12 months	No change	10%	12.50%
REITs/InvITs	15%	20%	12 months	Yes, Earlier 36 month	10%	12.50%
Gold/Silver ETFs	Slab rate	20%	12 months	Earlier same for STCG and LTCG	Slab rate	12.50%
Overseas FoFs	Slab rate	Slab rate	24 months	Earlier same for STCG and LTCG	Slab rate	12.50%
Gold Funds	Slab rate	Slab rate	12 montha	Earlier same for STCG and LTCG	Slab rate	12.50%

*Annual LTCG exemption amount increased from ₹1 lakh to ₹1.25 lakh

Unlisted Assets
Asset Type	Earlier STCG Tax Rate	Now STCG Tax Rate	Holding Period for LTCG	Changes in Holding Period	Earlier LTCG Tax Rate	Now LTCG Tax Rate
Real Estate (Physical)	Slab rate	Slab rate	24 months	No change	20% with indexation	12.50%
Bonds (Unlisted)	Slab rate	Slab rate	24 months	No change	Slab rate	Slab rate
Physical Gold	Slab rate	Slab rate	24 months	Yes, Earlier 36 month	20% with indexation	12.50%
Stocks (Unlisted), Foreign Equities/Debt	Slab rate	Slab rate	24 months	No change	20% with indexation	12.50%

**Indexation on all asset classes would be removed

Real estate: With the removal of the Indexation, on sale of property, the purchase prices will not be adjusted to inflation. Lowering stamp duty and reducing LTCG rate on property may help in better participation.  Encouragement for states to lower stamp duties for properties purchased by women.

2. Customs Duty: Rationalization of customs duties to boost competitiveness in strategic sectors and support domestic manufacturing.

The following table summarizes the changes in custom duties for various beneficiaries, highlighting the specific adjustments made to support different industries and sectors:

Custom Duty Changes	Beneficiaries
3 Cancer medicines to be fully exempt from Custom Duty	Affordable Medicine
Reduce basic custom duty to 15% on Mobile phones and chargers	Mobile Industry
Reduce basic custom duty to 6% on Gold & Silver (6.4% on platinum)	Precious Metal
Reduce basic custom duty on shrimp & fish feed to 5%	Marine Exports
Exempted more capital goods for manufacturing of solar cells & panels	Manufacturing Sector
Fully exempt custom duties on 25 critical minerals	Strategic Sectors

 

3. Corporate Tax rate on foreign companies reduced from 40% to 35%

4. Angel Tax abolished for all class of investors

 

The Government to continue the path of Fiscal Consolidation

• Total receipts other than borrowings estimated at Rs. 32.1 Lakh Crore

• Gross and Net Market borrowings estimated at Rs 14 lakh and Rs 11.6 lakh crore respectively

• Total expenditure estimated at Rs 48.21 Lakh Crore

• Fiscal deficit for 24-25 estimated at 4.9% and targeted below 4.5% for the next year

• From 2026-27 onwards, Fiscal Deficit to be targeted such that Central Govt. Debt will trend downward

• Capital Outlay stands at Rs 11.11 lakh crore unchanged from the Interim Budget

• Allocation for Defence, Railways, Roads and Highways continues to remain in line with interim budget

India’s Long term structural story remains intact with macro indicators looking strong and the Union Budget showcases Government’s continued commitment to enhance the stability of the economy.

The Budget 2024-25 aims to foster a balanced growth trajectory by addressing critical sectors and promoting inclusive development. With strategic investments and innovative policies, it seeks to transform India into a developed nation, driving economic growth and enhancing the quality of life for its citizens.

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Namrata Singh is a Certified Financial Planner with more than 14 years of experience in banking and wealth management. (namrata@asinvestment.in)

Chaitali Shah, MCom & MA (Economics) is a Financial Coach and was a Financial Economics Faculty at Wilson College, Mumbai (info@wealthron.com)