Finance Minister Nirmala Sitharaman presented the new budget yesterday, featuring increased standard deductions and revised tax rates for salaried individuals under the new tax regime. She presented the first budget under the Modi 3.0 government on Tuesday, July 23.

Sitharaman introduced increased standard deductions and new tax rates for salaried individuals. The removal of the angel tax is expected to enhance the startup ecosystem, fostering innovation and entrepreneurship. Also, there were cuts on customs duty for gold, silver, mobile phones, and other goods. The Centre’s FY25 Capex spending is set at ₹11.1 lakh crore, unchanged from the interim budget.

The government has allocated over ₹3 lakh crore for women-led development and extended the PMGKAY (Pradhan Mantri Garib Kalyan Anna Yojana) for five years, benefiting over 80 crore people. In this budget, the main focus is on nine priority areas, including agriculture, employment, inclusive development, manufacturing, urban development, energy, infrastructure, innovation, and next generation reforms.

Budget Highlights

Revised Tax Rates

  • The revised tax rates in the new tax regime will impact various income brackets differently:
  • For incomes up to ₹3 lakh, there is no tax, which benefits lower-income earners.
  • Incomes between ₹3 lakh and ₹7 lakh will be taxed at 5%, providing some relief compared to higher rates.
  • Incomes between ₹7 lakh and ₹10 lakh will be taxed at 10%, making it moderate for middle-income earners.
  • Incomes between ₹10 lakh and ₹12 lakh will face a 15% tax, which is higher but still manageable.
  • Incomes between ₹12 lakh and ₹15 lakh will be taxed at 20%, impacting higher earners more significantly.
  • For incomes above ₹15 lakh, the tax rate is set at 30%, which is the highest bracket and affects the wealthiest individuals the most.

These changes aim to simplify the tax system and potentially increase disposable income for lower and middle-income groups. Higher earners will contribute more, aligning with a progressive tax approach.

Old Tax Regime

The Finance Minister said she cannot decide whether the old tax regime will be eliminated but emphasised that the goal is to simplify the tax system.

Employment and Skilling Allocations in the Budget

  • Five schemes will focus on 4.1 crore youth over 5 years with a central outlay of ₹2 lakh crore.
  • A comprehensive internship scheme for one crore youth in top companies over five years.
  • Employment-linked incentives, including one month’s wage support for first-time employees.
  • Women-specific skilling programs and increased workforce participation.

MSME and Manufacturing Support Allocations in the Budget

  • Special attention to MSMEs and the manufacturing sector.
  • Credit guarantee scheme and term loans for machinery purchases.
  • Technology support package for MSMEs.
  • SIDBI will open 24 new branches to serve MSME clusters.

Financial Initiatives

  • The Mudra loan limit increased from ₹10 lakh to ₹20 lakh for previous borrowers.
  • Financial support for higher education loans up to ₹10 lakh in domestic institutions.
  • Integrated technology system for the Insolvency and Bankruptcy Code (IBC).

Agriculture and Rural Development

  • ₹2.66 lakh crore provision for rural development.
  • Transformation of agricultural research to focus on productivity and climate-resilient crop varieties.
  • Initiative to introduce one crore farmers to natural farming over two years.

Infrastructure and Regional Development

  • Rental housing in PPP mode for industrial workers.
  • Special financial support of ₹15,000 crore for Andhra Pradesh.
  • New airports, medical facilities, and sports infrastructure for Bihar.

Custom Duty Cut on Gold and Silver

The announcement to cut import duty on gold will enhance domestic manufacturing and promote jewelry exports, Commerce and Industry Minister Piyush Goyal said. He also mentioned that removing the angel tax will further bolster the startup ecosystem. With high gold prices and the upcoming marriage season, this measure will benefit people.

Budget 2024 Allocates ₹1.28 lakh Crore to the Telecom Ministry

The government proposed an allocation of ₹1.28 lakh crore for telecom projects and public sector companies under the telecom ministry. Majority of the funds are designated for state-owned BSNL. Over ₹1 lakh crore of the total proposed allocation is intended for BSNL and MTNL-related expenses, including ₹82,916 crore for technology upgrades and restructuring at BSNL.

Allocation for Andhra Pradesh

In her seventh budget presentation, Finance Minister Nirmala Sitharaman announced a special financial support of ₹15,000 crore for Andhra Pradesh to develop its capital. The current financial year, ₹15,000 crore will be arranged, with additional amounts in future years. We will facilitate financial support through multilateral agencies,” said Sitharaman.

Sitharaman on Long-Term Capital Gains

The Finance Minister stated that the average taxation on long-term capital gains has come down to 12.5%. She explained that they have worked out different rates for various asset classes, encouraging investment in the markets.

Nirmala Sitharaman made significant changes to the Union Budget 2024 that aim to streamline the tax system and strengthen various economic sectors. The new tax regime with revised rates offers relief to lower and middle-income earners while ensuring higher contributions from the wealthy. Special attention has been given to social welfare schemes, reflecting the government’s commitment to inclusive growth. Overall, the budget seeks to drive economic growth, create jobs, and improve the standard of living for all citizens.