The Union Budget 2024 presentation on Tuesday, July 23, 2024, presented by Finance Minister Nirmala Sitharaman, marks her seventh consecutive budget—a historic milestone. The day was marked by a great deal of volatility, as investors responded to the budget announcements, especially the adjustments made to the capital gains tax.
Let's look into the highlights of the Union Budget 2024-25 announcement made today by Finance Minister Nirmala Sitharaman.
Economic Outlook and Priority Areas
The government's target of 4% inflation and a focus on job creation and boosting consumption reflect its intent to maintain economic stability and growth. The nine priority areas—Agriculture, Employment, Inclusive Development, Manufacturing and Services, Urban Development, Energy, Infrastructure, Innovation and R&D, and Next Generation Reforms—highlight the comprehensive approach to development.
Securities Transaction Tax (STT) Changes:
- STT on the sale of options in securities increased from 0.0625% to 0.1% of the option premium.
- STT on the sale of futures in securities increased from 0.0125% to 0.02% of the futures price.
- Income received from share buybacks will now be taxed in the hands of the recipient.
Capital Asset Transfer:
Transfers of capital assets under a gift, will, or irrevocable trust by entities other than individuals or Hindu Undivided Families (HUF) will be regarded as transfers for calculating capital gains.
Capital Expenditure:
FY25 capital expenditure is set at ₹11.1 lakh crore, representing 3.4% of GDP.
Tax Reforms
Employment and Skilling
- Five major schemes will focus on skilling 4.1 crore youth over five years with a central outlay of ₹2 lakh crore.
- The government will provide 12-month internship opportunities to one crore youth in the top 500 companies for five years.
- Employment-linked incentives include one month's wage support for first-time employees and women-specific skilling programs.
MSME and Manufacturing Support
- Special attention to MSMEs and the manufacturing sector through credit guarantee schemes and term loans for machinery purchases.
- SIDBI to expand its reach with 24 new branches dedicated to serving MSME clusters.
- A technology support package for MSMEs aims to enhance their competitiveness and growth.
Financial Initiatives
- The Mudra loan limit has been increased from ₹10 lakh to ₹20 lakh for previous borrowers, providing greater access to credit for small businesses.
- Financial support for higher education loans up to ₹10 lakh in domestic institutions will make higher education more accessible.
- The introduction of an integrated technology system for the Insolvency and Bankruptcy Code (IBC) aims to streamline the resolution process for distressed assets.
Agriculture and Rural Development
- With a provision of ₹2.66 lakh crore, the budget emphasizes rural development and agricultural transformation.
- Efforts will be made to focus on productivity and climate-resilient crop varieties, enhancing the resilience of Indian agriculture.
- An initiative to introduce one crore farmers to natural farming over two years will promote sustainable agricultural practices.
Infrastructure and Regional Development
- The budget includes rental housing projects in PPP mode for industrial workers, addressing the housing needs of this segment.
- Andhra Pradesh receives special financial support of ₹15,000 crore, highlighting the government's focus on regional development.
- Bihar will benefit from new airports, medical facilities, and sports infrastructure, reflecting the government's commitment to balanced regional growth.
Women-Led Development and Social Welfare
With over ₹3 lakh crore allocated for schemes benefiting women and girls, the budget emphasizes women-led development. The extension of PMGKAY (Pradhan Mantri Garib Kalyan Anna Yojana) for five years will provide continued support to over 80 crore people, ensuring food security and social welfare.
Digital and Technological Advancements
The development of Digital Public Infrastructure (DPI) applications will drive advancements in credit, e-commerce, law and justice, and corporate governance, supporting India's digital economy.
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