Union Budget 2024-25: Important Tax Changes & Key Announcements

Union Budget 2024-25 Important Announcements

Key Economic Indicators

• India’s inflation remains low and stable compared to global uncertainties.
• Inflation is moving towards the 4% target.
• India’s economic growth is described as a “shining exception.”
• Fiscal deficit estimate for FY25 is 4.9% of GDP.
• Capex spend for FY25 at ₹11.1 lakh crore — unchanged from the Interim Budget, infrastructure spend at 3.4% of GDP.

Changes in capital gains tax 

• Short-term gains tax on specified financial assets raised to 20% from 15%, while that on all other financial assets and non-financial assets shall continue to attract the applicable tax rate.
  
• Long-term gains tax on all financial and non-financial assets raised to 12.5%. It is proposed to increase the limit of exemption of capital gains on certain listed financial assets from ₹1 lakh to ₹1.25 lakh per year.
  
• Listed financial assets held for more than a year will be classified as long term, while unlisted financial assets and all non-financial assets will have to be held for at least two years to be classified as long-term.
  
• Unlisted bonds and debentures, debt mutual funds and market linked debentures, irrespective of holding period, will attract tax on capital gains at applicable rates.

Important Announcements on TDS and TCS 

TDS on payment to a partner

• Payments made by a firm to its partner shall be subject to TDS at 10% for aggregate amounts more than ₹20,000 in a financial year.

TCS on notified luxury goods

• Levy TCS of 1% on notified goods of value exceeding 10 lakh rupees. 

TDS on Floating Rate Savings (Taxable) Bonds (FRSB) 2020

• TDS is proposed on interest exceeding ₹10,000 on Floating Rate Savings (Taxable) Bonds (FRSB) 2020 or any other notified security of the Central or State Governments

Revised Tax Rate Structure

Standard deduction increased to ₹75,000 from ₹50,000 in the new tax regime.

Important Announcements on Capital Gain Taxes

• Short term capital gain tax on certain financial assets revised to 20%
• Long term capital gain tax revised to 12.5% on Financial assets
• TDS rate on e-commerce operators to be cut to 0.1% from 1%

FY25 Fiscal Deficit 

• Projected at 4.9% of GDP versus 5.1% in the Interim Budget
• Aim to reach a fiscal deficit of below 4.5% next year
• Expenditure for FY25 seen at 48.21 lakh crore
• Receipts for FY25 32.07 lakh crore
  

Cut In Custom Duties

• Customs duties on gold, silver cut to 6%, platinum to 6.4%
• Lithium, Copper, and Cobalt exempted from Custom Duty
• Expand the list of exempted capital goods used in manufacturing of solar cells, panels
• Reduce BCD subject to conditions on MDI for manufacturing of spandex yarn from 7.5% to 5%
• Exempt customs duty on manufacturing of connectors
• Exempt customs duty on Oxygen-fused copper

Industrial Allocations

• ₹1.52 lakh crore for Agriculture and Allied Sectors.
• ₹2 lakh crore over five years for Middle Class and Skilling Youth.
• ₹1.48 lakh crore for Education, Employment, and Skilling.
• Over ₹3 lakh crore is allocated for schemes benefiting women and girls.
• Allocation of ₹11,500 crore for flood control and management in Bihar, Assam, Himachal Pradesh, and Uttarakhand.

Support for Farmers:

• Higher Minimum Support Prices (MSP) for major crops.
• Extension of PM Garib Kalyan Anna Yojana for 5 years, benefiting over 80 crore people.
• 1 crore farmers to be brought into natural farming in two years.
• Focus on productivity and climate-resilient crop varieties in agricultural research.

Employment and Skilling Initiatives:

• Five schemes targeting 4.1 crore youth over 5 years with a central outlay of ₹2 lakh crore.
• 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.

Higher Education Support:

• E-vouchers for loans up to ₹10 lakhs for higher education with a 3% annual interest subvention.
• Financial support for education loans up to ₹10 lakhs in domestic institutions.

MSME and Manufacturing Support:

• Special attention to MSMEs and the manufacturing sector.
• Credit guarantee scheme and term loans for machinery purchase.
• Technology support package for MSMEs.
• SIDBI to open 24 new branches to serve MSME clusters.
• Mudra loan limit increased from ₹10 lakh to ₹20 lakh for previous borrowers.

Infrastructure and Regional Development:

• Support for an industrial node at Gaya in Bihar.
• Road connectivity projects include the Patna-Purnea expressway and Buxar-Bhagalpur highway.
• ₹26,000 crores for various infrastructure projects.
• ₹15,000 crore for the development of Amaravati, the new capital of Andhra Pradesh.
• New airports, medical facilities, and sports infrastructure for Bihar.
• Rental housing in PPP mode for industrial workers.

Digital and Technological Advancements:

• Development of Digital Public Infrastructure (DPI) applications for credit, e-commerce, law and justice, and corporate governance.
• Establishment of an integrated tech platform for the Insolvency and Bankruptcy Code (IBC) for greater consistency and transparency.
• IBC resolved over 1,000 companies, recovering ₹3.3 lakh crore for creditors.
• 28,000 cases involving more than ₹10 lakh crore were resolved before admission.

Social Support:

• Introduction of NPS Vatsalya scheme for parents to contribute on behalf of their kids, converting to a regular NPS account when the child turns 18.
• Under PMAY Urban Housing 2.0, ₹10 lakh crore budget, with ₹2 lakh crore central aid and subsidized rates for housing projects.
• Continued focus on expanding the space economy with a venture capital fund of ₹1,000 crore.
• Launch of a critical mineral mission for recycling and overseas acquisition.