The Union Budget is a yearly financial plan presented by the Finance Minister of India for the development of the country. For the year 2024-25, Finance Minister Nirmala Sitharaman announced important changes to simplify the tax system and boost economic growth. With a focus on job creation and youth skilling, ‘EMPLOYMENT’ was the theme of Union Budget 2024-25.
Here, each letter represents a key focus area: Employment, MSMEs, Productivity, Land, Opportunity, Youth, Middle Class, Energy Security, New Generation Reforms, and Technology. These ten priorities outline the government’s strategy for economic growth and development.
Budget 2024 Key Highlights
Below are the major announcements from the Union Budget 2024:
- Income Tax Changes: Introduction of new income tax slabs and an increase in the standard deduction.
- Social Security: Enhancements to the National Pension Scheme (NPS) deductions.
- Sectoral Focus: Emphasis on agriculture, MSMEs, and employment generation.
Taxation Changes
The budget introduces several changes to the income tax regime. So, here are the revised tax slabs under the New Tax Regime:
New Tax Slabs- Up to ₹3 lakh: 0%
- ₹3 lakh to ₹7 lakh: 5%
- ₹7 lakh to ₹10 lakh: 10%
- ₹10 lakh to ₹12 lakh: 15%
- ₹12 lakh to ₹15 lakh: 20%
- Above ₹15 lakh: 30%
With this new regime, salaried employees can save up to ₹17,500/- in income tax.
- Income Tax Standard Deduction: Increased from ₹50,000 to ₹75,000 to provide more relief to salaried employees.
- Long Term Capital Gains Tax: LTCG gains tax hiked from 10% to 12.5%.
Social Security and Employment Benefits
The budget also introduces several measures to enhance social security and employment:
- Increased NPS Deductions: Employers’ contributions to NPS have been increased from 10% to 14% of the employee’s salary.
- One-Month Wage for New Entrants: The government will provide a one-month wage to all new employees in the formal sector in 3 instalments up to ₹15,000. This would directly be transferred as part of their provident fund contribution.
- Family Pension Deduction: The deduction on family pensions has been increased from ₹15,000 to ₹25,000, thereby, providing better financial stability to pensioners.
Impact On Major Sectors and Funds Allocation
Different sectors are set to benefit from various budget allocations:
- Agriculture and Allied Sectors: ₹1.52 lakh crores have been allocated to enhance strength and productivity in the agricultural sector.
- Education: For education and employment, a total of ₹1.48 lakh crores has been allocated.
- Healthcare: Funds of approximately ₹90,958 crores are allocated for building healthcare facilities to improve public services.
- Infrastructure: To maintain and increase infrastructural development, ₹11.11 lakh crores have been allocated in the Union Budget 2024.
- Urban Development: For upgrading urban infrastructure, ₹82,575 crores have been allocated by the government.
- Technology and Innovation: A total of ₹21,936 crores has been allocated to the Ministry of Electronics and Information Technology to support startups and technology companies.
Revenue and Expenditure
The budget outlines the government’s revenue and expenditure plans:
- Revenue Forgone: Approximately ₹37,000 crore in revenue will be forgone due to the new tax changes, with an additional ₹30,000 crore to be mobilised.
- Expenditure Plans: The government is set to spend ₹48,20,512 crore in 2024-25, which is 8.5% more than the actual expenditure in 2023-24. The major expenditure areas include agriculture, infrastructure, social welfare programs, and employment schemes.
Economic Projections and Targets
- GDP Growth: The budget highlights the expectation for continued strong economic performance.
- Fiscal Deficit: A target set at 4.9% for the fiscal deficit with plans to reduce it to 4.5%.
MSMEs and Employment Generation
The budget also looks forward to supporting Micro, Small, and Medium Enterprises (MSMEs) and generating employment. As a result, it doubles the Mudra loan limits to ₹20 lakh and implements a digital credit assessment model to nurture growth in the MSME sector.
Impact On Gold Price
As per the Budget 2024, the import duties on gold have been reduced from 15% to 6%. This custom duties cut will reduce the taxes on gold from 18.5% to 9%, eventually, reducing the price of gold.
Conclusion
So, this sums up the basics of the Budget 2024 key updates.
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