Union Budget 2024-25: Key Highlights

The Union Budget 2024-25, presented by the Union Minister of Finance and Corporate Affairs, focuses on various sectors with an emphasis on employment, skilling, MSMEs, and the middle class. The budget is divided into two parts: Part A, which outlines the economic overview and expenditures, and Part B, which details tax proposals.

Part A: Key Priorities and Allocations

Budget Theme:

• Focus on Employment, Skilling, MSMEs, and the Middle Class.
• Emphasis on four major groups: Garib (Poor), Mahilayen (Women), Yuva (Youth), and Annadata (Farmers).
• Aiming for sustained efforts across nine key priorities towards ‘Viksit Bharat’ (Developed India).

Part B: Tax Proposals

Part B of the Budget will detail the government’s tax proposals for the next financial year, focusing on reforms and changes to taxation policies.

Note: The specifics of the tax proposals will be provided in the detailed budget documents, which outline the adjustments to direct and indirect taxes, tax reliefs, and new tax regulations.

Priority 1: Productivity and Resilience in Agriculture

• Total Allocation: Rs 1.52 lakh crore for agriculture and allied sectors.
• Natural Farming: 1 crore farmers to be initiated into natural farming with support for certification and branding.
• Bio-Input Resource Centres: 10,000 centres to be established for natural farming.
• Pulses and Oilseeds: Strengthening production, storage, and marketing.
• Vegetable Clusters: Large-scale clusters to be developed closer to major consumption centres.
• Shrimp Farming: Financial support and facilitation for shrimp farming, processing, and export through NABARD.
• Digital Public Infrastructure (DPI): Implementation for agriculture with coverage of 6 crore farmers and their lands within 3 years, starting with a digital crop survey in 400 districts.
• Kisan Credit Cards: Issuance to be enabled in 5 states via Jan Samarth.

Priority 2: Employment & Skilling

• Prime Minister’s Package: Rs 2 lakh crore allocated for 5 schemes to facilitate employment and skilling for 4.1 crore youth over 5 years.
• Total Allocation for Education, Employment, and Skilling: Rs 1.48 lakh crore.

Scheme Details:

• Scheme A: First Timers
• Objective: Provide one-month wage to newly hired employees with a salary cap of Rs. 1 lakh per month.
• Benefit: Up to Rs. 15,000 in three installments.
• Eligibility: First-time employees must complete a compulsory online financial literacy course before the second installment.
• Expected Impact: Benefit 2.1 crore youth over 2 years.
• Scheme B: Job Creation in Manufacturing
• Objective: Incentivize hiring in the manufacturing sector.
• Benefit: Incentive provided to both employee and employer concerning EPFO contributions for the first 4 years.
• Expected Impact: Benefit 30 lakh youth.
• Scheme C: Support to Employers
• Objective: Reimburse employers up to Rs. 3,000 per month for EPFO contributions for each additional employee.
• Expected Impact: Incentivize additional employment of 50 lakh persons.
• Scheme D: Skilling
• Objective: New centrally sponsored scheme for skilling 20 lakh youth over 5 years.
• Allocation: Rs. 60,000 crore.
• Implementation: Upgrading 1,000 Industrial Training Institutes (ITIs).
• Scheme E: Internship
• Objective: Provide internships in 500 top companies to 1 crore youth in 5 years.
• Benefit: Rs. 5,000 per month internship allowance and one-time assistance of Rs. 6,000.
• Eligibility: Youth aged 21-24 who are unemployed and not engaged in full-time education.

Measures for Women Employment:

• Hostels and Crèches: Establishment with industrial collaboration.
• Women-Specific Skilling Programs: Organized for higher participation.
• Market Access: Promotion for women Self Help Group (SHG) enterprises.

Other Initiatives:

• Skill Loans: Revision of the Model Skill Loan Scheme to facilitate loans up to Rs. 7.5 lakh, helping 25,000 students annually.
• Higher Education Loans: Financial support for up to Rs 10 lakh for higher education, with e-vouchers and an annual interest subvention of 3% for 1 lakh students annually.

Priority 3: Inclusive Human Resource Development and Social Justice

Objective: To uplift marginalized communities and promote balanced regional development as India progresses towards becoming a developed nation by 2047.

Key Initiatives:

• Purvodaya: Development of the Eastern Region
• Focus States: Bihar, Jharkhand, West Bengal, Odisha, Andhra Pradesh.
• Industrial Development: Establishing an industrial node at Gaya along the Amritsar-Kolkata Industrial Corridor, blending cultural heritage with economic growth under the theme "Vikas bhi Virasat bhi".
• Road Connectivity: Several road projects to improve infrastructure and economic activities.
• Power Projects: New 2400 MW power plant at Pirpainti.
• Infrastructure Projects: New airports, medical colleges, and sports facilities in Bihar.
• Andhra Pradesh Reorganization Act
• Special Financial Support: ₹15,000 crore for capital development via multilateral development agencies.
• Polavaram Irrigation Project: Support for timely completion to enhance food security.
• Infrastructure Investments: Development of Kopparthy node (Visakhapatnam-Chennai Industrial Corridor) and Orvakal node (Hyderabad-Bengaluru Industrial Corridor).
• Grants: Financial aid for backward regions such as Rayalaseema, Prakasam, and North Coastal Andhra.
• Pradhan Mantri Janjatiya Unnat Gram Abhiyan
• Objective: Improve socio-economic conditions of tribal communities.
• Coverage: Saturation coverage in 63,000 villages, benefitting 5 crore tribal people.
• Expansion of Banking Services in the North-East
• New Branches: More than 100 branches of India Post Payment Bank to be established.
• Goal: Provide accessible banking services, support Digital India vision, and promote a less cash economy.
• Rural Development and Infrastructure
• Allocation: Rs. 2.66 lakh crore for rural development.
• Objective: Enhance quality of life through improved connectivity, healthcare, education, and economic opportunities.
• Women-Led Development
• Total Allocation: Over Rs. 3 lakh crore for schemes benefiting women and girls.

Priority 4: Manufacturing & Services

Objective: Special focus on MSMEs and manufacturing, particularly labor-intensive sectors, to boost growth and global competitiveness.

Key Initiatives:

• Credit Guarantee Scheme for MSMEs
• Objective: Facilitate term loans for MSMEs to purchase machinery and equipment without collateral.
• Guarantee Fund: Self-financing fund to provide guarantee cover up to ₹100 crore.
• Fee Structure: Borrowers pay an upfront guarantee fee and annual fee on the reducing loan balance.
• New Assessment Model for MSME Credit
• Objective: Improve credit assessment capabilities in public sector banks, moving beyond traditional asset or turnover criteria.
• Coverage: Include MSMEs without formal accounting systems.
• Credit Support to MSMEs during Stress Period
• Mechanism: New support system to continue bank credit during stress periods, backed by a government-promoted fund.
• Mudra Loans
• Enhanced Limit: Mudra loans under the ‘Tarun’ category increased to Rs. 20 lakh from Rs. 10 lakh for those who have repaid previous loans.
• Enhanced TReDS Onboarding
• Objective: Facilitate MSMEs in converting trade receivables into cash.
• Threshold Reduction: Turnover threshold for mandatory onboarding reduced from Rs. 500 crore to Rs. 250 crore.
• Expected Impact: Inclusion of 22 more Central Public Sector Enterprises (CPSEs) and 7,000 more companies.
• MSME Units for Food Irradiation, Quality and Safety Testing
• Support: Financial assistance for 50 multi-product food irradiation units and 100 food quality and safety testing labs.
• E-Commerce Export Hubs
• Objective: Set up hubs under public-private partnership (PPP) mode to assist MSMEs and traditional artisans in international markets.
• Features: Seamless regulatory and logistical support for trade and export services.
• New SIDBI Branches
• Expansion: Opening 24 new SIDBI branches to cover 168 out of 242 major MSME clusters within 3 years.
• Critical Mineral Mission
• Objective: Promote domestic production, recycling, and overseas acquisition of critical minerals.
• Focus: Technology development, skilled workforce, extended producer responsibility, and financing.
• Offshore Mining of Minerals
• Auction: First tranche of offshore blocks for mining to be auctioned.
• Industrial Parks
• Development: Investment-ready industrial parks in or near 100 cities with complete infrastructure.
• Sanctioned Projects: 12 parks under the National Industrial Corridor Development Programme.

These priorities reflect a comprehensive approach to regional development, economic growth, and social justice, aiming to bolster India's journey towards becoming a developed nation.

Priority 5: Urban Development

Objective: To enhance urban infrastructure and housing, improving the quality of life in cities.

Key Initiatives:

• Urban Housing
• PM Awas Yojana Urban 2.0: Investment of Rs. 10 lakh crore to address housing needs of 1 crore urban poor and middle-class families. Includes central assistance of Rs. 2.2 lakh crore over the next 5 years.
• Rental Housing
• Industrial Workers: Development of rental housing with dormitory-style accommodation through PPP mode with Viability Gap Funding (VGF) and industry commitment.
• Policies: Enhanced policies for efficient and transparent rental housing markets.
• Cities as Growth Hubs
• Growth Planning: Collaborate with states to develop cities as growth hubs via economic and transit planning.
• Brownfield Redevelopment: Framework for policies, market mechanisms, and regulation for redeveloping existing cities.
• Transit-Oriented Development: Formulate plans for 14 large cities with populations over 30 lakh, including implementation and financing strategies.
• Water Supply and Sanitation
• Projects: Promote water supply, sewage treatment, and solid waste management projects in 100 large cities with State Governments and Multilateral Development Banks.
• Usage: Utilize treated water for irrigation and tank filling.
• Street Markets
• Support: Develop 100 weekly ‘haats’ or street food hubs annually for the next 5 years, building on the success of the PM SVANidhi Scheme.
• Stamp Duty
• Encouragement: States encouraged to moderate high stamp duty rates and consider reducing duties for properties purchased by women.

Priority 6: Energy Security

Objective: To ensure sustainable energy transition and enhance energy security.

Key Initiatives:

• Energy Transition
• Policy Document: Develop pathways balancing employment, growth, and environmental sustainability.
• Pumped Storage Policy
• Promotion: Policy for promoting pumped storage projects to integrate renewable energy.
• Research & Development
• Nuclear Energy: Partner with the private sector for R&D of Bharat Small Modular Reactor and other nuclear technologies.
• AUSC Thermal Power Plants: NTPC and BHEL joint venture for an 800 MW plant using Advanced Ultra Super Critical technology with fiscal support.
• Roadmap for ‘Hard to Abate’ Industries
• Roadmap: Transition from energy efficiency to emission targets for industries with high greenhouse gas emissions.
• Regulations: Introduce regulations for industries moving to the ‘Indian Carbon Market’.
• Support to Traditional Micro and Small Industries
• Energy Audit: Facilitate energy audits in 60 clusters, support transition to cleaner energy, and replicate in 100 more clusters.
• PM Surya Ghar Muft Bijli Yojana
• Scheme: Install rooftop solar plants for 1 crore households to receive free electricity up to 300 units monthly. Over 1.28 crore registrations and 14 lakh applications received.

Priority 7: Infrastructure

Objective: To bolster infrastructure investments and projects that drive economic growth.

Key Initiatives:

• Infrastructure Investment
• Capital Expenditure: Rs. 11,11,111 crore allocated, which is 3.4% of GDP.
• Long-Term Loans: Rs. 1.5 lakh crore for interest-free loans to assist states in infrastructure allocation.
• Private Sector: Promote investment through viability gap funding and supportive policies.
• Pradhan Mantri Gram Sadak Yojana (PMGSY)
• Phase IV: Provide all-weather connectivity to 25,000 rural habitations.
• Completion: 7,65,530 km of road completed out of 8,10,083 km sanctioned.
• Irrigation and Flood Mitigation
• Financial Support: Rs. 11,500 crore for projects including Kosi-Mechi intra-state link and other schemes.
• Flood Management: Assistance for flood management in Assam, Himachal Pradesh, Uttarakhand, and Sikkim.
• Tourism
• Development: Comprehensive development of Vishnupad Temple Corridor, Mahabodhi Temple Corridor, and Rajgir.
• Assistance: Development of temples, monuments, and natural landscapes in Odisha.

Priority 8: Innovation, Research & Development

Objective: To promote research, development, and innovation across various sectors.

Key Initiatives:

• Anusandhan National Research Fund
• Operationalization: Fund for basic research and prototype development.
• Private Sector R&D
• Financing Pool: Rs. 1 lakh crore for encouraging private sector-driven research and innovation.
• Space Economy
• Venture Capital Fund: Rs. 1,000 crore to expand the space economy by five times in the next decade.

Priority 9: Next Generation Reforms

Objective: To lay down frameworks and reform processes for sustainable economic growth and efficient governance.

Key Initiatives:

• Economic Policy Framework
• Formulation: Comprehensive approach to economic development and next-generation reforms.
• Land Reforms
• Rural Actions: Assign Unique Land Parcel Identification Number (ULPIN), digitize cadastral maps, survey sub-divisions, establish land registry, and link to farmer’s registry.
• Urban Actions: Digitize land records with GIS mapping and establish IT-based systems for property record administration.
• Labour Reforms
• Integration: Integrate e-shram portal with other platforms for comprehensive labour services.
• Revamp: Enhance ease of compliance through Shram Suvidha and Samadhan portals.
• Financial Sector Vision and Strategy
• Strategy Document: Outline future vision for the financial sector.
• Taxonomy for Climate Finance
• Development: Facilitate capital availability for climate adaptation and mitigation.
• Variable Capital Company Structure
• Legislation: Seek approval for a flexible financing mode for leasing and private equity pooled funds.
• FDI and Overseas Investment
• Simplification: Ease rules and regulations to attract foreign investments and promote use of Indian Rupee.
• NPS Vatsalya
• Plan: Contribution plan for minors to be converted into a regular NPS account on reaching adulthood.
• New Pension Scheme (NPS)
• Solution: Address issues, protect citizens, and maintain fiscal prudence.
• Use of Technology and Digitalization
• Enhanced Adoption: Accelerate technology use to enhance productivity and reduce inequality.
• Data and Statistics
• Governance: Utilize advanced tools for data collection, processing, and management.
• Ease of Doing Business
• Jan Vishwas Bill 2.0: Implement reforms and digital measures for business ease.
• Strengthening the IBC Eco-System
• Technology Platform: Set up an integrated platform for Insolvency and Bankruptcy Code (IBC) improvements.
• Tribunals: Establish additional tribunals for better insolvency resolution.
• Voluntary Closure of LLPs
• C-PACE Services: Extend services for faster voluntary closure of LLPs.
• Strengthening Debt Recovery
• Reforms: Reform debt recovery tribunals and establish additional tribunals.

Budget Estimates 2024-25

• Total Receipts: Rs. 32.07 lakh crore (excluding borrowings).
• Total Expenditure: Rs. 48.21 lakh crore.
• Gross Market Borrowings: ₹14.01 lakh crore.
• Net Market Borrowings: ₹11.63 lakh crore.
• Net Tax Receipts: Rs. 25.83 lakh crore.
• Fiscal Deficit: Estimated at 4.9% of GDP, with a goal to reduce to below 4.5% by 2025-26.

These priorities reflect a comprehensive approach to addressing urban development, energy security, infrastructure, innovation, and next-generation reforms to drive India's sustainable growth and development.

Part B: Tax Reforms and Proposals in the Budget 2024-25

Direct Taxes

Objective: To simplify and rationalize the tax system, reduce litigation, and broaden the tax base.

Key Initiatives:

• Tax Review and Simplification
• Comprehensive Review: Aimed at simplifying direct and indirect taxes, reducing tax incidence, compliance burdens, and broadening the tax net.
• Income Tax Act: Targeted review to reduce disputes, litigation, and to make the act more concise and readable.
• Simplification of Tax Regimes
• Corporate and Personal Income Tax: Simplified tax regimes without exemptions and deductions have been well-received. Over 58% of corporate tax revenue came from the simplified regime in 2022-23, and more than two-thirds of taxpayers have switched to the new personal income tax regime.
• Indirect Taxes
• Goods and Services Tax (GST): Plans to simplify and rationalize the GST structure to expand its coverage to remaining sectors.
• Customs Duty Adjustments
• Medicines and Medical Equipment: Full exemption on three cancer drugs and reduction in Basic Customs Duty (BCD) on x-ray tubes and flat panel detectors.
• Mobile Phones and Related Parts: Reduction in BCD to 15% for mobile phones and related components.
• Telecommunication Equipment: Increase in BCD for telecom equipment’s Printed Circuit Board Assembly (PCBA) from 10% to 15%.
• Critical Minerals: Full exemption on 25 rare earth minerals and reduction in BCD for some.
• Solar Energy: Exemption from customs duty on capital goods for manufacturing solar cells and panels.
• Marine Products: Reduction in BCD and exemptions for inputs related to shrimp and fish feed.
• Leather and Textile: Reduction in BCD for Methylene Diphenyl Diisocyanate (MDI) used in spandex yarn manufacture.
• Precious Metals: Reduction in customs duties for gold, silver, and platinum.
• Plastics: Increase in BCD on PVC flex banners from 10% to 25% due to environmental concerns.
• Simplification and Rationalization of Direct Taxes
• Charities: Merging of two tax exemption regimes for charities into one.
• Tax Deducted at Source (TDS): Withdrawal of 20% TDS rate on mutual fund unit repurchases, reduction in TDS on e-commerce operators from 1% to 0.1%, and decriminalization of delays in TDS payment.
• Reassessment and Dispute Resolution
• Reassessment: Simplified reassessment procedures, with limits set for reopening assessments beyond three years and reduced time limits in search cases.
• Capital Gains: Revised tax rates for short-term and long-term capital gains, increased exemption limit for certain financial assets, and differentiated holding periods for asset classification.
• Taxpayer Services
• Digitalization: Complete digitalization of all remaining Customs and Income Tax services, including rectifications and appellate orders.
• Litigation and Appeals
• Vivad se Vishwas Scheme 2024: Proposed scheme for resolving income tax disputes.
• Increased Appeal Limits: Higher monetary limits for appeals in High Courts, Supreme Courts, and tribunals.
• International Taxation: Expansion of safe harbour rules and streamlining of transfer pricing assessment procedures.
• Employment and Investment
• Angel Tax Abolition: Removal of angel tax to support the startup ecosystem.
• Foreign Corporate Tax Rate: Reduction from 40% to 35% to attract foreign capital.
• Cruise Tourism: Simplified tax regime for foreign shipping companies operating domestic cruises.
• Diamond Industry: Safe harbour rates for foreign mining companies selling raw diamonds, promoting the diamond cutting and polishing industry.
• Deepening the Tax Base
• Security Transactions Tax: Increased rates for futures and options of securities.
• Buyback Taxation: Tax on income from share buybacks in the hands of recipients.

Revenue Implications:

• Revenue Forgone: Estimated at about Rs 37,000 crore, including Rs 29,000 crore in direct taxes and Rs 8,000 crore in indirect taxes.
• Additional Revenue Mobilized: Approximately Rs 30,000 crore.
• Net Revenue Forgone: About Rs 7,000 crore annually.

The budget emphasizes a balanced approach to simplifying tax structures while expanding the tax base and fostering a conducive environment for growth and investment.