Finance Minister Nirmala Sitharaman presented the Union Budget 2024, focusing on various sectors to boost economic growth, support MSMEs, and enhance the welfare of the common citizen. Here are the key highlights and analysis of the budget:

Income Tax Reforms

One of the most anticipated announcements was the revision of the income tax slabs under the new tax regime, offering significant savings for salaried employees. The new tax structure is as follows:

• ₹0-3 lakh: Nil
• ₹3-7 lakh: 5%
• ₹7-10 lakh: 10%
• ₹10-12 lakh: 15%
• ₹12-15 lakh: 20%
• Above ₹15 lakh: 30%

Additionally, the standard deduction has been increased from ₹50,000 to ₹75,000, providing further relief to taxpayers. These changes will enable a salaried employee to save up to ₹17,500 in income tax.

Abolition of Angel Tax

In a significant move to boost the start-up ecosystem, the government has announced the abolition of the angel tax. This step is expected to attract more investments and foster innovation in the start-up sector.

Changes in Capital Gains Tax

The capital gains tax regime has been simplified but accompanied by an increase in tax rates:

• Short-term capital gains (STCG) on specified financial assets will now attract a tax rate of 20%.
• Long-term capital gains (LTCG) on all financial and non-financial assets have been increased to 12.5%, with the exemption limit raised to ₹1.25 lakh from the existing ₹1 lakh.

These changes aim to streamline the taxation process while ensuring a fair contribution from investors.

Support for MSMEs

The budget introduces several measures to support Micro, Small, and Medium Enterprises (MSMEs):

• The government has increased the limit for Mudra loans from ₹10 lakh to ₹20 lakh.
• The government will establish E-Commerce Export Hubs in Public-Private Partnership (PPP) mode to help MSMEs and traditional artisans sell their products in international markets.
• Financial support for 50 multi-product food irradiation units in the MSME sector.

These initiatives are expected to enhance the financial stability and growth prospects of MSMEs.

Industrial Development

To boost industrial growth, the government plans to develop investment-ready “plug and play” industrial parks in or near 100 cities. The government has already sanctioned twelve industrial parks under the National Industrial Corridor Development Programme.

Skill Development Initiatives

The budget allocates a significant boost to skilling programs, aiming to train 1 crore youth by top companies in the next five years. Additionally, the government has introduced a 12-month Prime Minister’s Internship program offering a monthly allowance of ₹5,000 to enhance employment opportunities.

Agriculture Sector

The agriculture sector receives a substantial allocation of ₹1.52 lakh crore, focusing on the following areas:

• Establishment of 10,000 bio research centers.
• Promotion of natural farming with branding and certification.
• Development of vegetable production and supply chain clusters near consumption centers.
• Financial support for shrimp breeding centers and facilitation of exports through NABARD.
• Launch of Kisan Credit Cards in five states.

These measures aim to increase productivity and sustainability in agriculture.

Infrastructure and Energy

The budget also addresses infrastructure and energy needs with the following measures:

• The government has reduced customs duties on gold to 6%, silver to 6%, and platinum to 6.4%.
• Exemption from customs duty for lithium, copper, cobalt, and other critical minerals.
• Expansion of the list of exempted capital goods used in manufacturing solar cells and panels.
• Reduction in Basic Customs Duty on manufacturing of spandex yarn from 7.5% to 5%.
• Exemption from customs duty for the manufacturing of connectors and oxygen-fused copper.

These changes are expected to reduce production costs and promote domestic manufacturing.

Fiscal Deficit and New Schemes

The government projects the fiscal deficit for FY25 at 4.9% of GDP and aims to reduce it to below 4.5% next year. The government has also announced ₹2 lakh crore for five new schemes focused on job creation and skilling for 4.1 crore youth.

Conclusion

The Union Budget 2024 presents a balanced approach to economic growth, tax reforms, and welfare measures. By addressing key areas such as income tax relief, support for MSMEs, industrial development, skill enhancement, and agricultural productivity, the budget aims to drive sustainable and inclusive growth. As India’s economy continues to shine amid global uncertainties, these initiatives are expected to strengthen the foundation for a prosperous future.

Stay tuned for more updates and a detailed analysis of the Union Budget 2024!

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