Highlights Of the Union Budget 2024-25

Syllabus: GS3/Economy

Context

• The Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman presented the Union Budget 2024-25 in Parliament.

About

• Budget Estimates of 2024-25 are
  • Total receipts other than borrowings: `32.07 lakh crore.
  • Totalexpenditure: `48.21 lakh crore.
  • Net tax receipt:`25.83 lakh crore.
  • Fiscal deficit: 9 percent of GDP.
• Government aims to reach a deficit below 4.5 percentnext year.
• Inflation continues to be low, stable and moving towards the 4% target; Core inflation (non-food, non-fuel) at 1%.
• The focus of the budget is on Employment, Skilling, MSMEs, and the Middle  Class.

Package of PM’s five schemes for Employment and Skilling

• Prime Minister’s Package of 5 Schemes and Initiatives for employment, skilling and other opportunities for 4.1 crore youth over a 5-year period.
  • Scheme A – First Timers:One-month salary of up to `15,000 to be provided in 3 installments to first-time employees, as registered in the EPFO.
  • Scheme B – Job Creation in manufacturing:Incentive to be provided at specified scale directly, both employee and employer, with respect to their EPFO contribution in the first 4 years of employment.
  • Scheme C – Support to employers:Government to reimburse up to `3,000 per month for 2 years towards EPFO contribution of employers, for each additional employee.
  • New centrally sponsored scheme for Skilling: 20 lakh youth to be skilled over a 5-year period and 1,000 Industrial Training Institutes to be upgraded in hub and spoke arrangements.
  • New Scheme for Internship in 500 Top Companies to 1 crore youth in 5 years.

Nine Budget Priorities in pursuit of ‘Viksit Bharat’

• Productivity and resilience in Agriculture
• Employment & Skilling
• Inclusive Human Resource Development and Social Justice
• Manufacturing & Services
• Urban Development
• Energy Security
• Infrastructure
• Innovation, Research & Development and
• Next Generation Reforms

Priority 1: Productivity and resilience in Agriculture

• Allocation of  52 lakh crore for agriculture and allied sectors.
• New 109 high-yielding and climate-resilient varieties of 32 field and horticulture crops to be released for cultivation by farmers.
• 10,000 need-based bio-input resource centresto be established for natural farming.
• Digital Public Infrastructure (DPI)for Agriculture to be implemented for coverage of farmers and their lands in 3 years.

Priority 2: Employment & Skilling

• As part of the Prime Minister’s package, 3 schemes for ‘Employment Linked Incentive’ to be implemented –Scheme A – First Timers; Scheme B – Job Creation in manufacturing;  Scheme C – Support to employers.
• To facilitate higher participation of women in the workforce;
  • Working women hostels and crèches to be established with industrial collaboration
  • Women-specific skilling programmes to be organized
  • Market access for women SHG enterprises to be promoted.
• Skill Development: New centrally sponsored scheme for Skilling under Prime Minister’s Package for 20 lakh youth over a 5-year period.
  • Model Skill Loan Schemeto be revised to facilitate loans up to 7.5 lakh.
  • Financial support for loans upto `10 lakhfor higher education in domestic institutions to be provided to youth who have not been eligible for any benefit under government schemes and policies.

Priority 3: Inclusive Human Resource Development and Social Justice

• Purvodaya:Industrial node at Gaya to be developed along the Amritsar-Kolkata Industrial Corridor.
  • Power projects, including a new 2400 MW power plant at Pirpainti, to be taken up at a cost of  `21,400 crore.
• Andhra Pradesh Reorganization Act:Special financial support through multilateral development agencies of `15,000 crore in the current financial year.
  • Industrial nodes at Kopparthy along Visakhapatnam-Chennai Industrial Corridor and at Orvakal along Hyderabad-Bengaluru Industrial Corridor.
• Women-led development:Total allocation of more than `3 lakh crore for schemes benefitting women and girls.
• Pradhan Mantri Janjatiya Unnat Gram Abhiyan: Socio-economic development of tribal families in tribal-majority villages and aspirational districts, covering 63,000 villages benefitting 5 crore tribal people.
• 100 branches of India Post Payment Bank to be set up in the NorthEast region.

Priority 4: Manufacturing & Services

• Credit Guarantee Scheme for MSMEs in the Manufacturing Sector:A credit guarantee scheme without collateral or third-party guarantee in term loans to MSMEs for purchase of machinery and equipment.
• Credit Support to MSMEs during Stress Period:New mechanism to facilitate continuation of bank credit to MSMEs during their stress period.
• Mudra Loans: The limit of Mudra loans under ‘Tarun’ categoryto be enhanced to `20 lakh from `10 lakh for those who have successfully repaid previous loans.
• E-Commerce Export Hubs: E-Commerce Export Hubs to be set up under public-private-partnership (PPP) modefor MSMEs and traditional artisans to sell their products in international markets.
• Critical Mineral Mission: Critical Mineral Mission to be set up for domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets.
• Digital Public Infrastructure (DPI) Applications: Development of DPI applications in the areas of credit, e-commerce, education, health, law and justice, logistics, MSME, services delivery, and urban governance.

Priority 5: Urban Development

• Formulation of Transit Oriented Development plansand strategies to implement and finance 14 large cities above 30 lakh population.
• Street Markets: New scheme to support the development of 100 weekly ‘haats’ or street food hubs every year for the next 5 years in select cities.

Priority 6: Energy Security

• Government to partner with the private sector for R&D of Bharat Small Modular Reactorand newer technologies for nuclear energy, and to set up Bharat Small Reactors.
• Advanced Ultra Super Critical Thermal Power Plants:Joint venture proposed between NTPC and BHEL to set up a full scale 800 MW commercial plant using Advanced Ultra SuperCritical (AUSC) technology.

Priority 7: Infrastructure

• Infrastructure investment by Central Government:`11,11,111 crore (4 % of GDP) to be provided for capital expenditure.
• Infrastructure investment by state governments: Provision of `1.5 lakh crore for long-term interest free loans to support states in infrastructure investment.
• Tourism: Comprehensive development of Vishnupad Temple Corridor, Mahabodhi Temple Corridor and Rajgir.

Priority 8: Innovation, Research & Development

• Anusandhan National Research Fundfor basic research and prototype development to be operationalised.
• Financing pool of  `1 lakh crorefor spurring private sector-driven research and innovation at commercial scale.
• Space Economy: Venture capital fund of  `1,000 crore to be set up for expanding the space economy by 5 times in the next 10 years.

Priority 9: Next Generation Reforms

• Rural Land Related Actions:Unique Land Parcel Identification Number (ULPIN) or Bhu-Aadhaar for all lands, Digitization of cadastral maps etc.
• NPS Vatsalya:NPS-Vatsalya as a plan for contribution by parents and guardians for minors.

Highlights for Tax Collection

Indirect Taxes

• GST: Buoyed by GST’s success, tax structure to be simplified and rationalized to expand GST to remaining sectors.

Sector specific customs duty proposals

• Medicines and Medical Equipment: Three cancer drugs namely TrastuzumabDeruxtecan, Osimertinib and Durvalumab fully exempted from custom duty.
  • Changes in Basic Customs Duty (BCD) on x-ray tubes & flat panel detectors for use in medical x-ray machines under the Phased Manufacturing Programme.
• Precious Metals: Customs duties on gold and silver reduced to 6 per cent and that on platinum to 6.4 per cent.
• Telecommunication Equipment: BCD increased from 10 to 15 per cent on PCBA of specified telecom equipment.
• Trade facilitation:For promotion of domestic aviation and boat & ship MRO, time period for export of goods imported for repairs extended from six months to one year.
  • Time-limit for re-import of goods for repairs under warranty extended from three to five years.
• Critical Minerals:25 critical minerals fully exempted from customs duties.
  • BCD on two critical minerals reduced.
• Solar Energy:Capital goods for use in manufacture of solar cells and panels exempted from customs duty.

Direct Taxes

• Efforts to simplify taxes, improve taxpayer services, provide tax certainty and reduce litigation to be continued.
• 58 percent of corporate tax from simplified tax regime in FY23, more than two-thirds taxpayers availed simplified tax regime for personal income tax in FY 24.

Simplification and Rationalisation of Capital Gains

• Short term gains on certain financial assets to attract a tax rate of 20 per cent.
• Long term gainson all financial and non-financial assets to attract a tax rate of 5 per cent.
• Exemption limitof capital gains on certain financial assets increased to ₹ 1.25 lakh per year.

Litigation and Appeals

• ‘Vivad Se Vishwas Scheme, 2024’ for resolution of income tax disputes pending in appeal.
• Monetary limits for filing direct taxes, excise and service tax related appeals in Tax Tribunals, High Courts and Supreme Court increased to ₹60 lakh, ₹2 crore and ₹5 crore
• Safe harbor rulesexpanded to reduce litigation and provide certainty in international taxation.

Employment and Investment

• Angel tax for all classes of investors abolished to bolster start-up ecosystem.
• Corporate tax rate on foreign companies was reduced from40 to 35 per cent.

Deepening tax base

• Security Transactions Taxon futures and options of securities increased to 02 per cent and 0.1 per cent respectively.
• Income received on buy back of shares in the hands of the recipient to be taxed.

Social Security Benefits

• Deduction of expenditure by employers towards NPS to be increased from 10 to 14 percent of the employee’s salary.
• Non-reporting of small movable foreign assets up to ₹20 lakh de-penalised.

Changes in Personal Income Tax under new tax regime

Source: PIB