Budget 2024 Highlights: Key Tax Changes, STT, Capital Gains, and New Initiatives Announced by FM Nirmala Sitharaman

Budget 2024 Summary: Finance Minister Nirmala Sitharaman Announces Key Tax and Policy Changes

Finance Minister Nirmala Sitharaman unveiled the Union Budget 2024 in Parliament today, emphasising support for the underprivileged, women, youth, and farmers. The Budget aims to boost spending, create jobs, and offer relief to the middle class. Significant updates were also introduced in the tax sector. The government plans to increase the Securities Transaction Tax (STT) while reducing taxes on short-term and long-term capital gains. Additionally, new income tax slabs under the revised tax regime were announced.

Key Points from the Budget 2024 Address:

Income Tax Changes:

1. A review of the Income Tax Act of 1961 will be conducted to benefit the middle class.

2. New tax slabs under the revised regime are as follows:

Up to Rs 3 lakh: No tax

Rs 3 - 7 lakh: 5%

Rs 7 - 10 lakh: 10%

Rs 10 - 12 lakh: 15%

Above Rs 15 lakh: 30%

3.Standard Deduction under the new regime has been increased from Rs 30,000 to Rs 75,000. Additionally, the deduction on family pensions for pensioners has risen from Rs 15,000 to Rs 25,000.

Capital Gains and STT Adjustments:

1. Simplified capital gains taxation: Short-term capital gains tax reduced to 20%, and long-term capital gains tax lowered to 12.5% for specific assets. Unlisted bonds and debentures will now incur capital gains tax.

2. STT on options transactions increased to 0.1% from 0.0625%, and on futures transactions from 0.01% to 0.02%.

3. TDS on e-commerce transactions reduced from 1% to 0.1%.

4. Angel tax will be abolished for all investor categories.

Custom Duty Revisions:

1. Basic customs duty on gold and silver reduced to 6%, and on platinum to 6.4%. Duties on ferronickel and blister copper are reduced, while duty on specific telecom equipment increases from 10% to 15%. Customs duty on certain shrimp and fish feed reduced to 5%, and increased on ammonium nitrate and non-biodegradable plastics.

2. Custom duty on mobile phones, mobile PCBA, and chargers cut to 15%.

3. Fully exempt custom duties for 25 critical minerals.

4. Custom duties on plastic products increased.

Corporate and Infrastructure Updates:

1. Employer NPS (National Pension System) contribution increased to 14%.

2. Corporate tax rate for foreign companies reduced from 40% to 35%.

3. Capex (capital expenditure) for infrastructure maintained at Rs 11.1 lakh crore.

Fiscal Deficit and Borrowing:

1. Fiscal deficit estimated at 4.9% of GDP for the current fiscal year, with a target of 4.5% by next year.

2. Planned gross market borrowing reduced by Rs 12,000 crore to Rs 14.01 lakh crore for FY 2025.

3. NPS solutions will be revised based on committee recommendations.

State-Specific Allocations:

1. Andhra Pradesh: Social and infrastructure funds announced, including financial aid for Amaravati development, Vizag-Chennai Industrial Corridor, and Polavaram Irrigation project.

2. Bihar: Significant investments in road infrastructure, power projects, and new developments in temples, airports, and medical colleges.

Employment and Skills Development:

1. Introduction of three employment-linked schemes with Rs 2 lakh crore allocated over five years for job creation. A new skilling scheme will train 20 lakh youth, and wage support for new employees will be provided.

2. Internship schemes for 1 crore youth in top companies, and financial support for higher education loans up to Rs 10 lakh.

Agriculture and Rural Development:

1. Allocation of Rs 1.52 lakh crore for agriculture, with a focus on increasing productivity and developing climate-resilient crops. Support for shrimp farming and vegetable production clusters.

Overall Highlights:

1. The Budget focuses on supporting the middle class, employment generation, and MSMEs. A Rs 3 lakh crore allocation for women-centric schemes and nine key priorities including productivity, social justice, and urban development were announced. Despite global uncertainties, India's economic growth is projected to remain strong with low inflation rates.