Budget 2024-25: Relief for salaried class under new tax regime; 50% hike in standard deduction to Rs 75,000
In sops for the middle class, Finance Minister Nirmala Sitharaman on Tuesday hiked the standard deduction by 50 per cent to Rs 75,000 and tweaked tax slabs under the new income tax regime to provide more money in the hands of the salaried class to boost consumption. She said salaried employees in the new tax regime could save up to Rs 17,500 in income tax annually following the changes announced in the Budget. The standard deduction for salaried employees is proposed to be increased from Rs 50,000 to Rs 75,000 annually. Similarly, the deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000 to Rs 25,000. "This will provide relief to about four crore salaried individuals and pensioners," Sitharaman said in her Budget speech. In the last fiscal, more than two-thirds of individual taxpayers have availed of the new personal income tax regime. Over 8.61 crore I-T returns were filed in the 2023-24 fiscal. The new tax slabs under the new income tax regime will be effective from April 1, 2024. (Assessment Year 2025-26).
Sitharaman said income of up to Rs 3 lakh will continue to be exempted from income tax under the new regime. As per the proposal, a 5 per cent tax will be levied on income between Rs 3-7 lakh, 10 per cent between Rs 7-10 lakh, and 15 per cent for Rs 10-12 lakh. However, 20 per cent tax will continue to be levied on income between Rs 12-15 lakh and 30 per cent for income above Rs 15 lakh. Under the existing new I-T regime, a 5 per cent tax is levied on income between Rs 3-6 lakh and 10 per cent for income between Rs 6-9 lakh. Income between Rs 9-12 lakh and Rs 12-15 lakh is subject to 15 per cent and 20 per cent tax, respectively. A 30 per cent I-T would be applicable on income above Rs 15 lakh.
- The fiscal deficit for FY25 is estimated to be 4.9 pc of the GDP
Finance Minister Nirmala Sitharaman on Tuesday said the fiscal deficit for 2024-25 is estimated at 4.9 per cent of GDP. Presenting the Union Budget for 2024-25, she said the government aims to reach a 4.5 per cent fiscal deficit in 2025-26. The finance minister said gross and net market borrowing is pegged at Rs 14.01 lakh crore and Rs 11.63 lakh crore, respectively, in FY25. Net tax receipts are estimated at Rs 25.83 lakh crore in FY25 while the total receipts are pegged at Rs 32.07 lakh crore. Total expenditure is estimated at Rs 48.21 lakh crore in FY25, she added. It may be recalled that the interim Budget, presented in February 2024, had pegged fiscal deficit, which is the difference between the government expenditure and income, at 5.1 per cent for FY25 against 5.8 per cent in the last fiscal year. In her speech, Sitharaman also said the government plans to launch 'NPS Vatshalya' to provide pension contributions by parents and guardians.
- FM proposes hike in STT on F&Os to discourage retail participation
Finance Minister Nirmala Sithraman on Tuesday proposed to increase the rate of securities transaction tax (STT) on futures and options (F&O) trade to discourage retail investors' participation in the risky instrument. "It is proposed to increase the rates of STT on the sale of an option in securities from 0.0625 per cent to 0.1 per cent of the option premium, and on sale of a futures in securities from 0.0125 per cent to 0.02 per cent of the price at which such futures are traded," she said in the Union Budget speech. This came after the Economic Survey flagged concerns over rising retail investors' interest in derivative trading. The survey stated that speculative trade has no place in a developing country. It also pointed out that the sharp increase in retail investor participation in F&O trading is likely driven by humans' gambling instincts. "Derivatives trading holds the potential for outsized gains. Thus, it caters to humans' gambling instincts and can augment income if profitable. These considerations are likely driving active retail participation in derivatives trading," according to the Economic Survey 2023-24.
Recently, Sebi chief Madhabi Puri Buch also cautioned investors against heavy bets on F&O. Before that, Sitharaman and chief economic adviser V Anantha Nageswaran flagged the growing risk of F&O trading for retail investors. F&O trading continues to grow in popularity, and market experts believe that this is driven by the potential for profit and the rising trading volumes. Experts said investors who lack understanding or risk appetite should avoid derivatives trading. The segment's popularity is evident from its massive growth, with the monthly turnover in the F&O segment reaching Rs 8,740 lakh crore in March 2024, compared to Rs 217 lakh crore in March 2019. At the same time, the average daily turnover in the equity cash segment was Rs 1 lakh crore, while the F&O segment saw an average daily turnover of about Rs 330 lakh crore. Futures and Options trading involves contracts that derive their value from an underlying asset, such as stocks or commodities. Futures contracts obligate the buyer and seller to transact at a predetermined future date and price, while options give the holder the right, but not the obligation, to buy or sell the asset at a set price within a specific period.
These financial instruments are used for hedging risks, speculating on price movements, and arbitraging price differences. However, they come with significant risks, including leverage risk and market volatility, which can lead to substantial losses. Futures and Options trading is largely being utilised as a speculative tool for quick profits in the stock market. However, the reality is that most retail investors are losing money. A study by the Securities and Exchange Board of India (Sebi) revealed that 89 per cent of individual traders in the equity F&O segment suffered losses, with average losses of Rs 1.1 lakh in FY22. Additionally, there was an exponential increase in the F&O segment participation during the pandemic, with the total number of unique individual traders increasing by over 500 per cent from 7.1 lakh in FY19 to 45.24 lakh in FY21, the study noted. Earlier, Buch stated that the capital markets regulator is "compelled" to warn against speculative bets in the F&O segment because it has become a "macro issue", affecting the broader economy now. Household financial savings are going into the speculative bets, belying the expectations of being used for capital formation, and the youth is losing tonnes of money in such trades, she stated. Last month, the Sebi board approved stricter norms for the entry of individual stocks in the derivatives segment. The proposal is aimed at weeding out stocks with consistently low turnover from the F&O segment of the bourses.
- FM proposes a simpler tax regime for foreign shipping companies operating domestic cruises
Finance Minister Nirmala Sitharaman on Tuesday proposed a simpler tax regime for foreign shipping companies operating domestic cruises in the country, to give fillip to cruise tourism in India. Presenting the Union Budget for FY25, she said ownership, leasing and flagging reforms will be implemented to improve the share of the Indian shipping industry and generate more employment. "To give a fillip to this employment-generating industry, I am proposing a simpler tax regime for foreign shipping companies operating domestic cruises in the country," she said. There is tremendous potential for cruise tourism in India, the minister added.
- Central assistance of Rs 2.2 lakh cr in next 5 yrs to provide homes for 1cr urban poor, middle-class
The government on Tuesday announced central assistance of Rs 2.2 lakh crore over the next five years to meet the housing requirement of 1 crore urban poor and middle-class families under the Pradhan Mantri Awas Yojana-Urban and proposed interest subsidy to provide loans at affordable rates. In her Budget speech, Finance Minister Nirmala Sitharaman said, "Under the PM Awas Yojana Urban 2.0, housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of Rs 10 lakh crore." "This will include the central assistance of Rs 2.2 lakh crore in the next 5 years," she added. The government also plans to provide interest subsidies to facilitate loans at affordable rates, the minister said.
Sitharaman proposed that the government will put in place policies for promoting rental housing markets. "...enabling policies and regulations for efficient and transparent rental housing markets with enhanced availability will also be put in place," she said. Further, the minister said the government will facilitate rental housing with dormitory-type accommodation for industrial workers. This will be done in PPP (public-private partnership) mode with VGF support and commitment from anchor industries. On tax proposals, Sitharaman proposed that income from letting out of a house or part of the house by the owner, would not be charged under the head 'profits and gains of business or profession' and rather it would be chargeable to tax under the head 'income from house property' only.
Regarding TDS (tax deducted at source) on sale of immovable property, she clarified that "where there is more than one transferor or transferee in respect of an immovable property, then such consideration for transfer of the immovable property shall be the aggregate of the amounts paid or payable by all the transferees to the transferor or all the transferors for transfer of such immovable property". Sitharaman also proposed amendments to the Prohibition of Benami Property Transactions Act, 1988. "It is proposed to provide immunity from penalty and prosecution to benamidar on full and true disclosure. It is also proposed to rationalize time limits for attachment of property and reference to adjudicating authority," she said.
- Govt to provide Rs 11.11 lakh cr towards capex, VGF to spur private investment
The government will provide Rs 11.11 lakh crore for capital expenditure for 2024-25 and introduce viability gap funding to spur private investment in infrastructure, Finance Minister Nirmala Sitharaman said on Tuesday. Presenting the Union Budget for FY2024-25, she said that the government will endeavour to maintain strong fiscal support for infrastructure over the next five years, in conjunction with imperatives of other priorities and fiscal consolidation.
"This year, I have provided Rs 11,11,111 crore for capital expenditure. This would be 3.4 per cent of our GDP," Sitharaman said. The minister said the Union government will encourage states to provide support of a similar scale for infrastructure, subject to their development priorities. "A provision of Rs 1.5 lakh crore for long-term interest-free loans has been made this year also to support the states in their resource allocation," she said. Sitharaman said investment in infrastructure by the private sector will be promoted through viability gap funding (VGF) and enabling policies and regulations. "A market-based financing framework will be brought out," she said. The Budget has also announced launching the fourth phase of the PM Gram Sadak Yojana in 25 rural habitations and providing assistance to Assam for flood management and related projects. The minister added that the significant investment that the central government has made over the years in building and improving infrastructure has had a strong multiplier effect on the economy.
- Capital gains exemption limit on certain financial assets to be hiked to Rs 1.25 lakh/yr
Finance Minister Nirmala Sitharaman on Tuesday said the government plans to raise the capital gains exemption limit on certain financial assets to Rs 1.25 lakh per year for the middle and upper middle class. Presenting the Budget for 2024-25, she announced a hike in STT (securities transaction tax) on F&O (futures and options) securities by 0.02 per cent and 0.1 per cent. Income receipt on share buyback will be taxed in the hands of recipients, Sitharaman added. To reduce tax litigation, the finance minister said the government is planning the Vivad Se Vishwas Scheme 2024. She also said Rs 10 lakh crore has been proposed for PM Awas Yojana - Urban 2.0 to address the housing needs of 1 crore urban poor and middle class. She also announced 12 new industrial parks to be developed under the National Industrial Corridor Development programme.
- Govt will strive to further simplify, and rationalise the GST tax structure
Finance Minister Nirmala Sitharaman on Tuesday said the government will strive to further simplify, and rationalise GST (Goods and Services Tax), a move which would help promote ease of doing business. The government also proposed to rationalise customs duty rates. The minister announced customs duty exemptions on three more cancer treatment drugs. She added that GST has decreased tax incidence on the common man, and reduced logistics costs for industry. GST was rolled out on July 1, 2017. It subsumed 17 taxes and 13 cesses into a 5-tier structure, thereby, simplifying the tax regime.
- Govt to strengthen insolvency ecosystem will add more tribunals
The government will add more tribunals of the NCLT to improve recovery of stressed assets, Finance Minister Nirmala Sitharaman while presenting the Union Budget for 2024-25 on Tuesday. The government will also set up an integrated platform, which will improve the outcome of the Insolvency & Bankruptcy Code (IBC), she said. "Appropriate changes to IBC, reforms and strengthening of tribunals and appellate tribunals will be initiated to speed insolvency resolution," she said. Besides "additional tribunals will be established. Of those, some would be notified to decide cases exclusively under the Companies Act". IBC has resolved more than 1,000 companies resulting in direct recovery of Rs 3.3 lakh crore to the creditors, she said. "In addition, 28,000 cases involving over Rs 10 lakh crore have been disposed of even before admission," said Sitharaman. The government will also have an integrated technology platform for the IBC ecosystem.
"An integrated technology platform will be set up for improving the outcome of the IBC for achieving consistency, transparency, timely processing and better oversight for all stakeholders," she said. Besides, the Budget also proposes for speeding of voluntary closing of limited liability partnerships (LLPs). "The services of the centre for processing accelerated corporate exit will see pace. It will be extended for voluntary closure of LLPs to reduce the closure time," she said. NCLT has benches in 15 cities with a principal bench in Delhi. Besides, it has an appellate tribunal NCLAT, which has benches in Delhi and Chennai. Both NCLT and NCLAT have been facing a resource crunch. Besides, Sitharaman also said steps will be taken to strengthen debt recovery tribunals. More tribunals would be set up to speed up recovery, she added.
- New centrally-sponsored scheme to skill 20 lakh youth over 5 years
The government on Tuesday announced a new centrally-sponsored scheme for skilling 20 lakh youth over the next five years. The announcement was made by Finance Minister Nirmala Sitharaman in the Union Budget 2024-25. The minister said that the model skilling loan scheme will be revised to facilitate loans up to Rs 7.5 lakh. As part of boosting skilling efforts, 1,000 ITIs will be upgraded on the hub-and-spoke model. Besides, the government will provide financial support for loans up to Rs 10 lakh for higher education in domestic institutions. Sitharaman said the new centrally-sponsored scheme for skilling in collaboration with states and industry will train 20 lakh youth over a period of five years.
- Centre to Boost Water, Waste Management in 100 Large Cities
The Centre along with states and multilateral development banks will promote water supply, sewage treatment and solid waste management projects and services in 100 large cities through bankable projects, Finance Minister Nirmala Sitharaman said on Tuesday. Presenting the Budget in the Lok Sabha, she said these projects will also envisage use of treated water for irrigation and filling up of tanks in nearby areas. "In partnership with state governments and multilateral development banks we will promote water supply, sewage treatment and solid waste management projects and services for 100 large cities through bankable projects," she said.
- Govt to hold consultation with states on land reforms
The government will hold consultations with states on land reforms, Finance Minister Nirmala Sitharaman said on Tuesday. Presenting the Budget for 2024-25, Sitharaman said that land records in urban areas would be digitised to help improve the finances of urban bodies in the country. Further, she said that the government will provide support under the Accelerated Irrigation Programme and other sources for projects with an estimated cost of Rs 11,500 crore. In addition, the Centre will provide assistance to natural disaster-hit states - Himachal Pradesh, Uttarakhand and Sikkim. The finance minister also said Andhra Pradesh will receive funds to promote industrial development for essential infra like water, power, railways, and roads.
- Budget unveils big-ticket measures for Bihar; outlines plans for new airports, sports, power infra
The Union Budget on Tuesday unveiled big-ticket measures for Bihar, proposing an outlay of Rs 26,000 crore for various road projects in the state, and outlining plans for new airports and sports infrastructure. The government will also provide Rs 11,500 crore to the state for flood mitigation. Presenting the Union Budget for 2024-25, Finance Minister Nirmala Sitharaman said the government will arrange financial assistance to Bihar through aid from multilateral development agencies. She also said Rs 20,000 crore will be allocated for highways in the state. The government will also set up airports, medical colleges and sports infrastructure in Bihar. “New airports and sports infrastructure will be constructed in Bihar and additional allocation to support capital investment will be provided…the request of Bihar government for external assistance from multilateral development banks will be expedited,” Sitharaman said. Describing the eastern part of the country as being rich in endowment, she said, “we will support construction of industrial node at Gaya... the industrial node at Gaya will also be a good model for developing our ancient centres of cultural importance into future centres of modern economy”. This model shall showcase 'Vikas Bhi Virasat Bhi' in the growth trajectory.
"We will also support the development of road connectivity projects namely--Patna-Punia Expressway, Buxar-Bhagalpur Expressway...and additional two-lane bridge over Ganga at Buxar at a total cost of Rs 26,000 crore,” she said. The government will also support the development of Nalanda in Bihar as a tourist centre, Sitharaman announced. The minister also spoke of power projects, including setting up a 2400 MW power plant at Pirpainti (Bihar), which will be taken up for Rs 21,400 crore.
- Govt announces Rs 1.5 lakh cr interest-free loans for infra development in states
To help states in developing their infrastructure, the government will provide Rs 1.5 lakh crore worth of interest-free loans on a long-term basis. Announcing the Union Budget 2024-25, Finance Minister Nirmala Sitharaman on Tuesday also said private sector investment will be facilitated for the infrastructure sector through viability gap funding. The government endeavours to maintain strong fiscal support for infrastructure over the next five years, she said, adding that road connectivity projects will be developed for Rs 26,000 crore. Among others, the industrial node at Gaya on the Amritsar-Kolkata Industrial Corridor will be developed. The capital expenditure is pegged at Rs 11,11,111 crore -- 3.4 per cent of the GDP. The Budget has also announced launching the fourth phase of the PM Gram Sadak Yojana in 25 rural habitations and providing assistance to Assam for flood management and related projects. Meanwhile, the minister said street food hubs will be set up in select cities.
- The Budget provides Rs. 2.66 lakh crore for rural development
Finance Minister Nirmala Sitharaman on Tuesday announced that Rs. 2.66 lakh crore has been allocated for rural development, including rural infrastructure. She also said that three crore additional houses will be constructed under the PM Awas Yojana in rural and urban areas. Presenting the Budget for 2024-25 in the Lok Sabha, the minister said, "This year I have made a provision of Rs. 2.66 lakh crore for rural development, including rural infrastructure". She also announced launch of the phase 4 of the Pradhan Mantri Gram Sadak Yojana (PMGSY), to provide all-weather connectivity to 25,000 rural habitations. "Phase four of the PMGSY will be launched to provide all-weather connectivity to 25,000 rural habitations, which have become eligible given their population increase," Sitharaman said.
- The budget carries an allocation of more than Rs 3 lakh crore for schemes benefiting women, girls
For promoting women-led development, Finance Minister Nirmala Sitharaman on Tuesday said the Budget carries an allocation of more than Rs 3 lakh crore for schemes benefitting women and girls. Presenting the Union Budget for 2024-25 in the Lok Sabha, Sitharaman said this signals the government's commitment to enhancing women's role in economic development. "For promoting women-led development, the Budget carries an allocation of more than Rs 3 lakh crore for schemes benefitting women and girls," she said. government will set up working women hostels to promote their participation in the workforce.
- Govt announces loans up to Rs 10 lakh for higher education in domestic institutions
The government will provide financial support for loans up to Rs 10 lakh for higher education in domestic institutions, Union Finance Minister Nirmala Sitharaman announced on Tuesday. Presenting the budget for 2024-25, she said e-vouchers for this purpose will be given directly to one lakh students every year with interest subvention of 3 per cent of the loan amount. Upgrading 1,000 Industrial Training Institutes (ITIs) in the hub and spoke model, aligning course content with the skill needs of industry and revision of model skill loan scheme, are among the measures announced by the Finance Minister for the Skill Development sector. "For helping our youth who have not been eligible for any benefit under govt schemes and policies government will provide financial support for loans up to Rs 10 lakh for higher education in domestic institutions. E-vouchers for this purpose will be given directly to one lakh students every year with interest subvention of 3 per cent of the loan amount," Sitharaman said. The Union Budget for 2024-25 will provide Rs 1.48 lakh crore for education, employment and skills in the country. She said, "1,000 ITIs will be upgraded in a hub and spoke model, course content and design will be aligned to the skill needs of industry and new courses will be introduced for emerging needs. I am happy to announce a new centrally sponsored scheme for skill development in which 20 lakh youth will be skilled over 5 years". "The model skill loan scheme will be revised to facilitate loans up to RS 7.5 lakh with a guarantee from government promoted fund..this measure is expected to help 25,000 students every year," she added.