Tax Proposals
- Short-term capital gains on specified financial assets will increase from 15% to 20%.
- Long-term capital gains on specified financial assets will rise from 10% to 12.5%; the exemption limit will be raised from ₹1 lakh to ₹1.25 lakh.
- Long-term capital gains on other assets will be capped at 12.5%.
- The Vivad Se Vishwas Scheme 2024 will be introduced.
- The angel tax will be removed for all companies.
- The tax on foreign companies will be reduced from 40% to 35%.
- The Securities Transaction Tax (STT) on futures will increase to 0.02%, and on options to 0.01%.
- Share buybacks will now be taxable to shareholders.
- In the new tax regime, the standard deduction will increase from ₹50,000 to ₹75,000, and the family pension exemption from ₹15,000 to ₹25,000.
- The new tax regime slab will modify the 5% tax slab from ₹3-6 lakh to ₹3-7 lakh.
- Customs duty will be reduced on various items, including mobile chargers, lithium, critical minerals, shrimp, fish feed, gold, silver, platinum, copper, leather, footwear, and PVC flex banners.
- Customs duty on ammonium nitrate and telecom equipment will increase.
- There will be two tax regimes for charitable institutions.
- TDS on e-commerce will be reduced from 1% to 0.1%, with TCS credit for TDS on salary.
- Reassessment criteria will be rationalized.
- Employer NPS contribution exemption will increase from 10% to 14%.
- The equalization levy of 2% will be withdrawn.
Non-Tax Proposals
- A direct benefit transfer of one month’s salary (up to ₹15,000) will be given to first-time employees. Employers will get up to ₹3,000/month PF reimbursement for two years per additional employee.
- The Credit Guarantee Scheme for Term Loans against machinery will offer up to ₹100 crore with upfront and yearly guarantee fees.
- The TReDS platform mandatory enrollment threshold will be reduced from ₹500 crore to ₹250 crore turnover.
- The Mudra loan limit will increase from ₹10 lakh to ₹20 lakh.
- Accelerated corporate exit services will be extended to voluntary LLP closures.
- An online platform and additional tribunal will be set up for fast insolvency case processing.
- ₹11.11 lakh crore CAPEX is planned for FY25.
- A ₹1,000 crore Venture Capital Fund will be established for space technology.
- The NPS Vatsalya Plan for minors will convert to regular NPS at maturity.
- Total receipts are projected at ₹3,207 lakh crore, and total expenditure is projected at ₹4,821 lakh crore.
- The fiscal deficit is projected at 4.9% of GDP, aiming for 4.5% next year.
Key Budget Highlights: India Fiscal Year 2025
Key Focus Areas
Finance Minister Nirmala Sitharaman emphasized jobs, skilling, youth, agriculture, and the poor, addressing critical political issues in the budget.
Nine Priorities in Budget 2024
- Productivity and Resilience in Agriculture
- Strengthen production, storage, and marketing of oil-seeds.
- Develop large-scale clusters for vegetable production near consumption centers.
- Implement a digital crop survey for Kharif in 400 districts.
- Allocate ₹1.52 lakh crore for agriculture and allied sectors in FY25.
- Employment and Skilling
- Provide one month’s wage to all persons newly entering the workforce in all sectors, benefiting 210 lakh youths.
- Job creation in manufacturing with support to employers.
- Government reimbursement to employers: ₹3,000 per month towards EPFO contribution for two years for each additional employee.
- Revise the model skill loan scheme to facilitate loans up to ₹7.5 lakh with a government guarantee, benefiting 25,000 students per year.
- Paid internship programme: Internship in 500 top companies, benefiting 1 crore youth with an internship allowance of ₹5,000 per month and one-time assistance of ₹6,000.
- Regional Development
- Launch ‘Purvodaya’ scheme for Eastern India, targeting Bihar, Jharkhand, Orissa, and Andhra Pradesh.
- Commit ₹26,000 crore for infrastructure projects and ₹21,400 crore for power projects in Bihar.
- Allocate ₹15,000 crore grant for the development of Amaravati in Andhra Pradesh.
- Women and Rural Development
- Allocate over ₹3 lakh crore for schemes benefiting women’s development.
- Allocate ₹2.66 lakh crore for rural development, including rural infrastructure.
- MSMEs
- Enhance the credit guarantee scheme for MSMEs in manufacturing, operating on pooling of credit risks.
- Increase Mudra loan provision to ₹20 lakh for those who have repaid previous loans under the ‘Tarun’ category.
- Promote exports: SIDBI to open 24 new branches in FY25, set up e-commerce export hubs for MSMEs.
- Urban Development
- Invest ₹10 lakh crore in PM Awaas Yojana – Urban 2.0, catering to 1 crore urban poor with central assistance of ₹2.2 lakh crore over the next five years.
- Develop transit-oriented programmes for 14 large cities.
- Develop 100 street food hubs in select cities over five years.
- Install rooftop solar for 1 crore households under PM Surya Ghar Muft Bijli.
- Invest ₹10 lakh crore to address housing needs of 1 crore urban poor and middle-class families.
- Energy and Innovation
- Partner with the private sector to develop Bharat small reactors.
- Set up an 800 MW commercial plant using AUSC technology through an NTPC and BHEL JV.
- Allocate ₹1,000 crore to expand the space economy five times in the next ten years.
- Fiscal and Infrastructure
- Set a capital expenditure target of ₹11.11 lakh crore for FY25.
- Provide ₹1.5 lakh crore in long-term interest-free loans for states.
- Recover ₹3.3 lakh crore through the resolution of more than 1,000 companies under IBC.
- Launch the first tranche of offshore blocks for mining.
- Funding Plans for R&D Boost
- Operationalize ‘Anusandan’ national research fund for basic research and prototype development.
- Create a mechanism to spur private sector-driven R&D with a financing pool of ₹1 lakh crore.
- Fiscal Deficit and Borrowing
- Project a fiscal deficit of 4.9% of GDP for FY25.
- Total receipts (excluding borrowings): ₹32.07 lakh crore.
- Total expenditure: ₹48.21 lakh crore.
- Net tax receipts: ₹25.83 lakh crore.
- Plan for gross market borrowing of ₹14.01 lakh crore and net market borrowing of ₹11.63 lakh crore.
- Aim to reduce the fiscal deficit to 4.5% of GDP by FY26.
- Customs Duty Cuts
- Reduce customs duty on mobile phones, related parts, chargers to 15%.
- Exempt customs duty on 25 critical minerals, reduce duty on two.
- Reduce customs duty on some brood stock, shrimp, and fish feed to 5%.
- Reduce customs duty on real down-filling material from duck or goose.
- Capital Gains Taxation Simplified
- Increase short-term capital gains on some financial assets to 20%.
- Set long-term capital gains on financial and non-financial assets at 12.5%.
- Raise the exemption limit for capital gains on some financial assets to ₹1.25 lakh per year.
- Classify listed financial assets held for more than a year as long-term.
- Classify unlisted financial and non-financial assets held for two years as long-term.
- Tax unlisted bonds, debentures, debt MFs, market-linked debentures at the slab rate.
- Corporate Tax Cuts for Foreign Firms
- Reduce the corporate tax rate for foreign companies to 35% from 40%.
- Securities Transaction Tax Raised
- Increase STT on futures to 0.02%.
- Increase STT on options to 0.1%.
- Income Tax Rejigs
- Raise the deduction of employer expenditure towards NPS to 14% from 10% of salary.
- Deduct expenditure up to 14% of salary from income provided under the new tax regime.
- Modify the new tax regime slabs:
- Income of ₹0-3 lakh: 0%
- ₹3-7 lakh: 5%
- ₹7-10 lakh: 10%
- ₹10-12 lakh: 15%
- ₹12-15 lakh: 20%
- Above ₹15 lakh: 30%
Disclaimer: This is based on the Finance Minister’s budget speech. More clarity will come after a detailed study of the Finance Bill