Indian Budget 2024-25: What It Means for Salaried Employees and Businesses

The Indian government has unveiled its budget for the fiscal year 2024-2025, introducing a range of measures aimed at stimulating economic growth, addressing unemployment, and providing relief to both salaried individuals and businesses. This comprehensive Indian Budget 2024-25 sets a roadmap for India's pursuit of becoming a developed nation, or "Viksit Bharat". Let's break down the key aspects of this budget and their potential impact on various sectors of the economy.

1. Key Initiatives in Indian Budget 2024-25 for Salaried Individuals

The budget introduces several measures beneficial to the salaried class:

a) Increased Standard Deduction: Raised from ₹50,000 to ₹75,000, potentially increasing take-home pay.

b) Changes in Capital Gains Taxation:

- Short-term gains on financial assets will attract a 20% tax rate.

- Long-term gains on all financial and non-financial assets taxed at 12.5%.

- Exemption limit for capital gains on financial assets increased to ₹1.25 lakh per year.

c) Enhanced Pension Deduction: For pensioners, deduction on family pension increased from ₹15,000 to ₹25,000.

d) New Pension Scheme (NPS) Reforms: Government promises to address issues while protecting citizens and maintaining fiscal prudence.

e) NPS Vatsalya: New plan allowing parents and guardians to contribute to pension schemes for minors.

2. Important Declarations for Businesses

The budget offers several provisions to support and stimulate the business sector:

a) MSME (Micro, Small and Medium Enterprises) Support:

- Mudra (Micro Units Development & Refinance Agency) Loans limit enhanced to ₹20 lakh under the 'Tarun' category.

- New credit guarantee schemes and assessment models introduced.

b) Manufacturing Sector Boost:

- Development of twelve new industrial parks under the National Industrial Corridor Development Programme.

- Launch of Critical Minerals Mission for domestic production, recycling, and overseas acquisition.

c) Start-up and Innovation Support:

- ₹1,000 crore venture capital fund for the space economy.

- Operationalization of Anusandhan National Research Fund for basic research and prototype development.

d) Custom Duty Changes:

- Reduction in Basic Customs Duty (BCD) to 15% on mobile phones, mobile Printed Circuit Board Assemblies (PCBAs), and chargers.

- Full exemption of custom duties on 25 critical minerals.

- BCD on shrimp and fish feed reduced to 5%.

e) FDI (Foreign Direct Investment) and Overseas Investments: Simplified regulations to facilitate FDI and promote Indian Rupee usage for overseas investments.

f) Corporate Tax Rate: Reduced from 40% to 35% for foreign companies.

g) Angel Tax Abolished: For all classes of investors, boosting start-up investments.

h) Infrastructure Push: Provision of ₹11,11,111 crore (3.4% of GDP - Gross Domestic Product) for infrastructure development.

3. Price Impact on Goods and Services

Based on the budget proposals, particularly changes in customs duties, we can expect shifts in prices:

Items likely to become cheaper:

- Mobile phones, PCBAs, and chargers

- Gold and silver (custom duty reduced to 6%)

- Platinum (custom duty reduced to 6.4%)

- Shrimp and fish feed

- Solar cells and panels

- 25 types of critical minerals

- Three more types of cancer medicines

While the budget doesn't directly mention items becoming more expensive, some indirect effects might lead to price increases in certain areas, such as imported goods not specifically mentioned for duty reduction and services relying heavily on infrastructure development.

4. Initiatives to Address Unemployment

The budget introduces several measures to boost employment and enhance skill development:

a) PM's Package for Employment Linked Incentive (3 schemes):

• Scheme A: Wage support for new entrants in formal sectors.

• Scheme B: Incentives for first-time employees and employers in manufacturing.

• Scheme C: EPFO (Employees' Provident Fund Organisation) contribution reimbursement for employers.

b) Skilling Programme: Aiming to skill 20 lakh youth over 5 years and upgrade 1,000 Industrial Training Institutes (ITIs).

c) Internship Opportunities: Scheme to provide internships in 500 top companies to 1 crore youth in 5 years.

d) Support for Higher Education: Various loan and financial support schemes for students.

e) Women's Workforce Participation: Initiatives to set up working women hostels and creches.

f) MSME and Manufacturing Support: Various schemes potentially creating new job opportunities.

5. Macroeconomic Perspective: Impact on India's Growth and Development

From a macroeconomic standpoint, the budget aims to foster India's economic growth and development through:

a) Significant infrastructure investment (3.4% of GDP), expected to have a multiplier effect on the economy.

b) Fiscal consolidation efforts to maintain economic stability and investor confidence.

c) Boost to manufacturing sector to enhance global competitiveness.

d) Support for MSMEs to promote job creation and economic diversification.

e) Focus on agriculture to enhance productivity and rural incomes.

f) Emphasis on skill development and employment generation to capitalize on India's demographic dividend.

g) Promotion of R&D and innovation to enhance technological capabilities.

h) Initiatives for energy security and transition towards sustainable development.

i) Measures to attract foreign investment and simplify FDI regulations.

j) Push for digital and financial inclusion to enhance economic efficiency.

k) Focused regional development initiatives to reduce disparities.

l) Tourism development to boost the services sector and create employment opportunities.

This budget strikes a balance between fostering growth and maintaining fiscal prudence. It addresses key areas crucial for sustained economic growth while aligning with global economic trends. However, the effectiveness of these measures will depend on their implementation and the global economic environment.

Potential challenges include managing inflation (5.4% in 2023) and navigating global economic uncertainties. Nonetheless, if executed effectively, these budget initiatives have the potential to support India's ambition of becoming a developed nation by promoting inclusive and sustainable economic growth.

As always, it's advisable for individuals and businesses to consult with financial advisors or tax professionals to understand how these changes might affect their specific financial situations.

FAQs

Q: How will this budget affect my take-home salary?

A: The budget increases the standard deduction for salaried employees from ₹50,000 to ₹75,000, which could potentially increase your take-home pay.

Q: Are there any changes to income tax slabs?

A: The budget document provided doesn't mention specific changes to income tax slabs. It's best to consult the detailed tax guidelines or a tax professional for the most accurate information.

Q: How does this budget impact senior citizens?

A: The budget increases the deduction on family pension from ₹15,000 to ₹25,000, which will benefit pensioners.

Q: What measures are there to create jobs?

A: The budget introduces several employment schemes, including wage support for new entrants in formal sectors, incentives for employers, and a large-scale skilling program aimed at 20 lakh youth over 5 years.

Q: How does this budget support small businesses?

A: The budget enhances the Mudra Loans limit to ₹20 lakh under the 'Tarun' category and introduces new credit guarantee schemes for MSMEs.

Q: Are there any changes to capital gains tax?

A: Yes, the budget introduces a 20% tax rate on short-term gains of financial assets and a 12.5% rate on long-term gains for all financial and non-financial assets.

Q: How does this budget address inflation?

A: While the budget doesn't directly address inflation, measures like fiscal consolidation and investments in infrastructure and agriculture may help manage inflationary pressures in the long term.

Q: What are the major infrastructure initiatives in this budget?

A: The budget allocates ₹11,11,111 crore (3.4% of GDP) for infrastructure development, which includes various projects across sectors.

Q: How does this budget impact the real estate sector?

A: The budget encourages states to lower stamp duties for properties purchased by women, which could stimulate the real estate market.

Q: What measures are there to support agriculture?

A: The budget includes initiatives for natural farming, digital public infrastructure for farmers, and support for shrimp production and export.

Q: How does this budget address climate change and sustainability?

A: The budget includes measures to support renewable energy, nuclear power, and initiatives for energy transition and storage.

Q: Are there any changes to customs duties?

A: Yes, the budget reduces customs duties on several items including mobile phones and components, gold, silver, platinum, and certain critical minerals.

Q: How does this budget impact foreign investments in India?

A: The budget simplifies FDI regulations and reduces the corporate tax rate for foreign companies from 40% to 35%, which could attract more foreign investment.

Q: What measures are there to support start-ups?

A: The budget abolishes the Angel tax for all classes of investors and sets up a venture capital fund of ₹1,000 crore for the space economy.

Q: How does this budget address regional development?

A: The budget includes focused initiatives for Eastern states (Purvodaya) and specific regions to promote balanced development across the country.

Remember, while this FAQ covers key points, it's always advisable to consult official documents or financial experts for detailed, personalized advice.