India Budget 2024: Key Takeaways from Nirmala Sitharaman's Speech (July 23rd, 2024)

Budget 2024, presented by Finance Minister Nirmala Sitharaman on July 23rd, outlined the Modi government's roadmap for India's development in the next five years. Here's a breakdown of the key announcements:

Taxation:

• New Tax Slabs: The government introduced new tax slabs in the new tax regime, offering potential relief to some taxpayers. However, the old tax regime slabs remain unchanged.
• Revised Capital Gains Tax: The budget saw a revised capital gains tax structure. Short-term capital gains on financial assets now face a 20% tax (up from 15%). Long-term capital gains tax across all assets increased to 12.5% (from 10%). This, coupled with an increased exemption limit, aims to influence investor behavior.

Budget Direct Tax Majors

Angel Tax Abolished

One of the most anticipated changes is the complete abolition of the angel tax. This tax, levied on investments made in startups, has been a major hurdle for the startup ecosystem. Its removal is expected to encourage more angel investors to support budding entrepreneurs.

Changes to Capital Gains Tax

The government has rationalized the taxation of long-term capital gains. Now, both financial and non-financial assets will be taxed at a uniform rate of 12.5%. Additionally, the annual exemption limit for capital gains has been increased to Rs. 1.25 lakh, providing relief to taxpayers.

Hike in Securities Transaction Tax

To broaden the tax base, the Securities Transaction Tax (STT) on Futures and Options (F&O) has been increased. The new rates are 0.02% and 0.01% respectively.

Enhanced Standard Deduction

In a move to provide tax benefits to salaried individuals, the standard deduction has been raised from Rs. 50,000 to Rs. 75,000. This will result in higher disposable income for taxpayers.

Revised Tax Structure Under New Regime

The government has announced changes to the tax rate structure under the new income tax regime. Here's a breakdown of the new slabs:

* Income up to Rs. 3 lakh: Nil tax

* Income from Rs. 3 lakh to Rs. 7 lakh: 5% tax

* Income from Rs. 7 lakh to Rs. 10 lakh: 10% tax

* Income from Rs. 10 lakh to Rs. 12 lakh: 15% tax

* Income from Rs. 12 lakh to Rs. 15 lakh: 20% tax

* Income above Rs. 15 lakh: 30% tax

This revised structure is expected to provide significant tax relief to salaried individuals, with potential savings of up to Rs. 17,500.

Boosting Employment & Infrastructure:

• Employment Schemes: The budget announced key employment schemes to tackle unemployment. Details on these schemes are awaited.
• Infrastructure Spending: Significant allocations were made for infrastructure development across various sectors.

Sectoral Highlights:

• Education: A budget of ?1.25 lakh crore has been allocated to education with the aim of revamping the sector.
• Defense: The budget prioritized national security with a ?4.54 lakh crore allocation for defense spending.
• Healthcare: ?89,287 crore has been allocated to healthcare, with a focus on improving accessibility and affordability.
• Digital India: The budget emphasized continued support for the 'Digital India' initiative, with an allocation of ?1.16 lakh crore to the IT and Telecom sector.
• Agriculture: The budget prioritized agriculture and allied activities with a ?1.51 lakh crore allocation. Additionally, a reduction in customs duty on cancer medicines and mobile phones is expected to benefit citizens.

Fiscal Deficit:

• The budget projected a fiscal deficit of 4.9% for FY2025, indicating the government's commitment to fiscal consolidation.

Next Steps:

For a more comprehensive understanding, you can refer to official government documents or news articles from reputable sources. Analyzing expert opinions on the budget's impact on various sectors is also recommended.

Stay tuned!