Union Budget 2024 Highlights: Key Focus Areas

Introduction

The Union Budget 2024, “Viksit kaal” presented by Finance Minister Nirmala Sitharaman, reflects a meticulous approach to addressing the nation’s economic challenges and fostering growth. The budget focuses on four major groups – the poor, women, youth, and farmers, demonstrating a commitment to inclusive development. It’s important to note that this is an interim budget and will only be in place until July 2024 (till election results come out). This article explores the key highlights of the budget, including strategic initiatives as well as the financial allocations designed to propel India towards a resilient and equitable future.

Union Budget 2024 Highlights: Tax-Related 

Stability in Tax Rates and Import Duties:

The Finance Minister assured stability by announcing that no proposals would be made on tax rates – direct or indirect, including import duties. The changes made in 2023 will continue to apply.

2023 Direct and Indirect Tax Recap:

The Union Budget 2023 had introduced significant changes in the tax regime. The Union budget 2023 highlights were:

• New tax brackets starting from INR. 3 lakhs under the New Tax Regime.   
• Tax rebate for income up to INR 7 lakhs; hence no tax for income up to this limit.
• Salaried individuals benefit from a Rs 50,000 standard deduction under the New tax regime as well. 
• No changes in the old tax regime; the new regime is considered by default for ITR filing.
• Surcharge reduced to 25% from 37% for those earning over Rs. 5 crore.
• TDS rate was reduced to 20% on taxable EPF withdrawals instead of the maximum marginal rate applicable.  
• Startups get a 10-year carry-forward of losses as well as an extended exemption u/s 80IAC.
• Presumptive taxation limits increased for businesses from 2 Cr. to 3 Cr. and also professionals from 50 lakhs to 75 lakhs. 
• Cooperative societies have a higher Rs 3 crore limit for TDS on cash withdrawals.
• Proposal for TDS as well as taxability on net winnings for online games without any threshold.
• Additionally, the filing of returns/statements was restricted to a maximum period of three years from the due date of filing of the relevant return/statement.
• They had also enabled unregistered intra-state supply of goods through E-Commerce Operators for suppliers and composition taxpayers.

Tax Reforms Benefiting Taxpayers:

• The Finance minister shared their continued efforts in reducing the average return processing time, and providing faster refunds. She also shared that there has been a reduction in the average return processing time from 93 days in 2013-14 to 10 days in 2023-24.
• The Finance Minister announced the withdrawal of outstanding direct tax demands, with amounts up to ₹25,000 for the period up to the financial year 2009-10 and up to ₹10,000 for the financial years 2010-11 to 2014-15. This move is expected to benefit 1 crore taxpayers, providing relief as well as fostering a positive economic environment.

Union Budget 2024 Highlights for Startups

Tax Benefits for Startups and Sovereign Wealth Funds:

The budget extends tax benefits to startups and investments made by sovereign wealth and pension funds until March 2025. This move aims to support entrepreneurial ventures and attract long-term investments, contributing to the growth of the business ecosystem.

₹1 Lakh Crore Corpus for Long-Term Financing:

A significant announcement in the budget is the establishment of a ₹1 lakh crore corpus, offering a 50-year interest-free loan for long-term financing with extended tenures as well as minimal or no interest rates. This initiative shall stimulate economic growth by providing a robust financial foundation for critical sectors.

Union Budget 2024 Highlights: Financial

The budget outlines the fiscal deficit projections, with FY24 fiscal deficit seen at 5.8% of GDP. They revised the total expenditure for FY24 to ₹44.90 lakh crore. With total receipts (other than borrowings) at ₹27.56 lakh crore. The government aims to reduce the fiscal deficit to below 4.5% by FY26, further signaling a commitment to financial discipline. The government’s fiscal policies aim to strike a balance between economic growth and financial prudence, ensuring sustainable development.

Other Union Budget 2024 Highlights

FDI Focus on ‘First Develop India’:

The Finance Minister emphasized a new perspective on FDI, defining it as ‘First Develop India.’ The budget encourages bilateral trade treaties to boost FDIs, also signalling a commitment to making India an attractive destination for foreign investments and fostering economic growth. Additionally, the government has also taken a positive initiative where they have promised to provide MSMEs with adequate finances, relevant technologies and appropriate training to compete globally.

Rooftop Solarisation for Free Electricity:

In a bid to promote clean energy and alleviate the burden of electricity costs, the budget introduces rooftop solarisation. Finance Minister Nirmala Sitharaman stated that 1 crore households will receive 300 units of free electricity per month. In turn, encouraging sustainable practices as well as reducing the carbon footprint.

Empowering Key Demographics:

Finance Minister Nirmala Sitharaman, as predicted in our Union Budget 2024 expectations article, underscored the government’s commitment to uplifting four major groups – the poor, women, youth, as well as farmers. The budget allocates resources to address the specific needs of these segments, further aiming to create opportunities and also improve their quality of life.

Conclusion

The Union Budget 2024 outlines a comprehensive strategy to address the diverse needs of the nation while fostering economic growth. From empowering key demographics to introducing innovative financial measures, the budget reflects a commitment to inclusive development and long-term sustainability. Hence, as India navigates the evolving global economic landscape, these strategic initiatives set the stage for a resilient and progressive future.