Hon’ble Finance Minister, Nirmala Sitharaman has presented the new revised budget of the year 2024-25. This budget is tough for investors, good for jobs, and somewhere creates anger in the middle class. Let’s break every money deal and understand the new tax regimes in a very easy way!
Budget Theme:
- Focus more on employment, skilling, MSMEs, and poverty.
- The Prime Minister has announced a package of five schemes and initiatives to assist employment, skilling, and other possibilities for 4.1 crore youngsters over a five-year period, with a central outlay of INR 2 lakh crore.
- The budget includes an allocation of INR 1.48 lakh crore for education, employment, and skilling.
Direct Tax Proposals:
Under the new tax regime, the deduction for salaried individuals has increased from Rs. 50,000 to 75,000. Similarly a deduction for a person’s family pension has also increased to Rs. 25,000 from 15,000.
Look at the new tax structure that the government has proposed!
| Income Slabs | Tax Rate |
| 💸 0-3 Lakhs | Nil |
| 💸 3-7 Lakhs | 5% |
| 💸 7-10 Lakh | 10% |
| 💸 10-12 Lakh | 15% |
| 💸 12-15 Lakh | 20% |
| 💸 Above 15 Lakh | 30% |
Note: As per the new standards, a salaried employee in the tax regime can save up to Rs. 17,500 in taxes.
Changes in TDS Rates:
- Payment of insurance commission in case of other than company – Earlier 5% and Now – 2%.
- Payment in respect of life insurance policy – Earlier 5% and Now – 2%.
- Commission on sale of lottery tickets – Earlier 5% and Now – 2%.
- Payment of commission or brokerage – Earlier 5% and Now – 2%.
- Payment of Rent by certain individuals or HUF – Earlier 5% and Now – 2%.
- Payment of certain sums by certain individuals or HUFs Earlier 5% and Now – 2%.
- Payment of certain sum by e-commerce operator to e-commerce participants – Earlier 1% and Now – 0.1%.
- Payment on account of repurchase of units by mutual funds or UTI – Proposed to be omitted.
Introduction of TDS on Payments Made to Partners by Firms (Section 194T)
This budget included a new TDS provision for payments made by firms (including partnership firms and LLPs) to partners in the form of salary, remuneration, interest, bonus, or commission. As a result, any payment made by that company in excess of Rs. 20,000 will now be liable to TDS at the 10% rate specified in Section 194T.
Abolishment of Angel Tax:
The angel tax provisions of section 56(2) (viib) have been removed in the new proposed budget.
Angel Tax is a tax applied on companies that issue new shares to investors at a price higher than the company’s fair market value. The excess of the Issue Price over and above the fair market value (FMV) was taxed as an angel tax in the Company’s hands under Section 56(2)(viii). This provision has been proposed for removal.
Taxation on Capital Gains:
- Short term capital gain (STCG) on financial assets has increased from 15% to 20%. Other financial and non-financial assets which are held for short term or below 12 months continue to attract taxes at slab rates.
- Long term capital gain (LTCG) on all financial assets will now attract a new tax rate of 12.5%.
- For classifying assets into long-term and short-term manner, there will only be two holding periods: 12 months and 24 months. The 36-month holding period has been removed this time.
- To benefit the middle class people, the exemption limit on capital gains is now increased to 1.25 lakh from 1 lakh per year.
- The securities transaction tax on option premiums will be increased from 0.0625% to 0.1% in futures, while the STT on futures will be increased from 0.0125% to 0.02%.
Indirect Tax Proposals:
Custom Duties Reductions and Major Exemptions
- The Custom duty on Mobile Phones, chargers and its components is reduced to 15% from 20%, resulting in making the phones available at cheaper price.
- Gold and silver will also get a cut off of 9% reducing the custom’s from 15% to 6%.
- Platinum is at 6.4% significantly reducing from 15.4%.
- Broodstock, polychaete worms, shrimp and fish feed has a duty fee of 10%, 30%, and 15%, which now comes to basic custom duty to 5%.
- The custom duty is exempted on Alkali or alkaline earth metals, 25 rare earth minerals (like lithium). Earlier it was taxed at 5%.
- Capital goods for manufacturing of solar panels and cancer drugs (Trastuzumab Deruxtecan, Osimertinib and Durvalumab) are also exempted from customs duty. Earlier it was 7.5% and 10% respectively.
- PVC flex banners, PCBA of specific telecom equipment and Ammonium nitrate are also some of the goods on which customs duty is reduced.
Budget Breakdown: Allocation of Money Sector Wise!
| Sectors | Allocation of Money (Rs.) |
| Defence | 4.54 lakh crore |
| Agriculture and Allied Activities | 1.51 lakh crore |
| Rural Development | 2.65 lakh crore |
| Home Affairs | 1.50 lakh crore |
| Education | 1.25 lakh crore |
| It and Telecom | 1.16 lakh crore |
| Energy | 68,769 crore |
| Health | 89,287 Crore |
| Commerce and Industry | 47,559 crore |
| Social Welfare | 56,501 crore |
The key elements of the Union Budget 2024 are 1 update and 9 Viksit Bharat Priorities. Viksit Bharat, or Developed India, is the Central Government’s aim to transform India into a developed country by its 100th anniversary in 2047.
The Final Words:
This article contains the main changes and updates in the Fy 24-25 budget, apart from this there are some of the other updates that you can get to know from the Indian Budget website. The stock market doesn’t react much on the budget day, let’s see in the upcoming years how the Indian economy performs on the global charts. Hopefully, by now you have got an overview of the Budget 2024, and its themes, updates, and priorities.
