Union Budget 2024: Changes and New Regime, Learn more

On July 23 2024, Union Budget 2024 was presented by the Finance Minister of India, Nirmala Sitaraman. The speech of presenting the budget lasted 1 hour and 25 minutes, surpassing the previous record held by former Prime Minister Morarji Desai.

Highlights of Budget

• The Fiscal deficit in the year 2024-25 is estimated to be 5.1% of GDP, adhering to the path of fiscal consolidation announced in the 2021-22 budget.
• The scheme of 50-year interest-free loans for capital expenditure to states will be continued with a total outlay of rupees 1.3 lakh crore.
• The gross and net market borrowings through dated securities during 2024-25 are estimated at ₹14.15 lakh crore and ₹ 11.75 lakh crore respectively, both lower than 2023-24.
• A joint venture between NTPC and BHEL will set up on 800 MW commercial plant using advanced ultra-supercritical (AUSC) technology.
• The total receipts other than borrowings are estimated at ₹30.80 lakh crore, and total expenditure at ₹ 47.66 lakh crore for 2024-25.

Tax Reforms

This Union budget have introduced several important tax reforms:

• Personal Income Tax: The standard deduction of salaried employees and pensioners opting for new tax regime was increased from ₹50,000 to ₹75,000, providing relief of up to ₹17,500 annually. The deduction limit for the employer’s contribution to the National Pension System (NPS) was increased from 10% to 14%. The revised tax slabs for the new regime are: income up to ₹3 lakh tax-free; ₹3-7 lakh taxed at 5%; ₹ 7-10 lakh at 10%; ₹10-12 lakh at 15%; ₹12-15 lakhs at 20%; and income above ₹15 lakh taxed at 30%.
• Capital Gains Tax: Short term gains on some financial assets will now attract 20%, while those on other assets will continue to attract current rates. The limit of exemption on some financial instruments for capital gains has been increased to ₹1.25 lakh a year. Indexation benefit for computing long-term capital gains has been removed.
• Other Reforms: The Income Tax Act will be comprehensively reviewed in the next six months to make it concise, lucid, and easy to understand. The Securities Transaction Tax ( STT) on Futures and Options contracts has been increased.         

The burden to buy-back taxes has been shifted from companies to shareholders, taxed as dividend. The TDS rate structure has been simplified to improve ease of doing business. The 2% equalisation levy on e-commerce supply of goods of services has been withdrawn.

Political Chaos

The opposition political party is blaming the BJP government for favouring its alliance. They accused them for maintaining focus on strategically on states with upcoming election like Bihar, this will also help the BJP to strengthen its coalition with the regional party.

Tamil Nadu Chief Minister M.K. Stalin expressed discontent by announcing a boycott of the PM-led NITI Aayog meeting, citing the neglect of Tamil Nadu in the budget allocation. This reflects broader regional grievances among states that feel overlooked in favour of others, particularly Bihar and Andhra Pradesh, which received significant attention in the budget.

Opposition parties criticized the budget for lacking populist measures that could directly benefit electorate. Critics argue that the budget does not adequately address rural distress or provide immediate relief to farmers, which could have been pivotal in regaining support in light of previous electoral losses.