Comprehensive Overview of India's 2024 Union Budget

The annual Budget Day in India is a highly anticipated occasion, with both businesses and individuals eagerly awaiting announcements of new schemes and initiatives that could impact them. Due to the election cycle, the 2024 Budget was unveiled later than its typical schedule, specifically on February 1st.

The Finance Minister delivered the final Budget on July 23, 2024, highlighting its focus on creating employment, enhancing skills, supporting MSMEs, and benefiting the middle class. The budget also established specific priorities:

<ul><li>Boosting agricultural productivity and resilience.</li><li>Improving employment opportunities and skill development.</li><li>Fostering inclusive human resource development and social justice.</li><li>Strengthening manufacturing and service industries.</li><li>Advancing urban development.</li><li>Ensuring energy security.</li><li>Developing robust infrastructure.</li><li>Promoting innovation, research, and development.</li><li>Implementing next-generation reforms.</li></ul>

This article details the primary highlights of the 2024 Union Budget, encompassing significant reforms in both direct and indirect taxation.

Budget 2024 Document Downloads

Access the Finance Bill 2024 by clicking this link: Download here.

The full Budget 2024 speech can be downloaded here: Download here.

1. Direct Tax Proposals

Enhanced Standard Deduction and Family Pension Deduction in New Tax Regime

Under the optional new tax regime, the standard deduction for salaried individuals has been raised from Rs. 50,000 to Rs. 75,000. Similarly, individuals with pension income electing the new regime will see their family pension deduction increase from Rs. 15,000 to Rs. 25,000.

Revised Tax Structure under the New Regime

The new tax regime features an updated tax slab structure:

Income Tax Slabs	Tax Rate
₹0-3 lakh	Nil
₹3-7 lakh	5%
₹7-10 lakh	10%
₹10-12 lakh	15%
₹12-15 lakh	20%
Above ₹15 lakh	30%

Note: These adjustments could allow a salaried employee under the new tax regime to save up to Rs. 17,500 in taxes.

Simplified Capital Gains Taxation

Several changes aim to streamline the taxation of capital gains:

<ul><li>Asset classification for long-term and short-term gains will now use only two holding periods: 12 months and 24 months, removing the previous 36-month period.</li><li>All listed securities with a holding period exceeding 12 months are now categorized as long-term. Other assets generally have a 24-month holding period for long-term classification.</li><li>Unlisted bonds and debentures will now be taxed similarly to debt mutual funds and market-linked debentures, attracting capital gains tax at applicable slab rates, irrespective of the holding period (treated as short-term).</li><li>Short-Term Capital Gain (STCG) tax for listed equity shares, equity-oriented fund units, and business trust units has increased from 15% to **20%**. Other short-term financial and non-financial assets continue to be taxed at slab rates.</li><li>For the benefit of lower and middle-income groups, the exemption limit for Long-Term Capital Gains (LTCG) on transferring equity shares, equity-oriented units, or business trust units has increased from Rs. 1 lakh to **Rs. 1.25 lakh** annually. However, the tax rate on such gains has risen from 10% to **12.5%**.</li><li>The Rs. 1.25 lakh exemption limit applies for the entire year, while the tax rate change became effective on July 23, 2024.</li><li>The tax on long-term capital gains from other financial and non-financial assets has been reduced from 20% to **12.5%**. Concurrently, the indexation benefit previously available for selling long-term assets has been removed. Consequently, sales of long-term assets made from July 23, 2024, will be taxed at 12.5% without indexation.</li><li>It is important to note that the provision allowing the Fair Market Value (FMV) of an asset as of April 1, 2001, to be considered as the cost basis during sale remains applicable despite these recent changes.</li></ul>

Modifications in TDS Rates

Budget 2024 has adjusted TDS (Tax Deducted at Source) rates on specific payments to streamline business operations and improve taxpayer compliance. These new TDS rates will become effective either on October 1, 2024, or April 1, 2025. The affected payments are outlined below.

TDS Sections	Current TDS Rate	Proposed TDS Rate	Effective from
Section 194D - Insurance commission payments (other than to companies)	5%	2%	April 1, 2025
Section 194DA - Life insurance policy payments	5%	2%	October 1, 2024
Section 194G - Commission on lottery ticket sales	5%	2%	October 1, 2024
Section 194H - Commission or brokerage payments	5%	2%	October 1, 2024
Section 194-IB - Rent payments by certain individuals/HUFs	5%	2%	October 1, 2024
Section 194M - Payments by certain individuals/HUFs for contractors/professionals	5%	2%	October 1, 2024
Section 194-O - Payments by e-commerce operators to participants	1%	0.10%	October 1, 2024
Section 194F - Repurchase of units by mutual funds or UTI	Proposed to be Omitted		October 1, 2024

New TDS on Payments by Firms to Partners (Section 194T)

This budget introduces a new TDS provision applicable to payments made by firms (including both partnership firms and LLPs) to their partners. This covers salary, remuneration, interest, bonus, or commission. Any such payment exceeding Rs. 20,000 will now be subject to a 10% TDS under Section 194T.

Increased Remuneration Limit for Partners

Under Section 40(b), the limit for partner's remuneration has been raised as follows in Budget 2024:

Book Profit	Limit
On the first Rs. 6,00,000 of book profit or loss	Rs. 3,00,000 or 90% of the book profit, whichever is higher
On the remaining balance of book-profit	60% of the book-profit

Abolition of Angel Tax

The provisions of Section 56(2)(viib), commonly known as Angel Tax, are proposed to be removed. Angel Tax was previously imposed on companies issuing new shares to investors at a price exceeding the company's Fair Market Value, with the excess amount being taxable in the company's hands. The elimination of this provision is expected to significantly benefit the startup ecosystem by reducing compliance costs and time spent during fundraising activities.

Corporate Taxes for Foreign Companies

Corporate taxes, levied on a company's net income or profit, have seen a proposed reduction in Budget 2024. Finance Minister Nirmala Sitharaman announced a reduction in the corporate tax rate for foreign companies from 40% to 35%.

Higher Deduction for Employer's Pension Scheme Contributions

Section 80CCD allows a deduction for employer contributions to pension schemes, previously capped at 10% of the employee's salary. Budget 2024 has now increased this deduction limit to 14% of the employee's salary for the preceding year.

Securities Transaction Tax (STT) on Futures and Options

The Securities Transaction Tax (STT) on futures has increased from 0.0125% to 0.02%, and the STT on options has increased from 0.0625% to 0.1%.

Other Direct Tax Updates

<ul><li>**ITR Reopening**: Assessments can now be reopened beyond three years from the end of the assessment year, up to a maximum of five years, only if the escaped income is Rs. 50 lakh or more. For search-related cases, the time limit has been reduced from 10 years to six years.</li><li>**Income Tax Appeals**: To expedite the resolution of pending cases, the monetary thresholds for filing tax dispute appeals with tax tribunals, high courts, and the supreme court have been raised to Rs. 60 lakh, Rs. 1 crore, and Rs. 2 crore, respectively.</li><li>**Vivaad se Vishwas Scheme**: This scheme has been reintroduced to facilitate the resolution of income tax disputes and minimize litigation.</li></ul>

2. Indirect Tax Proposals

Reduced Customs Duties and Exemptions for Key Goods

The budget introduced several adjustments to customs duties:

Particulars	From	To
Mobile phones, mobile PCBAs, and chargers	20%	Basic customs duty reduced to 15%
Gold and silver	15%	Customs duty reduced to 6%
Platinum	15.40%	Customs duty reduced to 6.4%
Broodstock, polychaete worms, shrimp and fish feed	10%, 30%, and 15% respectively	Basic customs duty reduced to 5%
Alkali or alkaline earth metals, 25 rare earth minerals (e.g., lithium)	5%	Exempted from customs duty
Capital goods for solar panel manufacturing	7.50%	Exempted from customs duty
Cancer drugs (Trastuzumab Deruxtecan, Osimertinib, and Durvalumab)	10%	Exempted from customs duty
Ferro nickel and blister copper	2.50%	Nil Basic Customs Duty (BCD)
Ammonium nitrate	7.50%	10%
PVC flex banners	10%	25%
PCBA of specific telecom equipment	10%	15%

Significant GST Reforms and Amendments

<ul><li>Extra Neutral Alcohol (un-denatured) used in making alcoholic liquor for human consumption is now outside GST's scope.</li><li>Section 74A has been added to address unpaid, underpaid, erroneously refunded tax, or wrongly availed/utilized input tax credit (ITC) for financial years starting 2024-25. For amounts under Rs. 1,000 for a financial year, no notice will be issued.</li><ul><li>Notices must be issued within 42 months from the annual return due date or erroneous refund date.</li><li>The same limitation period applies for demand notices and orders from FY 2024-25 onwards.</li><li>Taxpayers now have 60 days (up from 30) to pay the demanded tax with interest and benefit from reduced penalties under this section.</li><li>Sections 10(5), 35(6), 39(3), 49(8), 50(1), 51(7), 61(3), 62(1), 63, 64(2), 65(7), 66(6), 104(1), 107(11), and 127 now reference this section.</li></ul><li>Section 11A is being inserted, empowering the government to regularize non-levy or short levy of central tax due to prevailing trade practices.</li><li>Section 13(3) is amended to set the time of supply for recipient-issued invoices as the invoice date.</li><li>Sub-section (5) is retrospectively inserted into Section 16 (from July 1, 2017) to permit ITC claims on invoices or debit notes for FYs 2017-18 to 2020-21, provided they were filed in GSTR-3B by November 30, 2021.</li><li>Additionally, sub-section (6) is retrospectively inserted into Section 16 (from July 1, 2017) to allow ITC claims on invoices and debit notes filed in GSTR-3B for the period between GST registration cancellation and revocation order date, if filed within 30 days of the revocation order. This is subject to the condition that the Section 16(4) time limit for ITC claims had not expired on the cancellation order date, and no refund is admissible if tax was paid or ITC reversed.</li><li>A new item has been added to blocked credits under Section 17(5), disallowing ITC on taxes paid under Section 74 for demands up to FY 2023-24, and removing references to Sections 129 and 130 of the CGST Act.</li><li>A new proviso in Section 30(2) of the CGST Act introduces additional conditions and restrictions for revoking GST registration cancellation, to be prescribed later in the CGST Rules.</li><li>Section 31(3)(f) is amended to specify a time limit for recipients to issue invoices for Reverse Charge Mechanism (RCM) supplies, including suppliers registered only for TDS under GST.</li><li>GSTR-7 for TDS under GST must now be filed monthly, regardless of whether TDS was deducted.</li><li>Section 54(15) states that GST refunds of unutilized ITC or IGST will not be granted for zero-rated goods supplies subject to export duty.</li><li>A new Section 70(1A) allows a summoned person to authorize another person to appear on their behalf in response to GST summons from a GST officer.</li><li>New Sections 73(12) and 74(12) limit the application of demand and recovery provisions for tax demands up to FY 2023-24.</li><li>Under the amended Section 74A, penalties will be reassessed in cases where fraud, willful misstatement, or suppression of facts are disproven.</li><li>The maximum pre-deposit for filing appeals with the appellate authority under Section 107 of the CGST Act has been reduced from Rs. 25 crore to Rs. 20 crore. Similarly, under the IGST Act, Section 20 reduces the pre-deposit from Rs. 50 crore to Rs. 40 crore.</li><li>Section 109 is amended to allow the government to specify types of cases for hearing by the Principal Bench of the Appellate Tribunal.</li><li>In Section 112:</li><ul><li>Effective August 1, 2024, the deadline for taxpayers to appeal to the Appellate Tribunal will be the later of the order communication date or a government-notified date based on Council recommendations.</li><li>This change also applies to commissioners/GST officers filing applications before the Appellate Tribunal.</li><li>Applications may be submitted within three months after the standard appeal period concludes.</li><li>The pre-deposit requirement for appeals is lowered from 20% to 10% of the disputed amount.</li><li>The maximum pre-deposit amount is reduced from Rs. 50 crore to Rs. 20 crore.</li></ul><li>Penalty under Section 122(1B) is retrospectively amended (from October 1, 2023) to apply only to cases involving e-commerce operators subject to TCS under GST.</li><li>Section 128A offers a conditional waiver of interest and penalty for demand notices under Section 73 for all FYs from 2017-18 to 2019-20, excluding erroneous refunds or cases where interest/penalty has already been paid.</li><li>Transitional credit for CENVAT credit for input services by an Input Service Distributor (ISD) is allowed retrospectively under Section 140.</li><li>The anti-profiteering authority is replaced by the appellate authority, from a notified date, for accepting applications related to anti-profiteering cases under Section 171.</li><li>New items in Paras 8 and 9 are inserted under Schedule III, declaring the following as neither supply of goods nor services:</li><ul><li>The distribution of co-insurance premiums by a lead insurer to a co-insurer for insurance services jointly provided to the insured, provided the lead insurer remits tax on the total premium.</li><li>Services by an insurer to a reinsurer, where ceding commission or reinsurance commission is deducted from the reinsurance premium paid by the insurer.</li></ul><li>Section 146 specifies that no refund will be made for tax paid or ITC reversed that would not have been paid or reversed had clause 114 been in effect at all relevant times.</li></ul>

Important Note: All direct and indirect tax amendments will take effect upon notification by the Central Board of Direct Taxes (CBDT) or Central Board of Indirect Taxes and Customs (CBIC), respectively.

Highlights of Various Sectors

Priority 1: Agriculture

<ul><li>A provision of Rs. 1.52 lakh crore has been allocated for agriculture and related sectors.</li><li>The government will introduce 109 new high-yielding, climate-resilient varieties of 32 field and horticulture crops for farmers.</li><li>Over the next two years, one crore farmers will adopt natural farming practices, supported by certification and branding initiatives. To facilitate this, 10,000 need-based bio-input resource centers will be established.</li><li>Farmer-Producer Organizations, startups, and cooperatives will receive promotion for enhancing vegetable supply chains, including storage, collection, and marketing.</li><li>A strategy is under development to achieve self-sufficiency ("Atmanirbharta") in oilseeds such as groundnut, mustard, soybean, sesame, and sunflower.</li><li>The government will facilitate the implementation of the Digital Public Infrastructure (DPI) in agriculture in collaboration with states, aiming to cover farmers and their land records in three years. Details of 6 crore farmers and their lands will be documented in farmer and land registries. Jan Samarth-based Kisan Credit Cards will be issued and activated in five states.</li><li>Financial support will be provided for establishing a network of Nucleus Breeding Centres for Shrimp Broodstocks.</li></ul>

Priority 2: Employment and Education

<ul><li>Three new 'Employment Linked Incentive' schemes will be launched, based on EPFO enrollment:</li><ul><li>**Scheme A: First Timers** - Provides a direct benefit transfer of one month s salary, in three installments, up to Rs. 15,000 to first-time employees registered in the formal sector with EPFO.</li><li>**Scheme B: Job Creation in Manufacturing** - Offers incentives directly to employees and employers, based on their EPFO contributions during the first four years of employment.</li><li>**Scheme C: Support to Employers** - The government will reimburse employers up to Rs. 3,000 per month for two years for each additional employee, based on their EPFO contributions. This includes all additional employment with a salary up to Rs. 1 lakh per month.</li></ul><li>A new centrally sponsored skilling scheme, in partnership with industry and state governments, will be introduced. This initiative aims to skill 20 lakh youth over a five-year period and upgrade 1,000 Industrial Training Institutes (ITIs) using a hub-and-spoke model with a focus on outcomes.</li><li>The Model Skill Loan Scheme will be revised to enable loans of up to Rs. 7.5 lakh for students, backed by a government-promoted Fund guarantee.</li><li>Financial assistance of up to Rs. 10 lakh will be provided for students pursuing higher education in domestic institutions. E-vouchers will be directly issued to one lakh students annually, covering an interest subvention of 3% of the loan amount.</li></ul>

Priority 3: Inclusive Human Resource Development and Social Justice

<ul><li>The government has allocated Rs. 2.66 lakh crore for rural development and rural infrastructure.</li><li>A plan called Purvodaya will be formulated for the comprehensive development of India's eastern region, including Jharkhand, Bihar, Odisha, West Bengal, and Andhra Pradesh.</li><li>The government will support the development of an industrial node at Gaya, as part of the Amritsar Kolkata Industrial Corridor, to spur industrial growth in the eastern region.</li><li>Road connectivity projects, such as the Patna-Purnea Expressway, Buxar-Bhagalpur Expressway, Bodhgaya, Rajgir, Vaishali, and Darbhanga spurs, and an additional 2-lane bridge over the River Ganga at Buxar, will be supported at a total cost of Rs. 26,000 crore.</li><li>Power projects, including a new 2400 MW power plant at Pirpainti costing Rs. 21,400 crore, will be undertaken.</li><li>The government remains committed to the Andhra Pradesh Reorganization Act and will provide special financial support through multilateral development agencies, arranging Rs. 15,000 crore in the current financial year and additional amounts in future years.</li><li>Funds will be provided for the swift completion of the Polavaram Irrigation Project and for essential infrastructure (power, water, roads, railways) in the Kopparthy node on the Vishakhapatnam-Chennai Industrial Corridor and the Orvakal node on the Hyderabad-Bengaluru Industrial Corridor.</li><li>Three crore additional houses have been announced under the PM Awas Yojana for rural and urban areas.</li><li>More than Rs. 3 lakh crore has been allocated to promote women-led development, benefiting women and girls.</li><li>A new scheme, Pradhan Mantri Janjatiya Unnat Gram Abhiyan, will be launched to improve the socio-economic conditions of tribal communities, covering 63,000 villages and benefiting 5 crore tribal people.</li><li>To expand banking services, over 100 new branches of India Post Payment Bank will be established in the North East region.</li></ul>

Priority 4: Manufacturing and Services

Promotion of MSMEs

<ul><li>A credit guarantee scheme will be introduced to provide term loans to MSMEs for purchasing machinery and equipment without requiring collateral or third-party guarantees. This will be a distinct, self-financing guarantee fund offering cover up to Rs. 100 crore per applicant.</li><li>Public sector banks will develop internal capabilities to assess MSMEs for credit, moving away from reliance on external evaluations. They will also create or adopt new credit assessment models based on MSMEs' digital footprints in the economy.</li><li>A new mechanism was announced to ensure continued bank credit for MSMEs during periods of stress.</li><li>The limit for Mudra loans under the 'Tarun' category has been increased from Rs. 10 lakh to Rs. 20 lakh for entrepreneurs who have successfully repaid previous loans in the same category.</li><li>The turnover threshold for buyers to be mandatorily onboarded on the TReDS platform has been reduced from Rs. 500 crore to Rs. 250 crore.</li><li>SIDBI will open new branches to extend its reach to major MSME clusters, providing direct credit within three years.</li><li>Financial support will be offered to establish 50 multi-product food irradiation units within the MSME sector. The government will also facilitate the setup of 100 food quality and safety testing labs with NABL accreditation.</li><li>E-commerce Export Hubs will be created under a public-private-partnership (PPP) model, enabling MSMEs and traditional artisans to access international markets.</li></ul>

Promotion of Manufacturing and Services

<ul><li>A comprehensive scheme will be launched to provide internship opportunities to one crore youth over five years in the top 500 companies. This includes an internship allowance of Rs. 5,000 per month and a one-time assistance of Rs. 6,000.</li><li>The government, in collaboration with states and the private sector, will facilitate the development of "plug and play" industrial parks that are ready for investment.</li><li>Twelve industrial parks will be sanctioned under the National Industrial Corridor Development Programme.</li><li>A Critical Mineral Mission will be established to promote recycling of critical minerals, boost domestic production, and facilitate overseas acquisition of critical mineral assets.</li><li>The first tranche auction of offshore blocks for mining will be launched, building on existing exploration efforts.</li><li>An Integrated Technology Platform will be set up to improve outcomes under the Insolvency and Bankruptcy Code (IBC).</li><li>The Centre for Processing Accelerated Corporate Exit (C-PACE) services will be expanded for the voluntary closure of Limited Liability Partnerships (LLPs).</li><li>Additional National Company Law Tribunals will be established to accelerate insolvency resolution, with some tribunals specifically designated for cases under the Companies Act.</li><li>More Debt Recovery Tribunals will be created to speed up the recovery process.</li></ul>

Priority 5: Urban Development

<ul><li>A Transit Oriented Development plan will be formulated for 14 large cities with populations exceeding 30 lakh.</li><li>Under the PM Awas Yojana Urban 2.0, the housing needs of one crore urban middle-class and poor families will be addressed through an investment of Rs. 10 lakh crore, including central assistance of Rs. 2.2 lakh crore over the next five years.</li><li>State Governments and Multilateral Development Banks will promote sewage treatment, water supply, and solid waste management projects and services for 100 large cities via bankable projects.</li><li>A scheme will be launched to support the development of 100 weekly 'haats' (local markets) or street food hubs in selected cities over the next five years.</li><li>States will be encouraged to moderate stamp duty rates, particularly those that are high for all, and consider further reductions for properties purchased by women.</li></ul>

Priority 6: Energy Security

<ul><li>The PM Surya Ghar Muft Bijli Yojana has been introduced, aiming to provide 300 units of free electricity per month to one crore households through rooftop solarization.</li><li>A policy promoting pumped storage projects will be initiated to enhance electricity storage capabilities and facilitate the smooth integration of increasing renewable energy sources.</li><li>The government will collaborate with the private sector to establish Bharat Small Reactors, conduct research and development for Bharat Small Modular Reactor, and explore new technologies for nuclear energy.</li><li>A joint venture between NTPC and BHEL will set up a full-scale 800 MW commercial plant utilizing Advanced Ultra Super Critical (AUSC) technology.</li><li>The government will support investment-grade energy audits for traditional micro and small industries in 60 clusters, offering financial aid to transition them to cleaner energy forms and implement energy efficiency measures.</li></ul>

Priority 7: Infrastructure

<ul><li>An allocation of Rs. 11,11,111 crore has been made for capital expenditure.</li><li>Rs. 1.5 lakh crore has been provided as long-term interest-free loans to support states in their resource allocation.</li><li>Phase IV of the Pradhan Mantri Gram Sadak Yojana (PMGSY) will be launched to ensure all-weather connectivity for 25,000 rural habitations.</li><li>Financial assistance will be provided through the Accelerated Irrigation Benefit Programme and other sources for projects estimated at Rs. 11,500 crore, including the Kosi-Mechi intra-state link and 20 other ongoing and new initiatives, such as river pollution abatement, barrages, and irrigation projects.</li><li>The comprehensive development of the Vishnupad Temple Corridor and Mahabodhi Temple Corridor in Rajgir, Nalanda, and Odisha will be undertaken.</li></ul>

Priority 8: Innovation, Research and Development

<ul><li>A mechanism will be established to boost private sector-driven research and innovation at a commercial scale, supported by a finance pool of Rs. 1 lakh crore.</li><li>The Anusandhan National Research Fund will be made operational for basic research and prototype development.</li><li>A venture capital fund of Rs. 1,000 crore will be set up to expand the space economy fivefold over the next decade.</li></ul>

Priority 9: Next Generation Reforms

<ul><li>The government will work with states to initiate reforms related to land, encompassing both rural and urban land actions.</li><li>The e-shram portal will be comprehensively integrated with other portals to create a unified solution offering a wide range of services to laborers.</li><li>The Shram Suvidha and Samadhan portals will be revamped to improve the ease of compliance for trade and industry.</li><li>A taxonomy for climate finance will be developed to enhance capital availability for climate adaptation and mitigation efforts.</li><li>Rules and regulations for Foreign Direct Investment (FDI) and Overseas Investments will be streamlined to prioritize, facilitate, and promote opportunities for using the Indian Rupee as an overseas investment currency.</li><li>NPS Vatsalya, a new plan for contributions by parents and guardians for minors, will be launched.</li><li>The government is progressing with Jan Vishwas Bill 2.0 to further enhance 'Ease of Doing Business'.</li></ul>

Budget 2024 Document Downloads

Topic	Download
Budget at a Glance (Full)	PDF
Budget Speech	PDF
Deficit Statistics	PDF
Transfer of Resources to States and Union Territories with Legislature	PDF
Budget Profile	PDF
Receipts	PDF
Expenditure	PDF
Outlay on Major Schemes	PDF
Statement I – Consolidated Fund of India
* Revenue Account – Receipts	PDF
* Revenue Account – Disbursements	PDF
* Capital Account – Receipts	PDF
* Capital Account – Disbursements	PDF
Statement IA – Disbursements ‘Charged’ on the Consolidated Fund of India	PDF
Statement II – Contingency Fund of India – Net	PDF
Statement III – Public Account of India
* Receipts	PDF
* Disbursements	PDF
* Receipts & Expenditure of Union Territories without Legislature	PDF
Finance Bill	PDF
Budget Highlights (Key Features)	PDF
Memorandum to the Finance Bill 2023	PDF
Expenditure Budget	PDF
Receipt Budget	PDF