Finance Minister Nirmala Sitharaman today presented the Budget 2024. Let’s explore the key highlights of the budget and examine its impact on personal finances, especially for salaried workers.
Key highlights of the 2024-25 Budget
- All formal sector freshers will be given one month’s wages in three instalments up to Rs 15,000, to employees registered with EPFO.
- First-time employees and employers in the manufacturing sector will be given incentives towards EPFO contributions of a specified magnitude for the first four years of their employment.
- The Indian government has proposed to reimburse employers for EPFO contributions of up to Rs 3,000 per month for two years for each additional employee.
- Students can get a 3% discount on education loans for higher education.
- Lower tariffs would make items like gold, silver and certain cancer drugs more affordable.
- Budget 2024 proposes to increase Short Term Capital Gains (STCG) from 15% to 20%, Long Term Capital Gains (LTCG) from 10% to 12.5% and increase LTCG exemption from Rs 1 lakh to Rs 12.5 lakh per annum, which will have a significant impact on individuals saving for short as well as long term goals.
- The standard deduction under the new tax regime has been increased from Rs 50,000 to Rs 75,000 per annum.
- Family pension allowance has been increased from Rs 15,000 to Rs 25,000.
- The new tax system will result in changes to income tax rates, please see the section below for further details.
- The limit for Mudra Loans has been increased from Rs 1 million to Rs 2 million in the ‘Tarun’ category.
- The government has proposed to provide a monthly allowance of Rs 5,000 and a lump sum of Rs 6,000 through the CSR fund and provide internship opportunities to 10 million youth in 500 top companies over five years.
- The Government of India has proposed to introduce NPS Vatsalya, which will allow minors to open an NPS scheme and convert it into a regular NPS account once the child reaches the age of 18.
Detailed highlights of the 2024 Budget
#1 – Viksit Bharat will focus on four areas The budget aims to focus on four areas – Yuva (youth), Mahilayan (women), Annadata (farmers) and Garib (the poor).
#2 – Budget Theme Focused on Four Areas The theme of the budget is jobs, skill acquisition, small and medium enterprises and the middle class.
#3 – The Prime Minister’s three-pronged policy package on jobs and skills
- Scheme A – First-time users
- The Indian government will provide all new employees in the formal sector with one month’s wages in three installments of up to Rs 15,000.
- This benefit will be applicable to all new hires earning less than Rs 10 lakh per month.
- It is expected that 2.1 million young people will benefit from the scheme.
- Scheme B – Job creation in manufacturing
- Linked to first-time employers in the sector.
- Incentives will be given to both employees and employers towards EPFO contributions of a specified magnitude for the first four years after joining.
- It is expected that 300,000 young people will benefit from this scheme.
- Scheme C – Assistance for employers
- The government will reimburse employers’ EPFO contributions up to Rs 3,000 per month for a period of two years for all new hires.
- The plan is expected to create 500,000 jobs.
#4 – Prime Minister’s Package – Fourth Scheme – Reduction in interest rates on higher education loans
- The Government of India will provide financial assistance in the form of loans up to Rs 10 lakh crore for higher education in higher educational institutions in the country.
- E-vouchers will be provided directly to 100,000 students each year.
- Subsidy of 3% annual interest.
#5 – 2024 Income Tax Rates
The government is proposing to simplify the new tax system.
- The standard deduction for salaried employees has been increased from Rs 50,000 to Rs 75,000.
- Family pension allowance for pensioners has been increased from Rs 15,000 to Rs 25,000.
- Proposed tax rates for the new tax regime:
- Up to 30 lakhs – None
- 300,000 to 700,000 rupees – 5%
- 700,000 to 1 million rupees – 10%
- 1 million to 1.2 million rupees – 15%
- 1.2 million to 1.5 million rupees – 20%
- 1.5 million rupees and above – 30%
#6 – Proposal for streamlining tax revenue
- Short-term gains on financial assets are taxed at a 20% rate.
- Long-term gains on all financial and non-financial assets are taxed at a rate of 12.5%.
- The capital gains tax exemption limit on financial assets will be increased to Rs 12.5 lakh per annum.
- Eliminating the angel tax for all investor classes.
- Simplifying the tax regime for operating domestic cruises.
- Provision of safe harbor rates for foreign mining companies (sales of rough diamonds).
- The corporate tax rate for foreign companies was reduced from 40% to 35%.
#7 – National Pension System The Indian government is set to introduce NPS Vatsalya, a scheme whereby parents or guardians of minors contribute to the scheme, which will convert into a regular NPS account once the minor turns 18.
#8 – Strengthening Mudra Lawn The limit for the ‘Tarun’ category has been increased to Rs 2 million from the current Rs 1 million.
#9 – PM’s 5th Package – Internship Opportunity
- The government has proposed a plan to provide internship opportunities at the top 500 companies to 10 million young people over a five-year period.
- In addition to a monthly allowance of Rs 5,000, a one-off assistance of Rs 6,000 will be given through the CSR fund.
#10 – Lower tariffs – some items will be cheaper
- In addition, three cancer treatment drugs will be fully exempt from tariffs.
- Reduce basic customs duty (BCD) on mobile phones, mobile PCBAs and chargers to 15%.
- It will reduce tariffs on gold and silver to 6% and on platinum to 6.4%.
- Reduce shrimp and fish feed BCD by 5%.
- Expanding tax exemption on capital goods for manufacturing of solar cells and panels.
- Complete exemption from customs duties on 25 critical minerals.
Suresh KP is the Founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and NISM Certified Research Analyst. He has been involved in analyzing financial markets for the last 20 years. He can be reached at suresh@myinvestmentideas.com.
