The Union Budget for 2024-2025 reflects the government’s strong commitment to enhancing various high-impact sectors through strategic financial allocations. Key announcements include a Rs 1000 crore venture capital fund for the space sector and the proposal for 12 industrial parks, aimed at expanding India’s space economy. The abolition of the angel tax and significant funding for research and innovation are set to drive technological advancement and economic growth. The highest-ever defence allocation underscores a commitment to national security and self-reliance, collectively highlighting the government’s holistic approach to fostering innovation, supporting startups, and enhancing the country’s global standing across key industries.

Key sector highlights

Space sector boost:

Rs 1000 Crore VC Fund: Aimed at addressing funding challenges faced by space startups.
12 Industrial Parks: Proposed to potentially include the space sector, boosting the space and satellite manufacturing industry.

Research and Innovation:

Rs 1 Lakh Crore Corpus: For R&D and innovation in sunrise sectors.
Anusandhan National Research Fund: Financial support for private sector research.

Defence sector:

Highest-Ever Allocation: Rs 6,21,940.85 crore, representing 12.9% of the total budget.
Domestic Capital Procurement: Rs 1,05,518.43 crore to promote self-reliance in defence manufacturing.

Tax Reforms:

Abolition of Angel Tax: Encouraging more investment and innovation in startups.
Corporate Tax Reduction: From 40% to 35%, attracting foreign investment.

The Union Budget 2024-2025 aims to boost economic growth and promote technological advancements across various sectors. Key measures, such as significant funding for the space sector, defence allocation, tax reforms, and support for research and innovation, collectively foster a supportive environment for startups and established industries alike. These initiatives are poised to enhance India’s global standing and drive sustained economic growth.

The recent Union Budget has introduced substantial tax changes that could significantly impact your financial planning. While it’s natural to react to such news, impulsive decisions can lead to financial setbacks. This article aims to guide you through the maze of tax changes and help you make informed investment choices.

Regardless of tax fluctuations, the principles of budgeting, saving, and asset allocation remain paramount. Avoid drastic shifts in your investment strategy based solely on tax implications.

Equity: The cornerstone of wealth creation

• Increased taxes: While STCG and LTCG on equities and equity-oriented mutual funds have risen, equity remains the best asset class for long-term wealth creation.
• Long-term perspective: The gap between STCG and LTCG has widened, emphasizing the importance of long-term investing.
• Utilize exemptions: Make the most of the increased LTCG exemption to minimize tax liabilities.

Arbitrage funds: Reconsider your choice

The narrower tax differential between arbitrage funds and fixed deposits might make FDs a more attractive option for short-term investments. Evaluate your investment horizon before making a decision.

Futures and Options: Proceed with caution

The higher STT on F&O trading underscores the speculative nature of these instruments. Unless you have a deep understanding of the market, it’s advisable to avoid F&O trading.

Real Estate: Reassess your portfolio

• Tax implications: The changes in LTCG tax on real estate can impact your investment decisions.
• Diversification: Consider reallocating a portion of your real estate investments to more liquid assets like equities and debt.
• Rental yield: Evaluate the rental yield of your property before making any investment decisions.

Gold: Moderation is key

The reduced customs duty on gold might tempt you to increase your gold holdings. However, it’s crucial to maintain a balanced portfolio. Consider sovereign gold bonds for a tax-efficient way to invest in gold.

NPS: Enhance your retirement savings

The increased employer contribution limit for NPS in the private sector is a significant boost to retirement planning. Maximize your NPS contributions to benefit from tax savings and potential high returns.

Embrace the new tax regime

The government’s push towards the new tax regime signals a shift in tax policies. Develop the habit of disciplined investing regardless of the tax regime.

The Union Budget demands a thorough review of your financial plan. By understanding the tax changes and making informed decisions, you can protect your wealth and achieve your long-term financial goals. Remember, financial planning is a journey, not a destination.

Finance Minister Nirmala Sitharaman presented the Union Budget for the financial year 2024-25 in Parliament today. This marks her seventh budget and the first of Prime Minister Narendra Modi-led government’s third term. Here are the crucial takeaways:

“India’s economic growth continues to be the shining exception and will remain so in the years ahead,” said FM Sitharaman. Despite global economic uncertainties, India’s economic outlook remains robust. The FM outlined nine priorities, focusing on productivity in agriculture, employment and skilling, inclusive HRD, manufacturing and services, urban development, energy security, infrastructure, innovation, and next-generation reforms.

• Capex for FY25: The government has allocated ₹11.11 lakh crore for capital expenditure, amounting to 3.4% of India’s GDP. This is an increase from the revised estimate of ₹9.5 lakh crore last year.
• Income Tax: Changes in the new tax regime include a proposed increase in the standard deduction to ₹75,000 from ₹50,000. The revised tax rate structure under the new regime is:
  ₹0-3 lakh: 0%
  ₹3-7 lakh: 5%
  ₹7-10 lakh: 10%
  ₹10-12 lakh: 15%
  ₹12-15 lakh: 20%
  ₹15 lakh and above: 30%
• Capital Gains Tax: Long-term capital gains on all financial and non-financial assets will now attract a tax rate of 12.5%, up from 10%. Short-term capital gains tax has been increased to 20% from 15%. The exemption limit for capital gains is set at ₹1.25 lakh per year.
• Futures and Options (F&O): The Securities Transaction Tax (STT) on F&O trading has been doubled. The new STT rate is 0.02% from the previous 0.01%.
• Mudra Loans: Limit increased to ₹20 lakh from ₹10 lakh.
• Higher Education Loans: Support for loans up to ₹10 lakh with e-vouchers and a 3% interest subvention.
• Insolvency and Bankruptcy Code (IBC): Integrated tech platform to improve outcomes.

Budget Estimates for FY25
Fiscal Deficit: Lowered to 4.9% of GDP from 5.1%.
Market Borrowing: Decreased to ₹14.01 lakh crore from ₹15.43 lakh crore.
Receipts and Expenditure: Receipts at ₹32.07 lakh crore, expenditure at ₹48.21 lakh crore.

The Union Budget 2024-25 aims to drive economic growth, enhance employment opportunities, and simplify the tax regime, setting a comprehensive roadmap for India’s development.

In a move that promises to bring significant relief to salaried taxpayers and pensioners, Finance Minister Nirmala Sitharaman has announced a revamp of income tax slabs and an increase in the standard deduction under the new tax regime. This announcement, made during her Budget 2024 speech, aims to benefit over four crore salaried individuals and pensioners.

Under the new tax regime, the finance minister has restructured the income tax slabs to make them more favorable for taxpayers. This change is expected to ease the tax burden for many and encourage more taxpayers to opt for the new regime. The standard deduction under the new tax regime has been raised from Rs 50,000 to Rs 75,000, bringing cheer to both salaried individuals and pensioners. For family pensioners, the deduction will increase from Rs 15,000 to Rs 25,000 under the new regime. However, the standard deduction under the old tax regime will remain unchanged at Rs 50,000.

The finance minister highlighted that a salaried individual under the new tax regime stands to save Rs 17,500 in income tax. This adjustment will result in a revenue loss of Rs 29,000 crore in direct taxes for the government.

Continuing the government’s focus on simplifying tax structures and rules, Sitharaman reiterated that more than two-thirds of personal taxpayers opted for the new tax regime in the financial year 2023-24. She promised further measures to streamline the tax process for individual taxpayers, ensuring that the system is easier to understand and reducing the potential for disputes and litigations.

The finance ministry will undertake a comprehensive review of the Income Tax Act, aiming to simplify its provisions and make it more accessible. This review is expected to be completed within six months.

Sitharaman also announced the launch of the Vivaad to Vishwas Scheme 3.0 for 2024, aimed at resolving tax disputes efficiently. The National Pension System (NPS) deduction on employers’ contributions to employees’ basic salary has been increased from 10 percent to 14 percent. This change will apply to public sector companies and the private sector under the new regime.

The Budget 2024 announcements by Finance Minister Nirmala Sitharaman mark significant steps towards providing relief to taxpayers, simplifying the tax regime, and ensuring more transparency and ease in the tax process. The revised income tax slabs and increased standard deduction are poised to benefit millions of salaried individuals and pensioners, reflecting the government’s commitment to creating a more taxpayer-friendly environment.

The upcoming week promises to be a pivotal one for Indian equity markets as the highly anticipated Union Budget 2024 takes center stage. Investor sentiment has been buoyant, driven by expectations of pro-growth policies and strong corporate earnings. However, the market is expected to witness increased volatility as investors digest the budget announcements and quarterly results.

Key market drivers

• Union Budget 2024: The government’s fiscal policy will be closely watched for its impact on various sectors and the overall economy.
• Q1FY25 earnings: A slew of major companies will announce their quarterly results, influencing sectoral trends.
  Global Cues: Global economic indicators, especially US GDP and inflation data, will impact investor sentiment.
• FII and DII activity: The flow of foreign and domestic funds will continue to influence market direction.
  Technical Indicators: Market analysts suggest caution due to overbought conditions and potential for a correction.

Sectors in focus

• IT: The sector has been a standout performer, driven by strong Q1 earnings and expectations of continued growth.
• FMCG: This defensive sector has shown resilience and is expected to benefit from rural consumption revival.
• Banking and Financials: The sector’s performance will hinge on the budget’s measures related to credit growth and asset quality.
• Metals and Energy: These cyclical sectors may witness volatility due to global commodity price movements.

While the overall market sentiment remains positive, however it is advisable to adopt a cautious approach due to the potential for increased volatility. Diversification and a long-term investment horizon are crucial for managing risk.