Union Budget 2024-25: Key highlights, tax reforms, and ₹11.11 lakh crore capex allocation

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.