Down The Memory Lane: Tax Relief To Record Capex Outlay and Job Creation, Key Budget 2024 Highlights

Nirmala Sitharaman will table her eighth budget speech come Saturday, matching the tallies of Pranab Mukherjee and Yashwant Sinha. The finance minister will have a laundry list of expectations to check off on Feb. 1: tax relief, a capex boost, spurring demand and consumption, making headway into new-age technologies, and then some. In the run-up to the Union Budget for the coming financial year, let's take a look at the headliners from the last one.

The Union Budget 2024-25 had nine priorities for a 'Viksit Bharat': productivity and resilience in agriculture; employment and skilling; inclusive human resource development and social justice; manufacturing and services; urban development; energy security; infrastructure; innovation, research, and development; and next-generation reforms.

The document had four themes—employment, skilling, MSMEs, and the middle class.

However, the much-awaited marquee announcement from the speech was income tax reforms. The increase in the standard deduction limit and the change in income tax slabs were probably the most talked about parts of the last Union Budget.

The standard deduction limit was increased to Rs 75,000 from Rs 50,000 earlier. The deduction from the family pension was increased to Rs 25,000 from Rs 15,000.

Income tax slabs were also revised, with no tax liability for incomes up to Rs 3 lakh. Five tax slabs—from Rs 3 lakh to Rs 7 lakh, from Rs 7 lakh to Rs 10 lakh, from Rs 10 lakh to Rs 12 lakh, from Rs 12 lakh to Rs 15 lakh, and above Rs 15 lakh—now attract income tax at 5%, 10%, 15%, 20%, and 30%, respectively.

These changes were applicable only under new tax regime.

The amount employers were allowed to deduct against their contribution to New Pension Scheme was increased to 14% from 10%. Also, non-government employees were allowed deduction of up to 14% of their salary in place of 10%.

To the startup's relief, the angel tax on all classes of investors was abolished. The corporate tax rate for foreign companies was reduced to 35% from 40%.

From the capital markets' perspective, the Securities Transaction Tax on futures and options was raised to 0.02% and 0.1%, respectively. Income received on the buyback of shares was mandated to be taxed in the hands of recipients. These measures were meant to deepen tax base.

The last budget proposed a capex outlay of Rs 11,11,111 crore, or 3.4% of the Gross Domestic Product. The government also extended Rs 1.5 lakh crore to states as long-term, interest-free loans to support resource allocation.

To spur private investments in infrastructure, the budget brought a viability gap funding and enabling policies and regulations. A market-based financing framework was also introduced.

A PM's Package of three schemes was rolled out with employment-linked incentives. Scheme A for First Timers mandated one month's wage to new

entrants in all formal sectors in three installments up to Rs 15,000. For job creation in manufacturing, the budget mandated incentives to both employee and employer for EPFO contributions in the specified scales for the first four years. As support for employers, under Scheme C, the government promised to reimburse EPFO contributions of employers up to Rs 3,000 a month for two years for all new hires.

The government aimed to cover 2.9 crore youth with these three schemes.

The Budget also had announcements to facilitate participation of women in the workforce, including specific skilling programmes for them, promoting market access for women self-help groups, and establishing women hostels and crèches.

In addition to the three schemes listed in the last section, a fourth scheme was announced to train 20 lakh youngsters and upgrade 1,000 industrial training institutes, aligned to industry needs and scope for new courses as and when needed.

The Model Skill Loan Scheme was revised to facilitate loans up to Rs 7.5 lakh with a guarantee from a government-promoted fund, expected to help 25,000 students every year.

For students not covered in any of the aforementioned schemes and policies, the budget had higher education loans up to Rs 10 lakh for domestic institutions.