The Union Budget of July 2024, presented by the Modi government, is the first budget of the government’s third term. This budget is significant because it sets the financial tone for the next five years. Union Budget 2024 focuses on several areas that aim to increase economic growth, create employment, and enhance infrastructure.
Although it is a Union Budget, the spotlight has been given to specific states and sectors. It shows the government’s strategy for balanced regional development and addressing economic challenges.
Besides its primary focus areas, the budget also targets economic differences across regions in underdeveloped states. The introduction of digitalization and infrastructure investments symbolizes the government’s commitment to long-term sustainable growth.
By acting upon both immediate needs and laying the groundwork for future development, the budget balances revenue control and social welfare. This ensures that economic benefits reach each section of society.
Table of Contents
1. Union Budget 2024 focuses on Bihar and Andhra Pradesh
The 2024 budget focuses on the states of Bihar and Andhra Pradesh. Bihar is allocated ₹26,000 crores for infrastructure projects and other developments. Similarly, Andhra Pradesh will benefit from huge investments to rebuild infrastructure, including bridges that have fallen into disrepair.
These state-specific allocations are part of the government’s broader strategy to ensure that all regions benefit from economic growth. The budget’s focus on these states highlights the government’s approach to inclusive growth. It focuses on uplifting regions with slower development than the national average.
By directing resources to infrastructure projects, the government wants to increase employment and improve the overall economic environment. Developing vital infrastructure such as roads, bridges, and industrial zones is going to to attract more investment. It will lead to improving living standards in these areas.
2. Union Budget 2024 and Employment Generation
A central theme of the Union Budget 2024 is employment generation. The government has introduced various new schemes to create jobs, particularly for young people entering the workforce. The government has launched a scheme offering financial support to freshers under the Employees’ Provident Fund Organization.
These individuals will receive up to ₹15,000 as a subsidy, distributed over three years. This initiative is intended to ease the financial burden on young professionals. The Union Budget 2024 includes internships to encourage employers to hire more freshers, thereby reducing youth unemployment.
The budget intends to create a more favorable environment for job creation across various sectors. The government is trying to reduce the cost of hiring. It also encourages businesses to expand their workforce by offering subsidies to employers.
These measures, combined with other structural changes, are expected to impact the labor market positively. It might help tackle underemployment and ensure that young workers have access to meaningful employment opportunities.
3. Benefits for the Manufacturing Sector under Union Budget 2024
The manufacturing sector, a key pillar of India’s economy, receives significant support in the 2024 budget. The government has announced that it will bear up to ₹6,000 of the monthly salary for freshers. Applicable for the students who join the manufacturing sector for the first two years of their employment.
This move incentivizes companies to hire more workers. Particularly in the textile, electronics and automotive manufacturing sectors, critical to India’s economic growth. By reducing the cost of hiring, the government hopes to boost production. Which in turn will make Indian manufacturing more competitive on the global stage.
Moreover, the budget’s focus on manufacturing boosts the “Make in India” initiative. The government is providing a solution for the workforce’s immediate needs and ensuring the longevity of manufacturing industries.
The focus on manufacturing can create a ripple effect, leading to the growth of various industries, increased exports, and a stronger industrial base.
4. Support for Non-Manufacturing Industries
In addition to its focus on the manufacturing sector, the budget introduces incentives for employers in non-manufacturing industries. Companies that increase their workforce will receive a subsidy of up to ₹3,000 per month for each additional employee hired.
This initiative will impact various sectors, including services, retail, and technology. The government’s goal is to reduce unemployment and support economic growth in all sectors of the economy.
These incentives can be a game changer for the non-manufacturing sector. Which is a major driver of India’s GDP growth in recent years. By lowering the cost of employment, the government is making it easier for companies to improve their operations. So that they can invest in new technologies, and improve service delivery. It is expected to lead to increased productivity and innovation across the economy.
5. Internship Opportunities for Youth: USP of Union Budget 2024
The 2024 budget also places a strong emphasis on enhancing employability through internships. The government aims to provide one crore internships to young individuals in India’s top 500 companies.
It is designed to give young people practical experience in the workforce, bridging the gap between education and employment. To make this possible, the government has allowed companies to cover the costs of these internships, including salaries and training expenses, through their Corporate Social Responsibility (CSR) funds.
Internships are a critical part of career development. They are allowing students and recent graduates to apply theoretical knowledge in real-world settings. The government’s push for internship opportunities might help students address the skills gap that many employers face, especially in high-demand sectors like technology and finance.
By making internships more accessible, the budget aims to ensure that more young people have the chance to gain valuable experience, build professional networks.
6. Transparency and Efficiency in Land Reforms
The government has brought reforms to improve transparency and efficiency in land transactions. One key measure is reducing stamp duty rates, which currently vary widely across different states. High stamp duty rates have been a barrier to formalizing land transactions, leading to widespread under-reporting of property values.
It also leads to the increase of black money in the real estate market. By encouraging states to reduce stamp duty, the government hopes to increase the number of registered land transactions, improve record-keeping, and reduce the incidence of land-related scams.
The emphasis on land reforms reflects the government’s recognition of the critical role that land ownership and transactions play in economic development. By making land transactions more transparent and efficient, the budget aims to unlock significant economic value.
Particularly in rural areas where land disputes and unclear ownership records are common. The reduction in stamp duty is also expected to make land more affordable, especially for first-time buyers and small-scale farmers.
Digital Land Records
In addition to reducing stamp duty, the government has made digital land records for rural and urban areas. It will likely create a reliable and accessible land ownership database, making buying, selling, and transferring property easier.
The digitization will also help reduce disputes over land ownership, as it will provide transparent and verifiable proof of ownership.
Digitization of land records is a step towards modernizing India’s land administration system. It will reduce the time and cost associated with land transactions. Furthermore, digitized records will allow better planning and development of infrastructure projects by providing accurate data on land availability and ownership. This will also support the government’s efforts to fight corruption and increase transparency in the real estate sector.
7. What is the NPS Vatsalya Scheme in the Union Budget 2024?
The 2024 budget introduces the NPS Vatsalya scheme. It is a new savings option that offers an alternative to traditional schemes like the Public Provident Fund (PPF) and Sukanya Samriddhi Yojana. Under this scheme, parents can invest in their minor children’s futures by distributing their savings across various asset classes, including equity, debt, and other financial options.
Once the child turns 18, the NPS Vatsalya account will automatically convert into a regular NPS account, providing the child with long-term financial security.
The introduction of the NPS Vatsalya scheme shows that the government’s goal is to promote financial literacy and long-term savings among Indian households. This scheme can be customized to individual needs.
The tax benefits associated with the NPS make it a great option for parents looking to secure their children’s financial future. The scheme is likely to play a key role in increasing financial security and reducing dependence on traditional savings options.
8. Reduced Customs Duty on Precious Metals
One of the unexpected announcements in the 2024 budget is the reduction in customs duty on gold and silver imports from 10% to 6%. This move is important because India imports a large portion of its gold and silver. The reduction in customs duty is expected to lower the prices of these precious metals in the domestic market.
By making gold and silver more affordable, the government hopes to change demand, particularly in the jewelry and investment sectors. However, there are concerns that this reduction in customs duty could be followed by a future increase in the Goods and Services Tax (GST) on gold.
With gold being a popular form of investment in Indian households, particularly in rural areas, this move is expected to have a positive impact on the economy. By making gold more accessible, the government aims to enable more people to participate in the formal financial system.
9. PM Surya Ghar Free Electricity Scheme
The PM Surya Ghar Free Electricity Scheme is an initiative announced in the 2024 budget to promote household solar energy use. The government has set an ambitious target of installing solar panels on one crore homes over the next five years.
The government plans to reduce household electricity bills and contribute to India’s renewable energy goals. Currently, 14 lakh applications have already been received for the scheme. By promoting solar energy, the government aims to reduce India’s reliance on traditional energy sources and move towards a more sustainable future.
This supports the government’s environmental goals and has a major economic role. By reducing electricity costs, households will have more income to spend, which can be used for other essential needs. In addition to that, the adoption of solar energy will lead to a more stable and reliable power supply. The scheme also will boost job creation in the renewable energy sector.
10. Changes in Taxation of Long-Term Capital Gains
The budget has made several changes to the taxation of long-term capital gains (LTCG), which will significantly impact investors. For LTCG on equities and mutual funds, the exemption limit has been increased from ₹1 lakh to ₹1.25 lakh.
However, the tax rate has also been raised from 10% to 12.5%, meaning that while investors benefit from a higher exemption, they will also face a higher tax rate on gains above the exemption limit. Additionally, the budget lowers the LTCG tax rate on real estate from 20% to 12.5%, but it removes the indexation benefit, which could result in higher taxes for property sellers.
These changes show the government’s intent to prevent speculative trading while encouraging long-term investments. The increase in LTCG tax rates is seen as a move to simplify the tax structure and make it more transparent. Especially on real estate, where the rate was reduced to 12.5% but without the benefit of indexation.
11. Impact of Increased Security Transaction Tax (STT)
The government has increased the Security Transaction Tax (STT) on futures and options trading by 50%, a move that is expected to impact traders and investors in the stock market.
This increase is part of the government’s broader strategy to generate more revenue from financial markets, but it could also discourage trading activity, particularly among retail investors and small traders.
The increase in STT is likely to raise the cost of trading, which could reduce market liquidity and increase volatility. For active traders, the higher STT could reduce profits and make it more difficult to get desired returns.
This change is likely to influence investor behavior in the real estate market. Investors may need to reconsider their long-term investment strategies and think about the tax implications of holding real estate for long periods. The removal of the indexation benefit may also impact the pricing of real estate, as sellers may look to adjust their prices to avoid the higher tax burden.
12. Foreign Investment in Startups
The 2024 budget brings two major incentives for foreign investors to boost the startup ecosystem. First, the controversial Angel Tax, a major startup concern, has been abolished. This tax had been imposed on the capital raised by startups from investors, and its removal is expected to make it easier for startups to get more investment.
Second, the tax rate for foreign entities investing in Indian startups has been reduced from 40% to 35%. These measures are expected to attract more foreign investment into India’s startup ecosystem, which is essential for creating jobs and driving economic growth.
The removal of the Angel Tax addresses a longstanding issue that has prevented the growth of the startup ecosystem in India. The government wants to encourage both domestic and international investors to back Indian startups.
13. Tax Relief for Salaried Employees
The 2024 budget relieves salaried employees by increasing the standard deduction under the new tax regime from ₹50,000 to ₹75,000. This change is expected to benefit many taxpayers, particularly those in the middle-income bracket.
The standard deduction is a fixed amount deducted from the gross salary before calculating taxable income, and the increase will result in lower taxes for many employees. Additionally, the budget sets the tax-free contribution limit for the National Pension System (NPS) with that of government employees, raising it from 10% to 14% for private-sector employees.
Read about Tax planning and minimizing your tax burden here.
The increase in the NPS contribution limit is an important step toward promoting retirement savings among private-sector employees. This change also highlights the government’s commitment to creating a more equitable pension system, where private-sector employees have access to the same benefits as public-sector employees.
Revisions to Income Tax Slabs
The 2024 budget also changed the income tax slabs under the new tax regime. The revised tax rates are as follows: no tax for income up to ₹3 lakhs, 5% tax for income between ₹3 lakhs and ₹7 lakhs, 10% tax for income between ₹7 lakhs and ₹10 lakhs, 15% tax for income between ₹10 lakhs and ₹12 lakhs, 20% tax for income between ₹12 lakhs and ₹15 lakhs, and 30% tax for income above ₹15 lakhs. These changes can provide some relief to middle-class taxpayers.
The revisions to the income tax slabs are part of the government’s attempt to simplify the tax system. Taxpayers will need to carefully evaluate the new tax conditions against the old ones to determine which offers the most benefits for their specific financial situation.
Here is a table outlining the income tax slabs for individuals under the new tax regime in India for the financial year 2024-25:
| Income Range | Tax Rate |
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 to ₹6,00,000 | 5% |
| ₹6,00,001 to ₹9,00,000 | 10% |
| ₹9,00,001 to ₹12,00,000 | 15% |
| ₹12,00,001 to ₹15,00,000 | 20% |
| ₹15,00,001 to ₹30,00,000 | 25% |
| Above ₹30,00,000 | 30% |
- Rebate: A rebate of up to ₹12,500 is available under Section 87A for taxpayers with an income of up to ₹5,00,000.
- Surcharge: A surcharge of 10% applies for incomes exceeding ₹50,00,000 and up to ₹1,00,00,000. For incomes exceeding ₹1,00,00,000, the surcharge is 25% or 37% for very high incomes.
- Cess: A health and education cess of 4% is levied on the total tax amount.
Read more about the Impact of 2024 Amendments on Taxpayers.
Controlling Inflation and Managing Monetary Deficit
The Finance Minister has reported a reduction in the fiscal deficit from the targeted 5.1% to 4.9%, indicating better-than-expected budgetary management. A lower monetary deficit suggests that the government has controlled its spending while still achieving its revenue targets.
However, inflation remains a concern, particularly in the healthcare sector, where costs have risen by approximately 14% annually. The budget sheds light on the importance of having adequate health insurance and other financial protections to safeguard against rising healthcare costs.
By managing the deficit and controlling inflation, the government aims to maintain economic stability and protect the purchasing power of consumers.
Maintaining budgetary discipline is crucial for managing public finances and avoiding excessive debt. The government is signaling its commitment to responsible financial management, which is essential for maintaining investor confidence and ensuring the country’s economic stability. The focus on controlling inflation, particularly in critical sectors like healthcare, is also important for protecting the purchasing power of consumers.
Conclusion
The Union Budget 2024 is a comprehensive financial plan that addresses the Union Budget 2024 presented by the Modi government. It outlines a comprehensive economic strategy focusing on employment generation, state-specific development, infrastructure improvement, and reforms in taxation.
Particular emphasis is placed on enhancing job opportunities for the youth, mainly through new schemes under the EPFO and incentivized internships. The budget also introduces significant changes in land reforms, tax structures, and startup incentives, aiming to stimulate economic growth while maintaining fiscal discipline.
This budget reflects the government’s commitment to inclusive development and sustainable economic progress.
The Budget’s success will depend on its effective implementation. The government’s ability to execute these plans will be crucial in achieving the desired economic growth and development. With a focus on transparency, efficiency, and inclusivity, the Union Budget 2024 has the potential to impact India’s economic growth and improve the quality of life for its citizens.
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FAQs
The Union Budget 2024, presented by the Modi government, focuses on employment generation, infrastructure development, and regional growth. It includes significant allocations for states like Bihar and Andhra Pradesh, with ₹26,000 crores for Bihar alone. The budget also introduces various tax reforms and incentives for industries, aiming to bolster economic growth and improve the quality of life for citizens across India.
In Budget 2024, the government has reduced the customs duty on precious metals like gold and silver from 10% to 6%. This reduction is expected to lower the prices of these metals in India, making them more affordable for consumers. Additionally, there are reductions in taxes for long-term capital gains in certain asset classes, although these come with some limitations.
Significant allocations have been made for employment generation and infrastructure development in the Union Budget 2024. The focus on these areas suggests that ministries related to labor, employment, and infrastructure likely received substantial funding in the Union Budget 2024.
The Union Budget 2024 introduces revised tax slabs under the new tax regime. The revised slabs are as follows: No tax for income up to ₹3 lakh, 5% tax for income between ₹3 lakh to ₹7 lakh, 10% for ₹7 lakh to ₹10 lakh, 15% for ₹10 lakh to ₹12 lakh, 20% for ₹12 lakh to ₹15 lakh, and 30% for income above ₹15 lakh.
Budget 2024 offers several benefits for taxpayers, including an increase in the standard deduction under the new tax regime to ₹1,50,000. Additionally, the long-term capital gains tax exemption limit has been increased to ₹1,25,000, though the tax rate itself has been slightly raised. These changes are aimed at providing some relief to taxpayers while also increasing overall tax compliance.
