2024 Union Budget of India: Economic Vision Unveiled

One of the most important dates on any country’s economic calendar is the release of the 2024 Union Budget of India. It establishes the framework for economic policies and provides a financial plan for the next fiscal year, including the government’s income and expenses. Understanding the main points, ramifications, and possible effects on India’s economic trajectory is crucial as we dive into the details of the 2024 Union Budget of India.

2024 Union Budget of India Overview

What is the Union Budget?

The Government of India develops a plan outlining how the nation’s expenses and revenues will be handled each year at the start of the fiscal year. To have the budget completed before the new fiscal year, which begins in April, the Finance Minister presents it in February. The Union Budget, as defined by Article 112 of the Indian Constitution, is a comprehensive summary of the nation’s projected future spending and income sources.

Features of the 2024 Union Budget of India

• The Lok Sabha elections are expected to take place early in the upcoming year, so Union Finance Minister Nirmala Sitharaman will not be making any major announcements on February 1st when she presents the Union Budget 2024.
• The entire budget might be found after the general elections and the new administration’s status quo.
• A specific budget typically contains estimates of spending, revenue, the financial deficit, overall performance for the fiscal year, and expectations for the following fiscal year of modern management.
• However, it cannot include any substantial policy statements.
• To support the nation’s hardworking middle class, Nirmala Sitaraman made five important announcements about private income tax during the Union Budget 2023–2024 presentation.

Where is the Money Going?

These are the figures that typically grab media attention. This is due to the perception that the total spending figures are a stimulus for the economy. A total of Rs 45.03 lakh crore is projected to be spent in 2023–2024. You should focus more on the distribution of the costs than just the headline. Specifically, how much will be spent on capital projects and how much on revenue?

For households, groceries and utilities are revenue expenditures. They are necessities, much like how electricity and rice or wheat are unavoidable. Revenue expenditures are projected to be around Rs 35 lakh crore in FY24. Remember that this is an election year, so be wary of grandiose, populist plans. From Rs. 9.1 lakh crore in FY16 to Rs. 21.3 lakh crore in FY23 (BE), social-sector spending grew.

What is Fiscal Deficit?

Every Union budget is, quite literally, a delicate balancing act, the magic of which is shown in the fiscal deficit figure. There isn’t a right or incorrect figure. The national need and the overall situation determine whether it is correct. The fiscal deficit, which is a crucial indicator in a government’s budget speech, is the difference between government revenue and expenses. It also shows how much money the government must borrow in total to pay for its expenditures. Sustaining a high level of fiscal deficit can raise concerns about a government’s ability to meet its obligations without heavily depending on borrowing.

For the fiscal year 2023–2024, the government has set a target of 5.9 percent of GDP for the fiscal deficit. A significant portion of India’s deficit has been covered by small savings accounts and loans from the domestic market. India hasn’t yet taken the step toward issuing specific bonds to raise money abroad, but it is an option. This is because, even though borrowing money internationally could be inexpensive, doing so increases the risk of exchange rates. Following the 1991 Balance of Payments crisis, India took a rather conservative approach to borrowing from overseas.

Then, the crucial inquiries will center on whether there will be sufficient interest in government borrowings and whether the government can raise the necessary funds. Whatever the response, it should be extremely reassuring if the government’s borrowing plan is clear and covers the required funding.

Union Budget Highlights 2023

Direct Tax Proposals:

• Increased presumptive taxation thresholds apply to specific professionals and microenterprises.
• For MSMEs, a deduction for expenses is only permitted upon payment.
• Until 31.3.2024, new cooperative manufacturers will pay a 15% tax rate.
• Improved grievance procedure and next-generation Common IT Return Form for taxpayer convenience.
• For salaried individuals, the standard deduction is Rs. 50,000; family pensions are subject to a deduction of up to Rs. 15,000.
• The maximum personal income tax rate was set at 39%, and the highest surcharge rate was lowered from 37% to 25%.
• The tax-free limit on leave encashment for salaried non-government workers has been raised to Rs. 25 lakh.
• There is no tax on income up to Rs. 7 lakh, which is the new personal income tax rebate limit.
• Sugar co-ops will be able to claim payments made to sugarcane farmers before 2016–17 with a relief of Rs. 10,000 crores.

Indirect Tax Proposals: 

• There are now only 13 basic customs duty rates instead of 21, except textile and agricultural industries.
• Modest adjustments to standard customs fees, cesses, and surcharges for goods like toys, bicycles, cars, and naphtha
• Exemptions from excise duties on compressed biogas paid with GST
• Zero-duty customs on camera lenses and inputs used in the production of mobile phone camera modules
• Customs duty on designated machinery and capital goods for producing lithium-ion batteries for electric vehicles is extended until March 31, 2024.
• exemptions from customs duties on automobiles and parts imported for testing and certification by designated testing organizations
• The basic exemptions from customs duties on ferrous scrap, nickel cathode, and raw materials for CRGO Steel were maintained.
• Reduced basic customs duty on parts of open-cell TV panels, heat coils for electric kitchen chimneys, acid-grade fluorspar, raw glycerin for epichlorohydrin, lab-grown diamond seeds, and essential components for domestic shrimp feed.

Budget Allocation: 

• Cost: Rs 45,03,097 crore is planned for 2023–2024, an increase of 7.5% over the revised estimate for 2022–2023.
• Revenues: Rs 27,16,281 crore is anticipated in 2023–2024, an increase of 11.7% over the revised estimate for 2022–2023.
• GDP: In 2023–2024, the nominal GDP growth rate is projected to be 10.5%.
• A revenue deficit of 2.9% of GDP is the goal for 2023–2024 (compared to 4.1% in 2022-23).
• Aiming for a 5.9% GDP deficit in 2023–2024 (down from 6.4% in 2022–2023).

Union Budget Highlights 2022

Direct Tax Proposals: 

• Corporate surcharge is cut from 12% to 7%.
• The new provision enables taxpayers to add the income that was omitted by additional tax payments and to amend their previous returns. Updated returns must be filed within two years of the relevant AY ending.
• The transfer of virtual digital assets, such as cryptocurrency, is subject to a 30% tax. Gifting is also taxable under the hands of the receiver.
• Employees of state governments are now eligible for a 14% tax deduction instead of the previous 10% limit.
• Income taxes and surcharges are not regarded as business expenses.
• Tax incentives are renewed for a full year for new businesses. Additionally, startups are now qualified for tax benefits under Section 80-IAC of the Income Tax Act through March 31, 2023.

Indirect Tax Proposals

• The Central Goods and Services Act’s Sections 16, 34, 37, 39, and 52 have some changes made to them. The deadline for making any kind of adjustments or modifications has been moved from September 30 to November 30 of the following year.
• Additional excise duty on unblended fuels is 2 rupees per liter.
• Reduced duties apply to packaging boxes and designated leather.
• Customs duty on polished and cut diamonds and gems is now only 5%.
• The customs duty on imitation jewelry was increased to deter imports.
• Customs duty on the import of capital goods shall be levied at the initial rate of 7.5%.

Budget Allocation:

• An estimated 6.4% of the fiscal deficit for the fiscal year 2023 has been made.
• The estimated revised fiscal deficit is 6.9% of GDP.
• A 50-year interest-free loan of Rs. 1 lakh crore has been extended to the states by the government to support the Prime Minister’s “Gati Shakti” related investments.

Union Budget Highlights 2021

Direct Tax Proposals:

• Senior Citizens over 75 who only receive pension income as their primary source of annual income are eligible for an exemption from income tax.
• For assessees with taxable incomes up to Rs. 50 lakhs or disputed income up to Rs. 10 lakhs under Section 245MA, a dispute resolution committee has been established.
• The deadline for extending tax incentives for startups is March 31, 2022.
• Elimination of other hardships and double taxation for non-resident Indians, or NRIs.
• Only after the dividend income is declared will advanced tax be imposed.
• Employers will not consider a PF contribution to be deducted if it is taken out of the employee’s PF account even though the employer hasn’t deposited the money.

Indirect Tax Proposals:

• Duty on copper scrap dropped to 2.5% from 5%.
• Lower gasoline and diesel excise taxes
• Duty on solar inverters increased to 20% from 5%.
• Duty on solar lanterns raised to 15% from 5%.
• Reduced customs duty on gold and silver
• imposed an Agriculture Infrastructure and Development Cess (AIDC) of Rs. 4 and Rs. 2.5 per liter, respectively, on gasoline and diesel.

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