Budget Day 2024 arrived later this year, announced on February 1st due to the elections, with the final budget released on July 23rd. The Finance Minister highlighted key focuses on employment, skilling, MSMEs, and the middle class. Key priorities include:

• Agricultural Productivity and Resilience
• Employment and Skilling Initiatives
• Inclusive Human Resource Development
• Social Justice
• Advancements in Manufacturing and Services
• Urban Development
• Energy Security and Infrastructure
• Innovation, Research, and Next-Generation Reforms

The budget also introduced significant reforms in both direct and indirect taxes.

For detailed information, download the full Budget 2024 documents:

• Finance Bill 2024
• Budget 2024 Speech

1. Direct Tax Proposals

Enhanced Limit of Standard Deduction and Family Pension Deduction Under New Regime Under the new regime, the standard deduction for salaried individuals has been increased to Rs. 75,000 from Rs. 50,000. Similarly, the deduction on family pension for persons with pension income has been raised to Rs. 25,000 from Rs. 15,000 if they file taxes under the new regime.

Changes in Tax Structure Under the New Regime The tax structure under the New tax regime is revised as follows:

Note: As a result of these changes, a salaried employee in the new tax regime can save up to Rs. 17,500 in taxes.

Simplification of Taxation of Capital Gains For classifying assets into long-term and short-term, there will now be only two holding periods: 12 months and 24 months. The previous 36-month holding period has been removed. The holding period for all listed securities is 12 months. All listed securities held for more than 12 months are considered Long-Term. For all other assets, the holding period is 24 months.

Unlisted bonds and debentures are now aligned with the taxation of debt mutual funds and market-linked debentures. They will attract tax on capital gains at applicable slab rates, treating them as short-term regardless of the holding period.

The taxation of Short-Term Capital Gain for listed equity shares, units of equity-oriented funds, and units of business trusts has been increased to 20% from 15%. Other financial and non-financial assets held for the short term will continue to attract tax at slab rates.

For the benefit of the lower and middle-income classes, the limit on the exemption of Long-Term Capital Gains from the transfer of equity shares or equity-oriented units or units of Business Trust has increased from Rs. 1 Lakh to Rs. 1.25 lakh per year. However, the tax rate has increased from 10% to 12.5%. The exemption limit of Rs. 1.25 lakh applies for the entire year, whereas the tax rate change applies from 23rd July 2024.

The tax on long-term capital gains for other financial and non-financial assets is reduced from 20% to 12.5%. The indexation benefit previously available on the sale of long-term assets has been removed. Hence, any sale of a long-term asset made from 23rd July 2024 will attract a tax rate of 12.5% without the indexation benefit. However, the provision allowing the benefit of Fair Market Value (FMV) of the asset as of 01.04.2001 as the cost while selling the asset remains unchanged despite the recent changes.

Changes in TDS Rates Budget 2024 reduced the TDS rates on specified payments to facilitate business and improve taxpayer compliance. However, the revised TDS rates will be effective only from either 1st October 2024 or 1st April 2025. The table below shows the specified payments:

Introduction of TDS on Payments Made to Partners by Firms (Section 194T) This budget introduces a new TDS provision for payments made by firms (including both partnership firms and LLPs) to their partners in the form of salary, remuneration, interest, bonus, or commission. Such payments exceeding Rs. 20,000 will now be subject to TDS at a rate of 10% under Section 194T.

Abolishment of Angel Tax The Angel tax provisions under Section 56(2)(viib) are proposed to be removed. Angel Tax is levied on companies that issue fresh shares to investors at a price above the company’s Fair Market Value (FMV). The excess of the issue price over the FMV was previously taxable under Section 56(2)(viii) as Angel Tax. This provision’s removal is expected to benefit the startup ecosystem by reducing compliance costs and time associated with fund raises.

Corporate Taxes on Foreign Companies The corporate tax rate on foreign companies is proposed to be reduced from 40% to 35%.

Increased Deduction on Employer’s Contribution to Pension Scheme Section 80CCD provides a deduction for the employer’s contribution to the Pension scheme up to 10%. Budget 2024 has increased this deduction limit to 14% of the employee’s salary during the previous year.

STT on Futures and Options The Securities Transaction Tax (STT) on futures has been increased from 0.0125% to 0.02%, and STT on options has been increased from 0.0625% to 0.1%.

Other Direct Tax Updates

• Reopening of ITR: An assessment can only be reopened if the escaped income is Rs. 50 lakh or more, up to a maximum period of five years from the end of the assessment year. In search cases, the time limit has been reduced from 10 years to six years.
• Income Tax Appeals: To reduce the number of pending cases, the monetary limits for filing tax dispute appeals in tax tribunals, high courts, and supreme courts have been raised to Rs. 60 Lakh, Rs. 1 Crore, and Rs. 2 Crore, respectively.
• Vivaad se Vishwas Scheme: This scheme has been reintroduced to facilitate the settlement of income tax disputes and eliminate litigation.

2. Indirect Tax Proposals

Customs Duties Reductions and Exemptions for Critical Goods

Major GST Reforms and Amendments

• Un-denatured Extra Neutral Alcohol used in the manufacture of alcoholic liquor for human consumption will be kept out of the purview of GST (Sec 9 of the CGST Act, Sec 5 of the IGST Act, and Sec 7 of the UTGST Act are amended).
• Section 74A is introduced to determine tax not paid, short paid, or erroneously refunded, or input tax credit wrongly availed or utilized for any reason pertaining to the Financial Year 2024-25 onwards. Under the new Section 74A, if any tax is unpaid, underpaid, erroneously refunded, or if the input tax credit is wrongly availed or utilized, the proper officer will serve a notice to the responsible person to explain why they should not pay the due amount with interest and penalty. However, no notice will be issued if the amount in question for a financial year is less than Rs. 1,000. The notice must be issued within 42 months from the due date of the annual return or erroneous refund date. It also provides for the same limitation period for issuing demand notices and orders concerning demands from the financial year 2024-25 onwards. The time limit for taxpayers to avail of the benefit of reduced penalties under this Section, by paying the tax demanded along with interest, is being increased from 30 days to 60 days. Sections 10(5), 35(6), 39(3), 49(8), 50(1), 51(7), 61(3), 62(1), 63, 64(2), 65(7), 66(6), 104(1), 107(11), and 127 provide reference to this section.
• Section 11A is being inserted to empower the government to regularize non-levy or short levy of central tax due to any general practice prevalent in trade.
• Section 13(3) is amended for the time of supply in case the invoice is issued by the recipient of supply to be the date of invoice.
• Sub-section (5) is inserted in Section 16 retrospectively from 1st July 2017 to allow ITC claims on invoices or debit notes for the FY 2017-18, 2018-19, 2019-20, and 2020-21 in the GSTR-3B filed up to 30th November 2021. Furthermore, sub-section (6) is inserted in Section 16 retrospectively from 1st July 2017 to allow ITC claims on invoices and debit notes in GSTR-3B filed for the period from the GST registration cancellation date or the effective date, as the case may be, till the date of the revocation order for GST registration cancellation, provided it is filed within thirty days of the date of the revocation order of cancellation of registration. However, the time limit for ITC claims for such documents must not have expired under Section 16(4) as on the date of the cancellation order. In case the tax is paid or ITC is reversed, no refund can be admitted.
• A new item is added under the blocked credits under Section 17(5). ITC is not allowed on taxes paid under Section 74 for demands up to FY 2023-24, removing references to Sections 129 and 130 of the CGST Act.
• A new proviso in sub-section (2) of Section 30 of the CGST Act is being inserted, adding conditions and restrictions for the revocation of GST registration cancellation, which will be prescribed in the CGST Rules at a later date.
• Section 31(3)(f) is amended to provide a time limit to issue invoices by the recipient for RCM supplies. It will include suppliers registered solely for TDS under GST.
• GSTR-7 for TDS under GST shall be filed whether or not TDS is deducted during a month under Section 39(3).
• Section 54(15) provides that GST refund of unutilized ITC or IGST will not be allowed for the zero-rated supply of goods subject to export duty.
• A summoned person can authorize another person to appear on their behalf in compliance with GST summons issued by the GST officer under the new Section 70(1A).
• New Sections 73(12) and 74(12) restrict the applicability of demand and recovery provisions for determining tax demands for FY up to 2023-24.
• Under the new Section 74A, the penalty shall be redetermined in a notice where it is proven that it is no longer a case of fraud, willful misstatement, or suppression of facts.
• Under Section 107 of the CGST Act, the maximum pre-deposit for filing appeals before the appellate authority is reduced from Rs. 25 crores to Rs. 20 crores. Similarly, under the IGST Act, Section 20 has been amended to reduce the pre-deposit amount from Rs. 50 crore to Rs. 40 crore.
• The government can notify the types of cases for hearing by the Principal Bench of the Appellate Tribunal by amending Section 109.
• In Section 112, effective 1st August 2024, the deadline for filing an appeal to the Appellate Tribunal by taxpayers will be the later of either the date of order communication or a date notified by the government based on Council recommendations. The same change applies to commissioners/GST officers filing applications before the Appellate Tribunal. Applications may be filed within three months after the standard appeal period expires. The pre-deposit requirement for appeals is reduced from 20% to 10% of the disputed amount. The maximum amount required for pre-deposit is lowered from Rs. 50 crore to Rs. 20 crore.
• Penalty under Section 122(1B) is amended to restrict this to cases involving e-commerce operators subjected to TCS under GST retrospectively from 1st October 2023.
• Conditional waiver of interest and penalty is given through Section 128A for demand notices under Section 73 for all FY from 2017-18 to 2019-20 except for erroneous refunds and where interest/penalty is already paid for the said years.
• Transitional credit for the CENVAT credit for input services by an ISD is allowed under Section 140 retrospectively.
• The appellate authority replaces the anti-profiteering authority from the date to be notified for accepting applications for cases of anti-profiteering under Section 171.
• New items through Paras 8 and 9 are inserted under Schedule III to declare the following as neither supply of goods nor supply of services:
  • The activity of apportionment of co-insurance premium by the lead insurer to the co-insurer for the insurance services jointly supplied by the lead insurer and the co-insurer to the insured in coinsurance agreements, provided the lead insurer pays the tax liability on the entire amount of premium paid by the insured.
  • The services by the insurer to the reinsurer, for which the ceding commission or the reinsurance commission is deducted from the reinsurance premium paid by the insurer to the reinsurer.
• Section 146 states that no refund shall be made of the tax paid or the input tax credit reversed, which would not have been so paid or not reversed had the said clause 114 been in force at all material times.

Important Note: All direct and indirect tax amendments will come into force once notified by the CBDT or CBIC respectively.

Highlights of Various Sectors

Highlights of Priority 1: Agriculture

• The government has allocated Rs.1.52 lakh crore for agriculture and allied sectors.
• 109 new high-yielding and climate-resilient varieties of 32 field and horticulture crops will be introduced for farmers.
• One crore farmers nationwide will be introduced to natural farming over the next two years, with support for certification and branding. To facilitate this, the government will set up 10,000 need-based bio-input resource centres.
• Promotion of Farmer-Producer Organisations, startups, and cooperatives will be prioritized for vegetable supply chains, including storage, collection, and marketing.
• A strategy will be developed to achieve ‘Atmanirbharta’ for oil seeds like groundnut, mustard, soybean, sesame, and sunflower.
• Implementation of Digital Public Infrastructure (DPI) in agriculture will be facilitated in partnership with states to cover farmers and their lands in 3 years. Details of 6 crore farmers and their lands will be recorded in the farmer and land registries. Kisan Credit Cards will be issued and enabled in 5 states through the Jan Samarth platform.
• Financial support will be provided for setting up a network of Nucleus Breeding Centres for Shrimp Broodstocks.

Highlights of Priority 2: Employment and Education

• Three new schemes for ‘Employment Linked Incentive’ based on EPFO enrolment will be introduced:
  • Scheme A: First Timers – Provides a direct benefit transfer of one month’s salary in 3 instalments of up to Rs.15,000 to first-time employees in the formal sector registered in the EPFO.
  • Scheme B: Job Creation in Manufacturing – Offers an incentive directly to the employee and the employer based on their EPFO contribution in the first 4 years of employment.
  • Scheme C: Support to Employers – Reimburses employers up to Rs.3,000 per month for 2 years based on their EPFO contribution for each additional employee, including all additional employment within a salary of Rs.1 lakh per month.
• A new centrally sponsored scheme for skilling will be introduced in collaboration with the industry and state governments, aiming to skill 20 lakh youth over 5 years and upgrade 1,000 Industrial Training Institutes (ITI) with outcome orientation.
• The Model Skill Loan Scheme will be revised to facilitate loans up to Rs.7.5 lakh for students with a guarantee from a government-promoted Fund.
• Financial support will be provided for loans up to Rs.10 lakh for higher education in domestic institutions. E-vouchers will be given directly to 1 lakh students each year for an annual interest subvention of 3% on the loan amount.

Highlights of Priority 3: Inclusive Human Resource Development and Social Justice

• Rs.2.66 lakh crore has been allocated for rural development and infrastructure.
• The government will formulate Purvodaya, a plan for the comprehensive development of the eastern region of India, covering Jharkhand, Bihar, Odisha, West Bengal, and Andhra Pradesh.
• Support will be given for the development of the Amritsar Kolkata Industrial Corridor, which will stimulate industrial growth in the eastern region.
• The government will support road connectivity projects, including the Patna-Purnea Expressway, Buxar-Bhagalpur Expressway, Bodhgaya, Rajgir, Vaishali, and Darbhanga spurs, along with an additional 2-lane bridge over the river Ganga at Buxar, at a total cost of Rs.26,000 crore.
• Power projects, including a new 2400 MW power plant at Pirpainti at a cost of Rs.21,400 crore, will be undertaken.
• The Andhra Pradesh Reorganization Act will be fulfilled with special financial support arranged through multilateral development agencies, providing Rs.15,000 crore in the current financial year, with additional amounts in future years.
• Financial support will be provided for the early completion of the Polavaram Irrigation Project and essential infrastructure such as power, water, roads, and railways in the Kopparthy node on the Vishakhapatnam-Chennai Industrial Corridor and the Orvakal node on the Hyderabad-Bengaluru Industrial Corridor.
• Three crore additional houses will be constructed under the PM Awas Yojana in rural and urban areas.
• Over Rs.3 lakh crore will be allocated to promote women-led development and benefit women and girls.
• The new scheme, Pradhan Mantri Janjatiya Unnat Gram Abhiyan, will aim to improve the socio-economic conditions of tribal communities, covering 63,000 villages and benefitting 5 crore tribal people.
• More than 100 branches of India Post Payment Bank will be established in the North East region to expand banking services.

Highlights of Priority 4: Manufacturing and Services

• The government will introduce a credit guarantee scheme to facilitate term loans for MSMEs to purchase machinery and equipment without collateral or third-party guarantees. This will involve a self-financing guarantee fund providing coverage up to Rs.100 crore for each applicant.
• Public sector banks will develop in-house capabilities to assess MSMEs for credit, and create a new credit assessment model based on digital footprints.
• A new mechanism will be introduced to ensure the continuation of bank credit to MSMEs during periods of stress.
• The Mudra loan limit will be increased to Rs.20 lakh from the current Rs.10 lakh under the ‘Tarun’ category for entrepreneurs who have successfully repaid previous loans under the same category.
• The turnover threshold for mandatory onboarding on the TReDS platform will be reduced from Rs.500 crore to Rs.250 crore.
• SIDBI will open new branches to expand its reach to major MSME clusters and provide direct credit within 3 years.
• Financial support will be provided for setting up 50 multi-product food irradiation units in the MSME sector. The establishment of 100 food quality and safety testing labs with NABL accreditation will be facilitated.
• E-Commerce Export Hubs will be set up in PPP mode to enable MSMEs and traditional artisans to sell their products internationally.

Promotion of Manufacturing and Services

• A comprehensive scheme will be launched to provide internship opportunities to 1 crore youth in 5 years in the top 500 companies, with an internship allowance of Rs.5,000 per month and a one-time assistance of Rs.6,000.
• Development of investment-ready “plug and play” industrial parks with states and the private sector will be facilitated.
• 12 industrial parks will be sanctioned under the National Industrial Corridor Development Programme.
• A Critical Mineral Mission will be established to recycle critical minerals, promote domestic production, and acquire critical mineral assets overseas.
• The first tranche auction of offshore blocks for mining will be launched, building on existing exploration.
• An Integrated Technology Platform will be set up to improve outcomes under the Insolvency and Bankruptcy Code (IBC).
• The Centre for Processing Accelerated Corporate Exit (C-PACE) services will be extended for voluntary closure of LLPs.
• Additional National Company Law Tribunals will be established to speed up insolvency resolution, with some Tribunals designated to handle cases exclusively under the Companies Act.
• Additional Debt Recovery Tribunals will be set up to expedite the recovery process.

Highlights of Priority 5: Urban Development

• A Transit Oriented Development plan will be formulated for 14 large cities with populations above 30 lakh.
• Under PM Awas Yojana Urban 2.0, housing needs for 1 crore urban middle-class and poor families will be addressed with an investment of Rs.10 lakh crore, including central assistance of Rs.2.2 lakh crore over the next 5 years.
• State Governments and Multilateral Development Banks will promote sewage treatment, water supply, and solid waste management projects for 100 large cities through bankable projects.
• A scheme to support the development of 100 weekly ‘haats’ or street food hubs in select cities over the next five years will be launched.
• States will be encouraged to moderate stamp duty rates, particularly for properties purchased by women.

Highlights of Priority 6: Energy Security

• The PM Surya Ghar Muft Bijli Yojana will be launched to provide 300 units of free electricity per month for 1 crore households through rooftop solarisation.
• A policy for promoting pumped storage projects will be introduced to aid electricity storage and integrate renewable energy.
• The government will partner with the private sector to establish Bharat Small Reactors, develop Bharat Small Modular Reactor technologies, and research new nuclear energy technologies.
• A joint venture between NTPC and BHEL will set up a full-scale 800 MW commercial plant using Advanced Ultra Super Critical (AUSC) technology.
• Financial support will be provided for an investment-grade energy audit of traditional micro and small industries in 60 clusters, with measures to shift them to cleaner energy and implement energy efficiency.

Highlights of Priority 7: Infrastructure

• Rs.11,11,111 crore has been allocated for capital expenditure.
• Rs.1.5 lakh crore has been set aside for long-term interest-free loans to support state resource allocation.
• Phase IV of the Pradhan Mantri Gram Sadak Yojana (PMGSY) will be launched to provide all-weather connectivity to 25,000 rural habitations.
• Financial support will be provided through the Accelerated Irrigation Benefit Programme and other sources for projects like the Kosi-Mechi intra-state link and 20 other ongoing and new schemes, including river pollution abatement and irrigation projects.
• Comprehensive development of the Vishnupad Temple Corridor and Mahabodhi Temple Corridor in Rajgir, Nalanda, and Odisha will be undertaken.

Highlights of Priority 8: Innovation, Research and Development

• A mechanism will be established to boost private sector-driven research and innovation at a commercial scale with a finance pool of Rs.1 lakh crore.
• The Anusandhan National Research Fund will be operationalised for basic research and prototype development.
• A venture capital fund of Rs.1,000 crore will be set up to expand the space economy fivefold over the next 10 years.

Highlights of Priority 9: Next Generation Reforms

• Land-related reforms will be initiated in collaboration with states, including rural and urban land-related actions.
• The e-shram portal will be comprehensively integrated with other portals to provide a one-stop solution for a wide range of services to labour.
• The Shram Suvidha and Samadhan portals will be revamped to enhance compliance ease for trade and industry.
• A taxonomy for climate finance will be developed to improve capital availability for climate adaptation and mitigation.
• Rules and regulations for Foreign Direct Investment and Overseas Investments will be simplified to encourage prioritisation, facilitate foreign investments, and promote the use of Indian Rupee for overseas investments.
• NPS Vatsalya, a plan for contributions by parents and guardians for minors, will be initiated.
• The Jan Vishwas Bill 2.0 will be worked on to enhance ‘Ease of Doing Business’.

Budget 2024 PDF Downloads