India’s Finance Minister Nirmala Sitharaman’s budget speech was just for 58 minutes as this was an interim budget ahead of elections looming in the next few months. The new government will present a full-fledged budget around July.
The 2024-25 budget is more focused on economic growth and modern India by 2047. The plans are people-centric inclusive development; policies for poor, youth, and farmers; sustainable development; infrastructure and investment; and reducing fiscal deficits.
Key Features of Budget 2024-2025
The next five years will be years of remarkable development and golden moments for the dream of a developed India by 2047. FM Nirmala Sitharam stressed on proactive inflation management as India’s vision for GDP, sustainable development, and infrastructure.
No change to direct and indirect tax rates
Despite expectations of a number of changes to taxes for development and income tax, Finance Minister Nirmala Sitharaman proposed to retain the direct and indirect tax rates, including import duties. Corporate tax is 22% for companies and 15% for new manufacturing companies. She focused on the new tax regime, with no tax liability under ₹7 lakh.
However, tax benefits to startups and sovereign wealth funds/pension funds were announced, with tax exemption of some IFSC units expiring this year extended to March 2025. Also, withdrawal of all pending direct tax demands up to Rs 25,000 up to FY10 and up to Rs 10,000 up to FY15. This will alleviate the burden on taxpayers and streamline the resolution process for smaller tax disputes.
Income Tax Slabs for 2024-25: Source: TOI
No announcement of crypto taxes
Finance Minister Nirmala Sitharaman offered no relief to the crypto industry as the government continued with its flat 30% tax on virtual assets, which was proposed in FY22. The crypto investors and exchanges asked for lowering tax-deducted at source (TDS) from 1% to 0.01%.
The industry believes lowering the taxes and TDS will provide enough tax revenue for government and retain crypto and Web3 talent in India. Crypto leaders plan to continue working towards educating and bringing digital asset tax reforms.
Infrastructure spending and investment
There will be a Rs 11.1 trillion budget on capital spending, an increase of 11% for infrastructure in the coming fiscal year, boosting housing and other services while still curbing its budget deficit. Ministry of Defense, Ministry of Road Transport and Highways, and Ministry of Railways get the largest allocation.
Major schemes including Mahatma Gandhi National Rural Employment Guarantee Scheme, Ayushman Bharat-PMJAY, Solar Power (Grid), National Green Hydrogen Mission, and Production Linked Incentive Scheme get boost.
FM also announced the allocation of $12 billion toward a tech innovation fund.
Budget Deficits
Especially, the government would reduce its fiscal deficit to 5.1% of GDP in 2024-25 from 5.8% this year. It is much lower than economists’ expectations of 5.3% of GDP for the coming year. The federal government will also provide 1.3 trillion Indian rupees in long-term loans to states to spend on infrastructure.
Indian rupee and bonds rose after the budget due to a lower-than-expected borrowing program. The benchmark 10-year yield falling by the most in more than a year.
Also Read:
Interim Budget 2024: Nirmala Sitharaman Propels Economic Growth With 11% CAPEX Surge
India Budget 2024: Rs 1 Lakh Crore Corpus For Research In Sunrise Sectors
Finance Minister Proposes No Change To Taxation During India Budget 2024 Speech
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