budget highlights 2024 and Analysis
What is the Union Budget?
Before talking about 2024 budget we need to know, what is budget?
There is no such word as “Budget” in our Indian Constitution. Yes!, it may sound surprising, but Article 112 of the Indian Constitution refers to it as “A statement of the estimated receipts and expenditures of the Government of India for a specific financial year,” known as the ‘annual financial statement.’
The budget can simply be define as the total income and expenditure compile by a government in a single document, both for the yearly segment, where it is outline where they will earn and where they will spend it through various schemes.
The government’s revenue sources are:
- 19% from income tax
- 18% from GST and other taxes
- 9% from non-tax receipts
- 27% from borrowing and other liabilities
- 5% from union excise duties
- 17% from corporation tax
- 4% from customs
- 1% from non-debt capital receipts
Ultimately, the government distributes these revenues across different sectors like defense, education, and healthcare through various schemes.
Main highlights of budget 2024 Middle-Class Tax Slab in the Budget 2024
In the entire 2024 budget main hype was around the middle-class tax slab, from last year middle class expected to remove the 3-5 lakh tax slab but if you look at the updated tax slab, there are no such changes, changes are if someone’s income 6-7lakh now they only pay 5% taxes previously it was 10% and if someone’s earning 9-10lakh then now they have to 10% tax previously it was 15%, moreover if someone’s income is more than 7lakh they can enjoy the standard for salaried employees tax deduction of benefit which is now increased 50,000rs to 75,000, but how many employees in India are earning 7 lakhs per annum?, but if someone is earning more than 7L which means they are now saving 17,500rs annually and 1,450rs monthly which is not a big amount who is earning is more than 7 lakh.
| Income tax slab | current | proposed |
| 0-3 lakh | Nil | Nil |
| 3-6 lakh | 5% | 5% |
| 6-7 lakh | 10% | 5% |
| 7-9 lakh | 10% | 10% |
| 9-10 lakh | 15% | 10% |
| 10-12 lakh | 15% | 15% |
| 12-15 lakh | 20% | 20% |
| above 15lakh | 30% | 30% |
Increased Taxes Burden Stock Market Investors:
The new union budget has increased the Short-Term Capital Gains (STCG) tax from 15% to 20% and the LTCG tax from 10% to 12.5%. Additionally, the holding period for LTCG has been increased to 2 years, whereas it was previously more than a year. The STT has also risen to 0.02% on futures and options.
Recently, we have observed a trend where the government aims to reduce short-term investments in the stock market. The number of investors has increased significantly in recent times, and these new investors can create volatility in the market. I believe that’s why the government has increased the STCG tax to encourage longer-term holdings and raised the STT to discourage new investors from engaging in futures and options trading.
Old LTCG tax rates and Details:
| Assets | Old LTCG tax rates | Holding period | Details |
| Equity shares and MFs | 10% with indexation | more than 1 years | No indexation benefit |
| Real Estate | 20% with indexation | more than 2 years | Includes residential and commercial properties, land. Indexation benefits applies. |
| Collectibles | 20% with indexation | more than 3 years | Includes art, antiques, rare, coins, etc. Indexation benefit applies |
| Gold | 20% with indexation | more than 3 years | Indexation adjusts the purchase price for inflation, reducing taxable gains |
| Other tangible assets | 20% wtih indexation | more than 3 years | includes jewelry, vehicles held as investment. indexation benefit applies. |
New LTCG tax rates and Details:
| Assets | New LTCG tax rates | Holding period | Details |
| Equity shares and MFs | 12.5% | more than 2 years | exemption limit increased to 12.25L per year for financial assets |
| Real Estate | 12.5% | more than 2 years | Includes residential and commercial properties, land. No Indexation benefits. |
| Collectibles | 12.5% | more than 2 years | includes arts, antiques, rare, coins, etc. No indexation benefit |
| Gold | 12.5% | more than 2 years | No indexation benefit |
| Other tangible assets | 20% wtih indexation | more than 2 years | includes jewelry, vehicles held as investments. indexation benefit applies. |
Removal of Indexation in 2024 budget
In the budget 2024,The biggest setback was for the real estate sector, as they will no longer benefit from indexation.
First, let’s understand what indexation is. Indexation is a system or technique used by organizations or governments to adjust prices and asset values. It’s accomplished by linking adjustments made to the value of a good, the price of a service, or another specific value to a predetermined price or composite index.
For example, if you bought real estate for ₹50 lakh 10 years ago and its value in 2024 is ₹80 lakh due to inflation, its indexed cost is ₹80 lakh. If you sell it for ₹90 lakh, under the old tax regime, you would pay tax on the ₹10 lakh profit, which would be ₹2 lakh at a 20% tax rate. However, under the new tax regime, there is no indexation. You bought your property for ₹50 lakh and now you’re selling it for ₹90 lakh, which means your profit is ₹40 lakh, because there is no inflation according to the government.so now, You have to pay 12.5% tax on ₹40 lakh, which is ₹5 lakh. And That’s the reason why every real estate stocks are down.
I think it’s a good thing to discourage real estate investors because some “Maaldar parties” would buy many properties as investments, while many people in India don’t even have their own homes.
Major Relief for Start-up Founders in 2024 Budget
In the 2024 budget, the Angel Tax has been reduced to zero from the previous rate of 30%. Angle tax was Introduced in 2012, the Angel Tax means when startup get fundings from external investor then they had pay 30% as Angle tax. for example, if a founder raised ₹100 crore, they would only receive ₹70 crore after taxes. But Now since there is no angle tax, founders will receive the full amount of their funding, allowing them to expand their businesses to more efficiently.
Government Announces Major Investment in Space Sector:
The Finance Minister has announced a 1000 crore venture capital fund for the space sector. The government aims to increase India’s share of the global space economy to 10% by 2030 and 15% by 2047, up from the current 2%. And major growth is expected to come from private sector. Recently, we saw a private space startup, Agnikul, who build world’s first rocket using 3D printing and successfully launch it into space. This project was majorly supported by technical expertise and assistance from ISRO.
budget 2024 highlights: What’s Getting Expensive and Cheaper:
In this 2024 Union budget, the government has reduce customs duty on some items like copper goods, leather, gold, platinum, mobile phones and chargers, batteries, cancer treatment medicines, solar sets, and X-ray equipment . means we can find these things cheaper now. Whereas plastic and telecom equipment have seen a rise in customs duty. which is a good thing by the way to discourage plastic.
Employment initiatives
PM’s package for employment and skilling:
A comprehensive package has been introduced to facilitate employment and skill development for 4.1 crore youth over five years, with a central outlay of ₹2 lakh crore.
But I think these schemes are totally waste of money!
Scheme A: First Timers
Firstly, we have a budget for first-time employees. If you’re stepping into a formal sector job for the first time and you’re registered under EPFO, the government will provide one month’s wage to all persons newly entering the workforce in all formal sectors. The direct benefit transfer of one month’s salary in three installments to first-time employees, as registered in the EPFO, will be up to ₹15,000. The eligibility limit will be a salary of ₹1 lakh per month. This scheme is expected to benefit 2.10 crore people.
Scheme B: Job Creation in Manufacturing
This scheme will incentivize additional employment in the manufacturing sector, linked to the employment of first-time employees. An incentive will be provided at a specified scale directly to both the employee and the employer concerning their EPFO contribution in the first four years of employment. The scheme is expected to benefit 30 lakh youth entering employment and their employers.
Scheme C: Support to Employers
This employer-focused scheme will cover additional employment in all sectors. All additional employment within a salary of ₹1 lakh per month will be count. The government will satisfy employers up to ₹3,000 per month for two years towards their EPFO contribution for each additional employee. The scheme is expects to incentivize additional employment of 50 lakh persons.
Women Empowerment
Incentives to increase female participation in the workforce include provisions for Working Women Hostels and Crèches, while some specific skilling programs have also been envisaged for them.
Why I didn’t like these schemes of budget 2024
Now, I’ll tell you why I think this schemes are useless. If you talk to any business owner, you’ll find that the reason they don’t recruit freshers isn’t because they don’t want to pay salaries to freshers, but because most freshers in India are unskilled and unemployable. The problem is not money; it is skill and education.
At least a dozen business owners I know would happily pay ₹6 lakh per annum even if the candidate is a dropout, provided they have the skill set for the job. When you pay someone as a business owner, it’s not an expense; it’s an investment. A talented person can easily generate 200% of their salary in business revenue. So, this ₹3,000 or one month’s salary up to ₹15,000 is of no use at all.
Instead of spending ₹2 lakh crore on this useless scheme, the government should invest this amount in incentivizing colleges to hire professional professors or improve college infrastructure. This would create a great impact and generate a highly skilled workforce.
My personal view and analysis on 2024 Budget
So this was my complete analysis of the 2024 Budget, there was more in this budget like,
- “Mudra” loan limits hikes to 10L to 20L, Mudra loan is basically for SMEs and MSMEs,
- Finance Minister keeps Capex at 11.11 lakh cr which is 3.4 of the GDP, higher than last year estimate of 9.5 lakh cr (3.2% of GDP)
- FM cuts fiscal deficit target to 4.9% for FY25, lower than previously announced 5.1% and many more, but ideally it needs be below 3.9%.
I think this budget and the upcoming budgets will be for to shift people to the new tax regime, this union budget 2024 was primarily supporting businesses and startups, not the middle class and I also think that now the government wants to increase the income tax payers which is now currently at only 2.2%, if I would compare to other countries it’s not even close to them. I even think it was a political budget where the government favored their own interest.
if you like this case study on budget 2024, make sure to check my other business case study as well :