Budget 2024 unveils progressive blueprint for India's development

Increasing the exemption limit of capital gains by Rs 25,000 could be a breather for the middle class.

The Union Budget 2024 portrays a promising picture with Finance Minister Nirmala Sitharaman prioritising measures that can boost skills, education and employment.

With a focus on MSMEs, the government intends to strengthen the local market players, thereby increasing the number of establishments contributing to net international exports from the country. A package has been formulated to augment the state of MSMEs by providing technological support and a self-financing guarantee fund of up to Rs 100 crore. The incorporation of a new credit assessment model by state-run lenders, doubling the limit of Mudra loans coupled with a growing branch network of the Small Industries Development Bank of India (SIDBI) will collectively amplify the output of MSME clusters. Further advancements in the technological aspects of the Insolvency and Bankruptcy Code (IBC) and measures laid down to expedite debt recovery will solidify the corporate credit market as the government is leaving no stone unturned to recover commercial losses. These measures often stay in shadows but have the potential to significantly ameliorate the books by minimising the NPAs.

Focus on youth

Among the key touch points in Budget 2024, the government has stressed on upskilling with 1 crore youngsters getting internships in top 500 companies. This marks another noteworthy step as initial exposure to young guns will improve the chances for a vibrant future. Monetary support of up to Rs 10 lakh for higher education for credit-deficient students can absolutely widen the talent base in years to come.

A promise of an additional 3 crore houses under PM Awas Yojana and central assistance of Rs 2.2 lakh crore to address the needs of 1 crore urban and poor middle-class families will thoroughly catalyse the ultimate goal of housing for all. A moderate stamp duty cut and lowering the rates for women buyers will further boost the housing market.

In order to extend financial inclusion, the government has proposed to open over 100 branches of India Post Payment Bank in the North-East region.

Also read | Good news for domestic taxpayers: Re-assessment window has been shrunk 

The Basic Customs Duty (BCD) rate rationalisation on precious metals including gold, silver and platinum and exemption on 25 critical minerals including steel, copper and materials used for making solar panels will comprehensively benefit in the longer term.

A much-awaited review of the Income Tax Act of 1961 is on the cards, thereby people can expect further simplification in the tax structure, litigations and tax demands.

Capital gains tax blues

Increasing the tax rate on short-term capital gains (STCG), long-term capital gains (LTCG) and securities transaction tax (STT) on futures & options could look like a damaging step but it fits somewhere under the broader objective of widening the income tax base. Indexation benefits for LTCG have been removed which will have an impact on the real estate sector.

Also read | Lower LTCG Rate and Abolition of Indexation: A Benefit or a Disadvantage?

Increasing the exemption limit of capital gains by Rs 25,000 could be a breather for the middle class. Taxing the receivables through share buybacks in the hand of recipients is another step that can promote staying invested and tendering shares in quick successions.

Increasing the contribution of NPS to 14 percent may hit the monthly paychecks but will improve the social security benefits at the time of retirement. A generous hike of Rs 25,000 in the standard deduction limit under the New Income Tax Regime and rate rationalisation can further accelerate and promote the taxpayers to transition to the new tax regime as the government claims nearly 66 percent of the taxpayers are already filing according to the new structure.