India’s Economic Landscape:
Fastest Growing Economy: India continues to lead as the world’s fastest-growing major economy with a 7.8% GDP growth in Q4FY24,surpassing many of its global peers.
Resilient Economy: Despite global supply chain disruptions, India’s core inflation is declining, showcasing its strong economic resilience.
Robust Foreign Exchange Reserves: A moderated current account deficit and substantial forex reserves provide India with a comfortable import cover for up to 11 months.
Revenue Growth: Increased tax revenues, higher-than-expected non-tax revenues (including RBI dividends), and growing GST collections enable continued government investment in capital expenditure.
Fiscal Discipline: In contrast to global trends, India remains committed to fiscal consolidation, maintaining a stable fiscal stance.
Healthy Corporate Sector: Impaired loans have further decreased, and corporate balance sheets are robust, fostering a favorable environment for private capital expenditure.
Structural Reforms: Government reforms are propelling the economy forward, with expected further boosts from strong execution.
Capital Expenditure: Consistent growth in government capex is setting a solid foundation for economic recovery post-geopolitical shocks.
Budget Priorities:
The budget outlines nine key areas for development aligned with the ‘Viksit Bharat 2047’ vision:
Agriculture Productivity & Resilience
Employment & Skills Development
Social Justice
Manufacturing
Urban Development
Infrastructure
Energy Independence
Innovation
Next-Gen Reforms
Tax Changes:
Custom duty:
Reduction of basic custom duty to 15% on Mobile phones and chargers
Reduction of basic custom duty from 10% to 6 % on Gold & Silver (6.4 on platinum)
Income-tax:
The Good:
Standard Deduction for salaried employees increased from Rs. 50,000 to Rs 75,000 (under new tax regime)
Deduction on family pension for pensioners increased from Rs. 15,000 to Rs 25,000
Angel Tax abolished for all class of investors
LTCG on certain Financial and Non-Financial assets to attract 12.5%: Fund of Funds (FoFs), Multi Asset Funds (with less than specified equity), International MFs, Gold/Silver ETFs, REITs/Invites and Unlisted Stocks to benefit
Exemption limit for LTCG (Equity) increased to Rs 1.25 Lakhs from 1 Lakhs
For listed securities, period of holding for LTCG is 12 months and for all other assets, rationalized to 24 months
TDS on repurchase of Mutual Fund units to be removed
The Bad:
STCG on listed equities & equity oriented MF increased to 20% (from 15%)
STT increased on Futures & Options to 0.02% and 0.1%
Income received on buyback of shares to be taxed in the hands of the recipients at marginal tax rate
Indexation on all asset classes would be removed
LTCG on certain Non-Financial assets to attract 12.5%
Urban Development Highlights:
PM Awas Yojana Urban 2.0: Investment of ₹10 lakh crore to address housing needs for 1 crore urban poor and middle-class families.
Stamp Duty: Moderation by states with lower rates for properties purchased by women.
Water and Sanitation: Projects for 100 large cities focusing on water supply, sewage treatment, and solid waste management.
Transit Oriented Development: Plans for 14 large cities with populations over 30 lakh.
Focus on MSMEs and Manufacturing:
Credit Guarantee Scheme: Up to ₹100 crore cover for MSMEs in the manufacturing sector.
Industrial Parks: Establishment of 12 industrial parks under the National Industrial Corridor Development Programme.
Mudra Loans: Enhanced loan limits to ₹20 lakh under the ‘Tarun’ category.
