“Mastering Your Finances: Unveiling the FY2024-2025 Budget”
INTRODUCTION
Finance Minister Mrs. Nirmala Sitharaman unveiled the Interim Budget on February 1 2024 amid the General Elections this year.
It was previously stated by the Finance Minister that there wouldn’t be any surprises, in the Interim Budget.
In line with this the Interim Budget for 2024 maintained the existing indirect tax rates. A key anticipation was for an extension of the deadline for new manufacturing companies to benefit from reduced tax rates.
However no such extension was announced. This has now shifted stakeholders attention towards a Budget expected to be revealed in JuIy
Direct Tax
Under the law a new company that meets the criteria can enjoy a tax break for three years out of a total of ten years if it was established on or, after April 1 2016 but before April 1 2024. In an effort to further promote the growth of businesses in India it is suggested to extend the incorporation deadline for start ups by one year until, before April 1 2025.
Global Financial Services Enhancement
The investment division of an offshore banking unit established in IFSC can enjoy tax exemption on specified incomes if it initiates its business operations and acquires registration as a Category I foreign portfolio investor (FPI) by March 31, 2024.
Similarly, income derived from leasing an aircraft or ship to a non-resident eligible unit in IFSC can qualify for tax exemption, given that the unit starts its business operations by the same deadline.
Furthermore, income generated from the transfer of an aircraft or ship previously leased to an eligible IFSC unit is eligible for tax deduction if the unit commences its business operations by March 31, 2024.
State-Owned Investment Fund and Retirement Income Fund
Under the current legislation, specific types of income such as dividends, interest, and long-term capital gains have been granted tax exemption for certain entities like wholly-owned subsidiaries of the Abu Dhabi Investment Authority, Sovereign Wealth Funds (SWFs), and Pension Funds that meet specific criteria. This exemption applies to investments made by these entities up to March 31, 2024.
The Interim Budget proposes an extension of this provision, allowing tax benefits for investments made until March 31, 2025. This proposed extension is anticipated to encourage a significant rise in foreign investment in India, particularly within the infrastructure domain, which is indeed a positive development.
Resolving conflicts arising from trivial requests.
The Interim Budget suggests eliminating any outstanding small, unverified, unreconciled, or contested direct tax claims amounting to INR 25,000 for the period up to FY 2009-10, and up to INR 10,000 for FY 2010-11 to FY 2014-15. The Finance Minister noted that this move is expected to benefit approximately 10 million taxpayers.
The increase in the TCS rate on foreign remittances from 5 percent to 20 percent, as announced in the previous budget, is poised to be officially included in the Income Tax Act.
The Finance Bill for 2024 proposes a modification to section 206C(1G) to legitimize the Press Release dated 28.06.2023. The TCS rates, effective since 01.10.2023, as per the Press Release dated 28.06.2023, and those currently proposed for codification in law, are listed below for quick reference
| Nature of payment | Rate of TCS prior to 01.10.2023 | Rate w.e.f.01.10.2023 |
| LRS for education financed by loan | Nil upto Rs 7 lakh 0.5% above Rs 7 Lakh | Nil upto Rs 7 lakh 0.5% above Rs 7 Lakh |
| LRS for Medica ltreatment/education. (other than financed by loan) | Nil upto Rs 7 lakh 5% above Rs 7 Lakh | Nil upto Rs 7 lakh 5% above Rs 7 Lakh |
| LRS for other purposes | Nil upto Rs 7 lakh 5% above Rs 7 Lakh | Nil upto Rs 7 lakh 20% above Rs 7 Lakh |
| Purchase of Overseas tour program package | 5% (without threshold) | 5% (without threshold) |
Indirect Tax
Provisions relating to distribution of input tax credit (ITC) across various registrations of a corporate group in India have been expanded, to provide for
-Mandatory distribution of ITC through Input Service Distributor (ISD) mechanism
-Specific inclusion of input services taxable on reverse charge basis
Last year, CBIC had clarified that distribution of input tax credit could be done either through ISD mechanism or through cross-charge.
Post the recent proposals, it shall become mandatory to obtain ISD registrations, for the purposes of distributing ITC. These proposals shall come into effect from a date yet to be notified, post the Finance Bill is enacted. Relevant rules for its effective implementation is also yet to be notified.
Penalty for non-registration of packing machines for specified businesses
Recently, in January 2023, CBIC had notified a mechanism to obtain registration of packing machines used by assesses dealing in pan-masala, tobacco and other allied products.
To ensure strict implementation of the said notification, the Financial Bill has also proposed to introduce specific penalty with respect to non-compliance of the above registration. Current proposals include
Penalty of INR 1 Lakh for every unregistered packing machine Seizure and confiscation of unregistered packing machinesy.
It is provided that the confiscation shall not be enforced upon payment of penalty and undertaking registration within 3 days of receipt of penalty order.
Special exemption granted for components involved in the production of mobiles
The CBIC has granted particular exemptions concerning the importation of components for producing mobile phones and materials for manufacturing those components within India. Among the listed items are:
•Microphone rubber case and other items for its manufacture
•Covers, lenses, antenna, SIM sockets, screws, mechanical items of plastic and metal
•LCD foam, BT foam, Sticker-battery slot
•Side key
Customs duties for components necessary for mobile phone production will not exceed 10%. The extension of specific exemptions is in effect until September 30, 2024.
The Central Board of Indirect Taxes and Customs (CBIC) recently prolonged certain exemptions until September 30, 2024, which were initially scheduled to conclude on March 31, 2024. These exemptions encompass various items such as
•Ferrous waste and scrap
•Certain goods used in manufacture of cold rolled grain-oriented steel (CRGO)
•Parts and raw materials for manufacture of goods to be supplied in connection with off- shore oil exploration or exploitation
•Certain goods relating to manufacture of solar photovoltaic cells, panels or modules
•Lithium ion cell for use in the manufacture of battery or battery pack of cellular mobile phone, electrically operated vehicle or hybrid motor vehicles
Transitional Budget 2024: Blueprint for Advancing
Vikasita Bharath by 2047
This year’s Budget took on the Viksit Bharat theme, with the government visualising a developed India by 2047. ‘Garib’ (Poor), ‘Mahilayen’ (Women), ‘Yuva’ (Youth) and ‘Annadata’ (Farmers) are the four-pillars of the Viksit Bharat Budget
2024
In light of the people-centric inclusive development plan, the Finance Minister announced
•There will be significant advancement across all types of infrastructure: physical, digital, and social.
•The implementation of Digital Public Infrastructure (DPI) will foster formalization and enhance financial inclusivity.
•The government plans to deepen and widen the tax base via GST.
•The improved financial sector revitalized savings, credit, and investment.
•A resilient gateway named GIFT IFSC will be established to facilitate global capital and financial services for the economy.
•Inflation will be managed proactively.
Garib Kalyan – Desh Ka Kalyan
•Direct Benefit Transfer (DBT) has led to savings of Rs. 2.7 lakh crore
•25 crore people have moved out of multidimensional poverty
•Credit assistance has been given to 78 lakh street vendors under PMSVA Nidhi.
Empowering the younger generation.
•1.4 crore youth have been trained under the Skill India Mission
•Fostering entrepreneurial aspirations of youth – 43 crore loans have
been sanctioned under the PM Mudra Yojana.
•A corpus of Rs.1 lakh crore to fund tech-savvy youth with a 50-year, interest-free loan at low or nil interest rates charge to provide financing/re-financing.
Welfare of Farmers (annadata)
•There has been direct financial assistance provided to 11.8 crore farmers under PM-KISAN.
•Crop Insurance has been given to 4Cr farmers under PM Fasal Bima Yojana.
•There has been an integration of 1,361 mandis under eNAM, supporting trading volume of Rs.3 lakh crore.
Nari Shakthi
•30 crore Mudra Yojana loans have been disbursed to women entrepreneurs
•There has been an increase in female enrollment in higher education by 28 per cent in the past 10 years.
•There is 43% of female enrolment in STEM courses
•One crore women are assisted by 83 lakh SHGs to become Lakhpati Didis.
Transitional Budget 2024: Strategic Changes for Amrith kal to Karthavya kal
The Finance Minister emphasized the importance of achieving ‘Net Zero’ by 2070 within the framework of Amrit Kaal, stressing the imperative of sustainable development. Regarding this matter, the FM put forward the proposal:
•Viability gap funding for harnessing offshore wind energy for an initial capacity of one giga-watt.
•Setting up of coal gasification and liquefaction capacity of 100 MT by 2030
•Phased mandatory blending of CNG, PNG, and compressed biogas for domestic purposes
•Financial assistance for the procurement of biomass aggregation machinery
•Phased mandatory blending of CNG, PNG, and compressed biogas for domestic purposes
•The government also plans to adopt e-buses for public transport and strengthen the e-vehicle ecosystem by supporting the manufacturing and charging of electric vehicles.
•A new scheme of biomanufacturing and bio-foundry will be launched to support environment-friendly alternatives.
1.3 crore LED street lights will be installed under the SNLP scheme
The Blue Economy 2.0 scheme will be launched to restore and adapt coastal aquaculture and mariculture.
Development and Capital Expenditure
The government aims to roll out three key railway corridor initiatives, including energy, minerals, and cement corridors, port connectivity corridors, and high-traffic density corridors as part of the PM Gati Shakti program.
These endeavors will enhance logistical efficiency and lower expenses. Foreign investment will be encouraged through bilateral investment treaties to be arranged.
Furthermore, there are plans for the expansion of current airports and the holistic establishment of new airports within the UDAN scheme. Urban revitalization efforts will also take place through the Metro rail and NaMo Bharat initiatives.
Equitable Progress and Growth
The FM emphasized the importance of inclusive development during the Amrit Kaal era, introducing an aspirational District Programme to aid states in accelerated development, encompassing employment generation
Health care
•The government is actively encouraging cervical cancer vaccination for girls aged between 9-14 years
•The Saksham Anganwadi and Poshan 2.0 scheme would expedite the upgradation of Anganwadi centres to improve nutrition delivery, early childhood care and development.
•A U-WIN platform is to be rolled out for the immunisation efforts of Mission Indradhanush.
•Health coverage under the Ayushman Bharat scheme will be extended for all ASHA, Anganwadi workers, and helpers.
•A committee will be formed to study the issues faced in setting up more medical colleges in India.
Housing
•The Pradhan Mantri Awas Yojana (Grameen) is close to achieving the target of 3 crore houses, with an additional 2 crore targeted for the next 5 years.
•Housing for the middle class scheme to be launched to encourage the middle class to buy or build their own houses.
Tourism
•States will be encouraged to undertake the development of iconic tourist centres to attract business and promote opportunities for local entrepreneurship.
•Long-term interest-free loans are to be provided to states to encourage development.
•Projects for port connectivity, tourism infrastructure, and amenities will be taken up in islands, including Lakshadweep
Agriculture And Food Processing
•The government is set to promote private and public investment in post-harvest activities.
•The application of Nano-DAP is to be expanded in all agro-climatic zones.
•Atmanirbhar Oilseeds Abhiyan strategy to be formulated to achieve
atma nirbharta for oilseeds
•A comprehensive programme for dairy development is to be formulated.
•The implementation of Pradhan Mantri Matsya Sampada Yojana will be stepped up to enhance aquaculture productivity, double exports, and generate more employment opportunities.
INTERIM BUDGET 2024 – ALLOCATIONS FOR VARIOUS MINISTRIES AND SCHEMES
The following allocations have been proposed for various ministries under the Interim Budget 2024:
| Ministry | INR (in lakh crore) |
| Ministry of Defence | 6.2 |
| Ministry of Road Transport and Highways | 2.78 |
| Ministry of Railways | 2.55 |
| Ministry of Consumer Affairs, Food & Public Distribution | 2.13 |
| Ministry of Home Affairs | 2.03 |
| Ministry of Rural Development | 1.77 |
| Ministry of Chemicals and Fertilisers | 1.68 |
| Ministry of Communications | 1.37 |
| Ministry of Agriculture and Farmers’ Welfare | 1.27 |
On the other hand, the following allocations have been proposed for major schemes in force under the Interim Budget 2024:
•Mahatma Gandhi National Rural Employment Guarantee Scheme – Rs.86,000 crore
•Ayushman Bharat-PMJAY – Rs.7,500 crore
•Production Linked Incentive Scheme – Rs.6,200 crore
•Modified Programme for Development of Semiconductors and display manufacturing ecosystem – Rs.6,903 crore
•Solar Power (Grid) – Rs.8,500 crore
•National Green Hydrogen Mission – Rs.600 crore
The capital expenditure outlay for the next year is being increased by 11.1 per cent to Rs 11,11,111 crore, which would be 3.4 per cent of the GDP.
