The Union Budget 2024-25 has brought several significant changes that directly impact salaried employees. From enhanced contributions to the National Pension System (NPS) to new income tax slabs and increased deductions, this budget aims to improve the financial well-being of employees. In this article, we will explore the key changes introduced in the budget and provide actionable steps for salaried employees to maximize their benefits.
The Union Budget 2024-25 has introduced significant changes affecting various population sections, including salaried employees, mutual fund investors, retirees, and the common man. This comprehensive guide will help you understand the key takeaways from the budget and provide actionable steps to optimize your financial planning. From enhanced NPS contributions to new tax regimes and investment opportunities, we cover everything you need to know to make informed decisions and maximize your benefits.
This year’s Union Budget 2024-25 is designed to create equal opportunities for all, particularly the poor (‘Garib’), women (‘Nari’), youth (‘Yuva’), and farmers (‘Annadata’). As India progresses towards becoming a developed nation by 2047, the budget aims to promote employment, support MSMEs, and empower the middle class. The overarching theme of the budget is ‘EMaPLOYMENT,’ which stands for:
Industrial Development:
Development of ‘Plug and Play’ Industrial Parks in 100 cities with complete infrastructure.
Establishment of 12 Industrial Parks under the National Industrial Corridor Development Programme.
Youth Employment and Skilling:
Creation of employment opportunities for the youth.
Financial support for domestic higher education loans up to `10 lakh.
E-vouchers for 1 lakh students annually for a 3% interest subvention on loans.
Skilling 20 lakh youth over five years.
Upgrading 1,000 Industrial Training Institutes (ITIs) in hub and spoke arrangements.
Revised Model Skill Loan Scheme facilitating loans up to `7.5 lakh with a government-guaranteed fund.
Development of rental housing with dormitory-type accommodation for industrial workers.
Support for Street Vendors and Tourism:
Development of 100 weekly ‘haats’ or street food hubs in select cities.
Transformation of religious and tourist sites like Vishnupad Temple and Mahabodhi Temple in Bihar, and comprehensive development initiatives for Rajgir and Nalanda.
Assistance for developing Odisha as a tourist destination.
Simplified tax regime for foreign shipping companies operating domestic cruises in India.
- Summary of Tax Changes
Middle Class Investor Taxes:
Security transaction tax: 0.1% on buy & sell.
Dividend distribution tax: 15%.
Long-term capital gains tax: 12.5%.
Short-term capital gains tax: 20%.
Withdrawal of 20% TDS on repurchase by mutual funds or UTI.
Reduced TDS rate on e-commerce to 0.1%.
Merging of two tax exemption regimes for charities into one.
Increased Security Transaction Tax on F&O from 0.01% to 0.02%.
New Tax Regime Changes:
Increased standard deduction from `50,000 to `75,000.
Revised tax slabs:
`0-3 lakhs: Nil
`3-7 lakhs: 5%
`7-10 lakhs: 10%
`10-12 lakhs: 15%
`12-15 lakhs: 20%
Above `15 lakhs: 30%
Conclusion
Overall, the Union Budget 2024-25 aims to foster inclusive growth and development across various sectors, with significant focus on employment, skilling, and supporting the middle class. The proposed reforms and fiscal policies are geared towards building a robust economy as India strides towards becoming a developed nation by 2047.
Implications of the Union Budget 2024-25 for the Common Man
Infrastructure Development:
Simplified Impact: Faster and improved roads, bridges, and railways mean less travel time and better connectivity for daily commuters and businesses.
Budget Detail: The government is focusing on building physical, digital, and social infrastructure quickly and efficiently.
Inclusive Economic Growth:
Simplified Impact: Economic growth will benefit all regions and communities, ensuring that opportunities are evenly spread across the country.
Budget Detail:
Efforts to formalize the economy through digital public infrastructure and a unified Goods and Services Tax (GST) system are aimed at creating a seamless market.
Financial Sector Strengthening:
Simplified Impact: Improved access to savings, credit, and investment options can help individuals manage their finances better and plan for the future.
Budget Detail
Strengthening financial institutions and implementing tax reforms to widen the tax base.
Inflation Management:
Simplified Impact: Keeping inflation under control means that the prices of essential goods and services remain stable, making it easier for families to budget and save.
Budget Detail: Proactive measures to manage inflation within a specific policy band.
Women Empowerment:
Simplified Impact: More opportunities for women in education, employment, and entrepreneurship lead to greater economic independence and societal progress.
Budget Detail:
Initiatives like Mudra Yojana loans and reservations in political bodies aim to empower women and increase their participation in the workforce.
Support for Farmers (Annadata):
Simplified Impact: Direct financial support and insurance schemes help farmers manage risks and ensure a stable income, contributing to food security.
Budget Detail:
Programs like PM-KISAN SAMMAN Yojana and PM Fasal Bima Yojana offer financial assistance and crop insurance to millions of farmers.
Youth Empowerment (Amrit Peedhi):
Simplified Impact: Enhanced educational and entrepreneurial opportunities for the youth can lead to better career prospects and innovation.
Budget Detail:
Initiatives such as the National Education Policy 2020, Skill India Mission, and PM Mudra Yojana provide training, loans, and support for young entrepreneurs.
The Union Budget 2024-25 focuses on fostering economic growth, ensuring social justice, and empowering various segments of the population, including women, youth, and farmers. Key initiatives include the development of infrastructure, support for MSMEs, and policies promoting employment and skilling. The budget emphasizes financial inclusion, inflation management, and sustainable energy use, with specific programs targeting affordable housing, social justice, and free electricity through rooftop polarization.
Taresh Bhatia is author of The Richness Principles, a CERTIFIED FINANCIAL PLANNER (CFP)
Disclaimer: The information provided in this article is for general informational purposes only and should not be considered as financial advice. Always consult with a qualified financial advisor before making any investment decisions.