Union Finance Minister Nirmala Sitharaman presented the first budget of the Narendra Modi government’s third term on Tuesday in Parliament. This marks her seventh consecutive budget, surpassing the late Morarji Desai’s record of six consecutive budgets.
In her speech, Sitharaman outlined Modi 3.0’s roadmap for transforming India into ‘Viksit Bharat’ by 2047. The Union Budget 2024 is the first major economic document of the Modi 3.0 government.
Union budgets aren’t exactly like household budgets because, unlike the latter, they can influence the trajectory of the whole country. Apart from not overburdening people with increasing levels of borrowings and debt, a government can use the budget to influence the behavior of Indian citizens and businesses in two broad ways. One is by tweaking who it taxes and how much, and the second is by adjusting where a government spends and how much.
Here’s the full text of Finance Minister Nirmala Sitharaman’s Budget speech:
Hon’ble Speaker,
I present the Budget for 2024-25.
Introduction
The people of India have reposed their faith in the government led by the Hon’ble Prime Minister Shri Narendra Modi and re-elected it for a historic third term under his leadership. We are grateful for their support, faith, and trust in our policies. We are determined to ensure that all Indians, regardless of religion, caste, gender, or age, make substantial progress in realizing their life goals and aspirations.
Global Context
The global economy, while performing better than expected, is still in the grip of policy uncertainties. Elevated asset prices, political uncertainties, and shipping disruptions continue to pose significant downside risks for growth and upside risks to inflation. In this context, India’s economic growth continues to be the shining exception and will remain so in the years ahead. India’s inflation continues to be low, stable, and moving towards the 4 percent target. Core inflation (non-food, non-fuel) currently is 3.1 percent. Steps are being taken to ensure supplies of perishable goods reach the market adequately.
Interim Budget
As mentioned in the interim budget, we need to focus on four major castes, namely ‘Garib’ (Poor), ‘Mahilayen’ (Women), ‘Yuva’ (Youth), and ‘Annadata’ (Farmer). For Annadata, we announced higher Minimum Support Prices a month ago for all major crops, delivering on the promise of at least a 50 percent margin over costs. The Pradhan Mantri Garib Kalyan Anna Yojana was extended for five years, benefiting more than 80 crore people. Administrative actions for approval and implementation of various schemes announced in the interim budget are well underway. The required allocations have been made.
Budget Theme
Turning attention to the full year and beyond, in this budget, we particularly focus on employment, skilling, MSMEs, and the middle class. I am happy to announce the Prime Minister’s package of five schemes and initiatives to facilitate employment, skilling, and other opportunities for 4.1 crore youth over a five-year period with a central outlay of ₹2 lakh crore. I will speak about them shortly, while more details may be seen in the annexure. This year, I have made a provision of ₹1.48 lakh crore for education, employment, and skilling.
Budget Priorities
The people have given a unique opportunity to our government to take the country on the path of strong development and all-round prosperity. In the interim budget, we promised to present a detailed roadmap for our pursuit of ‘Viksit Bharat’. In line with the strategy set out in the interim budget, this budget envisages sustained efforts on the following nine priorities for generating ample opportunities for all.
Subsequent budgets will build on these and add more priorities and actions. A more detailed formulation will be carried out as part of the ‘economic policy framework’ about which I will speak later in this speech. This budget details some of the specific actions to be initiated in the current year towards the fulfillment of these priorities with the potential for transformative changes. The budget also covers some of the previously made announcements with an intent to strengthen them and step up their implementation for expediting our journey towards the goal of Viksit Bharat.
Priority 1: Productivity and Resilience in Agriculture
Transforming Agriculture Research
Our government will undertake a comprehensive review of the agriculture research setup to bring the focus on raising productivity and developing climate-resilient varieties. Funding will be provided in challenge mode, including to the private sector. Domain experts both from the government and outside will oversee the conduct of such research.
Release of New Varieties
New 109 high-yielding and climate-resilient varieties of 32 field and horticulture crops will be released for cultivation by farmers.
Natural Farming
In the next two years, 1 crore farmers across the country will be initiated into natural farming supported by certification and branding. Implementation will be through scientific institutions and willing gram panchayats. 10,000 need-based bio-input resource centers will be established.
Missions for Pulses and Oilseeds
For achieving self-sufficiency in pulses and oilseeds, we will strengthen their production, storage, and marketing. As announced in the interim budget, a strategy is being put in place to achieve ‘atmanirbharta’ for oil seeds such as mustard, groundnut, sesame, soybean, and sunflower.
Vegetable Production & Supply Chains
Large-scale clusters for vegetable production will be developed closer to major consumption centers. We will promote Farmer-Producer Organizations, cooperatives, and start-ups for vegetable supply chains including for collection, storage, and marketing.
Digital Public Infrastructure for Agriculture
Buoyed by the success of the pilot project, our government, in partnership with the states, will facilitate the implementation of the Digital Public Infrastructure (DPI) in agriculture for coverage of farmers and their lands in three years. During this year, the digital crop survey for Kharif using the DPI will be taken up in 400 districts. The details of 6 crore farmers and their lands will be brought into the farmer and land registries. Further, the issuance of Jan Samarth-based Kisan Credit Cards will be enabled in five states.
Shrimp Production & Export
Financial support for setting up a network of Nucleus Breeding Centres for Shrimp Broodstocks will be provided. Financing for shrimp farming, processing, and export will be facilitated through NABARD.
National Cooperation Policy
Our government will bring out a National Cooperation Policy for the systematic, orderly, and all-round development of the cooperative sector. Fast-tracking the growth of the rural economy and the generation of employment opportunities on a large scale will be the policy goal. This year, I have made a provision of ₹52 lakh crore for agriculture and the allied sector.
Priority 2: Employment & Skilling
Employment Linked Incentive
Our government will implement the following three schemes for ‘Employment Linked Incentive’, as part of the Prime Minister’s package. These will be based on enrollment in the EPFO, and focus on the recognition of first-time employees, and support to employees and employers.
Scheme A: First Timers
This scheme will provide one-month wage to all persons newly entering the workforce in all formal sectors. The direct benefit transfer of one-month 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. The scheme is expected to benefit 210 lakh youth.
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 both to the employee and the employer with respect to 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 counted. The government will reimburse employers up to ₹3,000 per month for two years towards their EPFO contribution for each additional employee. The scheme is expected to incentivize additional employment of 50 lakh persons.
Participation of Women in the Workforce
We will facilitate higher participation of women in the workforce through the setting up of working women hostels in collaboration with the industry and establishing creches. In addition, the partnership will seek to organize women-specific skilling programs, and promotion of market access for women SHG enterprises.
Skilling Programme
I am happy to announce a new centrally sponsored scheme, as the fourth scheme under the Prime Minister’s package, for skilling in collaboration with state governments and industry. 20 lakh youth will be skilled over a five-year period. 1,000 Industrial Training Institutes will be upgraded in hub and spoke arrangements with outcome orientation. Course content and design will be aligned to the skill needs of the industry, and new courses will be introduced for emerging needs.
Skilling Loans
The Model Skill Loan Scheme will be revised to facilitate loans up to ₹5 lakh with a guarantee from a government-promoted Fund. This measure is expected to help 25,000 students every year.
Education Loans
For helping our youth who have not been eligible for any benefit under government schemes and policies, I am happy to announce financial support for loans up to ₹10 lakh for higher education in domestic institutions. E-vouchers for this purpose will be given directly to 1 lakh students every year for annual interest subvention of 3 percent of the loan amount.
Priority 3: Inclusive Human Resource Development and Social Justice
Saturation Approach
Our government is committed to the all-round, all-pervasive, and all-inclusive development of people, particularly farmers, youth, women, and the poor. For achieving social justice comprehensively, the saturation approach of covering all eligible people through various programs including those for education and health will be adopted to empower them by improving their capabilities. Implementation of schemes meant for supporting economic activities by craftsmen, artisans, self-help groups, scheduled caste, schedule tribe and women entrepreneurs, and street vendors, such as PM Vishwakarma, PM SVANidhi, National Livelihood Missions, and Stand-Up India will be stepped up.
Purvodaya
The states in the Eastern part of the country are rich in endowments and have strong cultural traditions. We will formulate a plan, Purvodaya, for the all-round development of the eastern region of the country covering Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh. This will cover human resource development, infrastructure, and generation of economic opportunities to make the region an engine to attain Viksit Bharat.
On the Amritsar Kolkata Industrial Corridor, we will support the development of an industrial node at Gaya. This corridor will catalyze the industrial development of the eastern region. The industrial node at Gaya will also be a good model for developing our ancient centers of cultural importance into future centers of the modern economy. This model shall showcase “Vikas bhi Virasat bhi” in our growth trajectory. We will also support the development of road connectivity projects, namely (1) Patna-Purnea Expressway, (2) Buxar-Bhagalpur Expressway, (3) Bodhgaya, Rajgir, Vaishali and Darbhanga spurs, and (4) additional two-lane bridge over the river Ganga at Buxar at a total cost of ₹26,000 crore. Power projects, including setting up a new 2400 MW power plant at Pirpainti, will be taken up at a cost of ₹21,400 crore. New airports, medical colleges, and sports infrastructure in Bihar will be constructed. An additional allocation to support capital investments will be provided. The requests of the Bihar Government for external assistance from multilateral development banks will be expedited.
Andhra Pradesh Reorganization Act
Our government has made concerted efforts to fulfill the commitments in the Andhra Pradesh Reorganization Act. Recognizing the state’s need for a capital, we will facilitate special financial support through multilateral development agencies. In the current financial year ₹15,000 crore will be arranged, with additional amounts in future years. Our government is fully committed to financing and the early completion of the Polavaram Irrigation Project, which is the lifeline for Andhra Pradesh and its farmers. This will facilitate our country’s food security as well. Under the Act, for promoting industrial development, funds will be provided for essential infrastructure such as water, power, railways, and roads in the Kopparthy node on the Vishakhapatnam-Chennai Industrial Corridor and Orvakal node on the Hyderabad-Bengaluru Industrial Corridor. An additional allocation will be provided this year towards capital investment for economic growth. Grants for backward regions of Rayalaseema, Prakasam, and North Coastal Andhra, as stated in the Act, will also be provided.
PM Awas Yojana
Three crore additional houses under the PM Awas Yojana in rural and urban areas in the country have been announced, for which the necessary allocations are being made.
Women-led Development
For promoting women-led development, the budget carries an allocation of more than ₹3 lakh crore for schemes benefiting women and girls. This signals our government’s commitment to enhancing women’s role in economic development.
Pradhan Mantri Janjatiya Unnat Gram Abhiyan
For improving the socio-economic condition of tribal communities, we will launch the Pradhan Mantri Janjatiya Unnat Gram Abhiyan by adopting saturation coverage for tribal families in tribal-majority villages and aspirational districts. This will cover 63,000 villages benefiting 5 crore tribal people.
Bank Branches in North-Eastern Region
More than 100 branches of India Post Payment Bank will be set up in the North East region to expand banking services. This year, I have made a provision of ₹66 lakh crore for rural development including rural infrastructure.
Priority 4: Manufacturing & Services
Support for Promotion of MSMEs
This budget provides special attention to MSMEs and manufacturing, particularly labor-intensive manufacturing. We have formulated a package covering financing, regulatory changes, and technology support for MSMEs to help them grow and also compete globally, as mentioned in the interim budget. I am happy to announce the following specific measures.
Credit Guarantee Scheme for MSMEs in the Manufacturing Sector
For facilitating term loans to MSMEs for the purchase of machinery and equipment without collateral or third-party guarantee, a credit guarantee scheme will be introduced. The scheme will operate on the pooling of credit risks of such MSMEs. A separately constituted self-financing guarantee fund will provide, to each applicant, a guarantee cover up to ₹100 crore, while the loan amount may be larger. The borrower will have to provide an upfront guarantee fee and an annual guarantee fee on the reducing loan balance.
New Assessment Model for MSME Credit
Public sector banks will build their in-house capability to assess MSMEs for credit, instead of relying on external assessment. They will also take a lead in developing or getting developed a new credit assessment model, based on the scoring of digital footprints of MSMEs in the economy. This is expected to be a significant improvement over the traditional assessment of credit eligibility based only on asset or turnover criteria. That will also cover MSMEs without a formal accounting system.
Credit Support to MSMEs During Stress Period
I am happy to announce a new mechanism for facilitating the continuation of bank credit to MSMEs during their stress period. While being in the ‘special mention account’ (SMA) stage for reasons beyond their control, MSMEs need credit to continue their business and to avoid getting into the NPA stage. Credit availability will be supported through a guarantee from a government-promoted fund.
Mudra Loans
The limit of Mudra loans will be enhanced to ₹20 lakh from the current ₹10 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category.
Enhanced Scope for Mandatory Onboarding in TReDS
For facilitating MSMEs to unlock their working capital by converting their trade receivables into cash, I propose to reduce the turnover threshold of buyers for mandatory onboarding on the TReDS platform from ₹500 crore to ₹250 crore. This measure will bring 22 more CPSEs and 7000 more companies onto the platform. Medium enterprises will also be included in the scope of the suppliers.
SIDBI Branches in MSME Clusters
SIDBI will open new branches to expand its reach to serve all major MSME clusters within three years and provide direct credit to them. With the opening of 24 such branches this year, the service coverage will expand to 168 out of 242 major clusters.
MSME Units for Food Irradiation, Quality & Safety Testing
Financial support for setting up of 50 multi-product food irradiation units in the MSME sector will be provided. Setting up of 100 food quality and safety testing labs with NABL accreditation will be facilitated.
E-Commerce Export Hubs
To enable MSMEs and traditional artisans to sell their products in international markets, E-Commerce Export Hubs will be set up in public-private partnership (PPP) mode. These hubs, under a seamless regulatory and logistic framework, will facilitate trade and export-related services under one roof.
Measures for Promotion of Manufacturing & Services
Internship in Top Companies
As the fifth scheme under the Prime Minister’s package, our government will launch a comprehensive scheme for providing internship opportunities in 500 top companies to 1 crore youth in five years. They will gain exposure for 12 months to the real-life business environment, varied professions, and employment opportunities. An internship allowance of ₹5,000 per month along with a one-time assistance of ₹6,000 will be provided. Companies will be expected to bear the training cost and 10 percent of the internship cost from their CSR funds.
Industrial Parks
Our government will facilitate the development of investment-ready “plug and play” industrial parks with complete infrastructure in or near 100 cities, in partnership with the states and private sector, by better using town planning schemes. Twelve industrial parks under the National Industrial Corridor Development Programme also will be sanctioned.
Rental Housing
Rental housing with dormitory-type accommodation for industrial workers will be facilitated in PPP mode with VGF support and commitment from anchor industries.
Shipping Industry
Ownership, leasing, and flagging reforms will be implemented to improve the share of the Indian shipping industry and generate more employment.
Critical Mineral Mission
We will set up a Critical Mineral Mission for domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets. Its mandate will include technology development, skilled workforce, extended producer responsibility framework, and a suitable financing mechanism.
Offshore Mining of Minerals
Our government will launch the auction of the first tranche of offshore blocks for mining, building on the exploration already carried out.
Digital Public Infrastructure Applications
Turning to the services sector, I propose the development of DPI applications at population scale for productivity gains, business opportunities, and innovation by the private sector. These are planned in the areas of credit, e-commerce, education, health, law and justice, logistics, MSME, service delivery, and urban governance.
Integrated Technology Platform for IBC Ecosystem
An Integrated Technology Platform will be set up for improving the outcomes under the Insolvency and Bankruptcy Code (IBC) for achieving consistency, transparency, timely processing, and better oversight for all stakeholders.
Voluntary Closure of LLPs
The services of the Centre for Processing Accelerated Corporate Exit (C-PACE) will be extended for voluntary closure of LLPs to reduce the closure time.
National Company Law Tribunals
The IBC has resolved more than 1,000 companies, resulting in direct recovery of over ₹3 lakh crore to creditors. In addition, 28,000 cases involving over ₹10 lakh crore have been disposed of, even before admission. Appropriate changes to the IBC, reforms, and strengthening of the tribunal and appellate tribunals will be initiated to speed up insolvency resolution. Additional tribunals will be established. Out of those, some will be notified to decide cases exclusively under the Companies Act.
Debt Recovery
Steps for reforming and strengthening debt recovery tribunals will be taken. Additional tribunals will be established to speed up recovery.
Priority 5: Urban Development
Cities as Growth Hubs
Working with states, our government will facilitate the development of ‘Cities as Growth Hubs’. This will be achieved through economic and transit planning and orderly development of peri-urban areas utilizing town planning schemes.
Creative Redevelopment of Cities
For creative brownfield redevelopment of existing cities with a transformative impact, our government will formulate a framework for enabling policies, market-based mechanisms, and regulation.
Transit Oriented Development
Transit Oriented Development plans for 14 large cities with a population above 30 lakh will be formulated, along with an implementation and financing strategy.
Urban Housing
Under the PM Awas Yojana Urban 2.0, the housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of ₹10 lakh crore. This will include the central assistance of ₹2.2 lakh crore in the next five years. A provision of interest subsidy to facilitate loans at affordable rates is also envisaged. In addition, enabling policies and regulations for efficient and transparent rental housing markets with enhanced availability will also be put in place.
Water Supply and Sanitation
In partnership with the State Governments and Multilateral Development Banks, we will promote water supply, sewage treatment, and solid waste management projects and services for 100 large cities through bankable projects. These projects will also envisage the use of treated water for irrigation and filling up of tanks in nearby areas.
Street Markets
Building on the success of the PM SVANidhi Scheme in transforming the lives of street vendors, our Government envisions a scheme to support each year, over the next five years, the development of 100 weekly ‘haats’ or street food hubs in select cities.
Stamp Duty
We will encourage states which continue to charge high stamp duty to moderate the rates for all and also consider further lowering duties for properties purchased by women. This reform will be made an essential component of urban development schemes.
Priority 6: Energy Security
Energy Transition
In the interim budget, I had announced our strategy to sustain high and more resource-efficient economic growth, along with energy security in terms of availability, accessibility, and affordability. We will bring out a policy document on appropriate energy transition pathways that balance the imperatives of employment, growth, and environmental sustainability.
PM Surya Ghar Muft Bijli Yojana
In line with the announcement in the interim budget, PM Surya Ghar Muft Bijli Yojana has been launched to install rooftop solar plants to enable 1 crore households to obtain free electricity up to 300 units every month. The scheme has generated a remarkable response with more than 1.28 crore registrations and 14 lakh applications, and we will further encourage it.
Pumped Storage Policy
A policy for promoting pumped storage projects will be brought out for electricity storage and facilitating smooth integration of the growing share of renewable energy with its variable & intermittent nature in the overall energy mix.
Research and Development of Small and Modular Nuclear Reactors
Nuclear energy is expected to form a very significant part of the energy mix for Viksit Bharat. Towards that pursuit, our government will partner with the private sector for (1) setting up Bharat Small Reactors, (2) research & development of Bharat Small Modular Reactor, and (3) research & development of newer technologies for nuclear energy. The R&D funding announced in the interim budget will be made available for this sector.
Advanced Ultra Super Critical Thermal Power Plants
The development of indigenous technology for Advanced Ultra Super Critical (AUSC) thermal power plants with much higher efficiency has been completed. A joint venture between NTPC and BHEL will set up a full-scale 800 MW commercial plant using AUSC technology. The government will provide the required fiscal support. Moving forward, the development of indigenous capacity for the production of high-grade steel and other advanced metallurgy materials for these plants will result in strong spin-off benefits for the economy.
Roadmap for ‘Hard to Abate’ Industries
A roadmap for moving the ‘hard to abate’ industries from ‘energy efficiency’ targets to ‘emission targets’ will be formulated. Appropriate regulations for the transition of these industries from the current ‘Perform, Achieve and Trade’ mode to ‘Indian Carbon Market’ mode will be put in place.
Support to Traditional Micro and Small Industries
An investment-grade energy audit of traditional micro and small industries in 60 clusters, including brass and ceramic, will be facilitated. Financial support will be provided for shifting them to cleaner forms of energy and implementing energy efficiency measures. The scheme will be replicated in another 100 clusters in the next phase.
Priority 7: Infrastructure
Infrastructure Investment by Central Government
Significant investment the Central Government has made over the years in building and improving infrastructure has had a strong multiplier effect on the economy. We will endeavor to maintain strong fiscal support for infrastructure over the next five years, in conjunction with the imperatives of other priorities and fiscal consolidation. This year, I have provided ₹1.11 lakh crore for capital expenditure. This would be 3.4 percent of our GDP.
Infrastructure Investment by State Governments
We will encourage states to provide support of similar scale for infrastructure, subject to their development priorities. A provision of ₹5 lakh crore for long-term interest-free loans has been made this year also to support the states in their resource allocation.
Private Investment in Infrastructure
Investment in infrastructure by the private sector will be promoted through viability gap funding and enabling policies and regulations. A market-based financing framework will be brought out.
Pradhan Mantri Gram Sadak Yojana (PMGSY)
Phase IV of PMGSY will be launched to provide all-weather connectivity to 25,000 rural habitations which have become eligible in view of their population increase.
Irrigation and Flood Mitigation
Bihar has frequently suffered from floods, many of them originating outside the country. Plans to build flood control structures in Nepal are yet to progress. Our government, through the Accelerated Irrigation Benefit Programme and other sources, will provide financial support for projects with an estimated cost of ₹11,500 crore such as the Kosi-Mechi intra-state link and 20 other ongoing and new schemes including barrages, river pollution abatement, and irrigation projects. In addition, the survey and investigation of Kosi-related flood mitigation and irrigation projects will be undertaken. Assam grapples with floods every year by the Brahmaputra River and its tributaries, originating outside India. We will provide assistance to Assam for flood management and related projects. Himachal Pradesh suffered extensive losses due to floods last year. Our government will provide assistance to the state for reconstruction and rehabilitation through multilateral development assistance. Uttarakhand too suffered losses due to cloud bursts and massive landslides. We will provide assistance to the state. Recently Sikkim witnessed devastating flash floods and landslides that wreaked havoc across the state. Our Government will provide assistance to the state.
Tourism
Tourism has always been a part of our civilization. Our efforts in positioning India as a global tourist destination will also create jobs, stimulate investments and unlock economic opportunities for other sectors. In addition to the measures outlined in the interim budget, I propose the following:
Vishnupad Temple at Gaya and Mahabodhi Temple at Bodh Gaya in Bihar are of immense spiritual significance. Comprehensive development of Vishnupad Temple Corridor and Mahabodhi Temple Corridor will be supported, modeled on the successful Kashi Vishwanath Temple Corridor, to transform them into world-class pilgrim and tourist destinations. Rajgir holds immense religious significance for Hindus, Buddhists, and Jains. The 20th Tirthankara Munisuvrata temple in the Jain Temple complex is ancient. The Saptharishi or the seven hot springs form a warm water Brahmakund that is sacred. A comprehensive development initiative for Rajgir will be undertaken. Our government will support the development of Nalanda as a tourist center besides reviving Nalanda University to its glorious stature. Odisha’s scenic beauty, temples, monuments, craftsmanship, wildlife sanctuaries, natural landscapes, and pristine beaches make it an ultimate tourism destination. Our government will provide assistance for their development.
Priority 8: Innovation, Research & Development
We will operationalize the Anusandhan National Research Fund for basic research and prototype development. Further, we will set up a mechanism for spurring private sector-driven research and innovation at a commercial scale with a financing pool of ₹1 lakh crore in line with the announcement in the interim budget.
Space Economy
With our continued emphasis on expanding the space economy by five times in the next 10 years, a venture capital fund of ₹1,000 crore will be set up.
Priority 9: Next Generation Reforms
Economic Policy Framework
We will formulate an Economic Policy Framework to delineate the overarching approach to economic development and set the scope of the next generation of reforms for facilitating employment opportunities and sustaining high growth. Our government will initiate and incentivize reforms for (1) improving the productivity of factors of production, and (2) facilitating markets and sectors to become more efficient. These reforms will cover all factors of production, namely land, labor, capital and entrepreneurship, and technology as an enabler of improving total factor productivity and bridging inequality. Effective implementation of several of these reforms requires collaboration between the Centre and the states and building consensus, as the development of the country lies in the development of the states. For promoting competitive federalism and incentivizing states for faster implementation of reforms, I propose to earmark a significant part of the 50-year interest-free loan. Working with the states, we will initiate the following reforms.
Land-related Reforms by State Governments
Land-related reforms and actions, both in rural and urban areas, will cover (1) land administration, planning, and management, and (2) urban planning, usage, and building bylaws. These will be incentivized for completion within the next three years through appropriate fiscal support.
Rural Land-related Actions
Rural land-related actions will include (1) assignment of Unique Land Parcel Identification Number (ULPIN) or Bhu-Aadhaar for all lands, (2) digitization of cadastral maps, (3) survey of map sub-divisions as per current ownership, (4) establishment of land registry, and (5) linking to the farmers registry. These actions will also facilitate credit flow and other agricultural services.
Urban Land-related Actions
Land records in urban areas will be digitized with GIS mapping. An IT-based system for property record administration, updating, and tax administration will be established. These will also facilitate improving the financial position of urban local bodies.
Labour-related Reforms
Services to Labour
Our government will facilitate the provision of a wide array of services to labor, including those for employment and skilling. A comprehensive integration of e-shram portal with other portals will facilitate such a one-stop solution. Open architecture databases for the rapidly changing labor market, skill requirements, and available job roles, and a mechanism to connect job-aspirants with potential employers and skill providers will be covered in these services.
Shram Suvidha & Samadhan Portal
Shram Suvidha and Samadhan portals will be revamped to enhance ease of compliance for the industry and trade.
Capital and Entrepreneurship Related Reforms
Financial Sector Vision and Strategy
For meeting the financing needs of the economy, our government will bring out a financial sector vision and strategy document to prepare the sector in terms of size, capacity, and skills. This will set the agenda for the next five years and guide the work of the government, regulators, financial institutions, and market participants.
Taxonomy for Climate Finance
We will develop a taxonomy for climate finance for enhancing the availability of capital for climate adaptation and mitigation. This will support the achievement of the country’s climate commitments and green transition.
Variable Capital Company Structure
We will seek the required legislative approval for providing an efficient and flexible mode for financing leasing of aircrafts and ships, and pooled funds of private equity through a ‘variable company structure’.
Foreign Direct Investment and Overseas Investment
The rules and regulations for Foreign Direct Investment and Overseas Investments will be simplified to (1) facilitate foreign direct investments, (2) nudge prioritization, and (3) promote opportunities for using the Indian Rupee as a currency for overseas investments.
NPS Vatsalya
NPS-Vatsalya, a plan for contribution by parents and guardians for minors will be started. On attaining the age of majority, the plan can be converted seamlessly into a normal NPS account.
Use of Technology
We have successfully used technology for improving productivity and bridging inequality in our economy during the past 10 years. Public investment in digital infrastructure and innovations by the private sector have helped in improving access for all citizens, particularly the common people, to market resources, education, health, and services. We will step up the adoption of technology towards the digitalization of the economy.
Ease of Doing Business
For enhancing ‘Ease of Doing Business’, we are already working on the Jan Vishwas Bill 2.0. Further, states will be incentivized for the implementation of their Business Reforms Action Plans and digitalization.
Data and Statistics
For improving data governance, collection, processing, and management of data and statistics, different sectoral databases, including those established under the Digital India mission, will be utilized with active use of technology tools.
New Pension Scheme (NPS)
The Committee to review the NPS has made considerable progress in its work. I am happy that the Staff Side of the National Council of the Joint Consultative Machinery for Central Government Employees has taken a constructive approach. A solution will be evolved which addresses the relevant issues while maintaining fiscal prudence to protect the common citizens.
Budget Estimates 2024-25
For the year 2024-25, the total receipts other than borrowings and the total expenditure are estimated at ₹37 lakh crore and ₹48.21 lakh crore respectively. The net tax receipts are estimated at ₹25.83 lakh crore. The fiscal deficit is estimated at 4.9 percent of GDP. The gross and net market borrowings through dated securities during 2024-25 are estimated at ₹13.01 lakh crore and ₹11.63 lakh crore respectively. Both will be less than that in 2023-24. The fiscal consolidation path announced by me in 2021 has served our economy very well, and we aim to reach a deficit below 4.5 percent next year. The Government is committed to staying the course. From 2026-27 onwards, our endeavor will be to keep the fiscal deficit each year such that the Central Government debt will be on a declining path as a percentage of GDP.
I will now move to Part B.
PART B
Indirect Taxes
I start with GST. It has decreased the tax incidence on the common man; reduced the compliance burden and logistics cost for trade and industry, and enhanced the revenues of the central and state governments. It is a success of vast proportions. To multiply the benefits of GST, we will strive to further simplify and rationalize the tax structure and endeavor to expand it to the remaining sectors. My proposals for customs duties intend to support domestic manufacturing, deepen local value addition, promote export competitiveness, and simplify taxation, while keeping the interest of the general public and consumers paramount. In Budget 2022-23, we reduced the number of customs duty rates. I propose to undertake a comprehensive review of the rate structure over the next six months to rationalize and simplify it for ease of trade, removal of duty inversion, and reduction of disputes. I shall now take up sector-specific customs duty proposals.
Medicines and Medical Equipment
To provide relief to cancer patients, I propose to fully exempt three more medicines from customs duties. I also propose changes in the BCD on x-ray tubes & flat panel detectors for use in medical x-ray machines under the Phased Manufacturing Programme, so as to synchronize them with domestic capacity addition.
Mobile Phone and Related Parts
With a three-fold increase in domestic production and almost a 100-fold jump in exports of mobile phones over the last six years, the Indian mobile phone industry has matured. In the interest of consumers, I now propose to reduce the BCD on mobile phone, mobile PCBA, and mobile charger to 15 percent.
Critical Minerals
Minerals such as lithium, copper, cobalt, and rare earth elements are critical for sectors like nuclear energy, renewable energy, space, defense, telecommunications, and high-tech electronics. I propose to fully exempt customs duties on 25 critical minerals and reduce BCD on two of them. This will provide a major fillip to the processing and refining of such minerals and help secure their availability for these strategic and important sectors.
Solar Energy
Energy transition is critical in the fight against climate change. To support energy transition, I propose to expand the list of exempted capital goods for use in the manufacture of solar cells and panels in the country. Further, in view of sufficient domestic manufacturing capacity of solar glass and tinned copper interconnect, I propose not to extend the exemption of customs duties provided to them.
Marine Products
India’s seafood exports in the last financial year touched an all-time high of more than ₹60,000 crore. Frozen shrimp accounted for about two-thirds of these exports. To enhance their competitiveness, I propose to reduce BCD on certain broodstock, polychaete worms, shrimp, and fish feed to 5 percent. I also propose to exempt customs duty on various inputs for the manufacture of shrimp and fish feed.
Leather and Textile
Similarly, to enhance the competitiveness of exports in the leather and textile sectors, I propose to reduce BCD on real down filling material from duck or goose. I am also making additions to the list of exempted goods for the manufacture of leather and textile garments, footwear, and other leather articles for export. To rectify inversion in duty, I propose to reduce BCD, subject to conditions, on methylene diphenyl diisocyanate (MDI) for the manufacture of spandex yarn from 7.5 to 5 percent. Furthermore, the export duty structure on raw hides, skins, and leather is proposed to be simplified and rationalized.
Precious Metals
To enhance domestic value addition in gold and precious metal jewelry in the country, I propose to reduce customs duties on gold and silver to 6 percent and that on platinum to 6.4 percent.
Other Metals
Steel and copper are important raw materials. To reduce their cost of production, I propose to remove the BCD on ferro nickel and blister copper. I am also continuing with nil BCD on ferrous scrap and nickel cathode and concessional BCD of 2.5 percent on copper scrap.
Electronics
To increase value addition in the domestic electronics industry, I propose to remove the BCD, subject to conditions, on oxygen-free copper for the manufacture of resistors. I also propose to exempt certain parts for the manufacture of connectors.
Chemicals and Petrochemicals
To support existing and new capacities in the pipeline, I propose to increase the BCD on ammonium nitrate from 7.5 to 10 percent.
Plastics
PVC flex banners are non-biodegradable and hazardous to the environment and health. To curb their imports, I propose to raise the BCD on them from 10 to 25 percent.
Telecommunication Equipment
To incentivize domestic manufacturing, I propose to increase the BCD from 10 to 15 percent on PCBA of specified telecom equipment.
Trade Facilitation
To promote domestic aviation and boat & ship MRO, I propose to extend the period for the export of goods imported for repairs from six months to one year. In the same vein, I propose to extend the time limit for the re-import of goods for repairs under warranty from three to five years.
Direct Taxes
We will continue our efforts to simplify taxes, improve taxpayer services, provide tax certainty, and reduce litigation while enhancing revenues for funding the development and welfare schemes of the government. It has been our endeavor to simplify taxation. We have taken a number of measures in the last few years including the introduction of simplified tax regimes without exemptions and deductions for corporate tax and personal income tax. This has been appreciated by taxpayers. 58 percent of corporate tax came from the simplified tax regime in the financial year 2022-23. Similarly, as per data available till now for the last fiscal, more than two-thirds have availed the new personal income tax regime.
Comprehensive Review of the Income-tax Act, 1961
I am now announcing a comprehensive review of the Income-tax Act, 1961. The purpose is to make the Act concise, lucid, easy to read, and understand. This will reduce disputes and litigation, thereby providing tax certainty to the taxpayers. It will also bring down the demand embroiled in litigation. It is proposed to be completed in six months. A beginning is being made in the Finance Bill by simplifying the tax regime for charities, TDS rate structure, provisions for reassessment and search provisions, and capital gains taxation.
Simplification for Charities and of TDS
The two tax exemption regimes for charities are proposed to be merged into one. The 5 percent TDS rate on many payments is being merged into the 2 percent TDS rate and the 20 percent TDS rate on repurchase of units by mutual funds or UTI is being withdrawn. The TDS rate on e-commerce operators is proposed to be reduced from one to 0.1 percent. Moreover, credit of TCS is proposed to be given in the TDS to be deducted on salary. Further, I propose to decriminalize the delay for payment of TDS up to the due date of filing a statement for the same. I also plan to provide a standard operating procedure for TDS defaults and simplify and rationalize the compounding guidelines for such defaults.
Simplification of Reassessment
I propose to thoroughly simplify the provisions for reopening and reassessment. An assessment hereinafter can be reopened beyond three years from the end of the assessment year only if the escaped income is ₹50 lakh or more, up to a maximum period of five years from the end of the assessment year. Even in search cases, a time limit of six years before the year of search, as against the existing time limit of ten years, is proposed. This will reduce tax uncertainty and disputes.
Simplification and Rationalisation of Capital Gains
Capital gains taxation is also proposed to be hugely simplified. Short-term gains on certain financial assets shall henceforth attract a tax rate of 20 percent, while that on all other financial assets and all non-financial assets shall continue to attract the applicable tax rate. Long-term gains on all financial and non-financial assets, on the other hand, will attract a tax rate of 12.5 percent. For the benefit of the lower and middle-income classes, I propose to increase the limit of exemption of capital gains on certain financial assets to ₹1.25 lakh per year. Listed financial assets held for more than a year will be classified as long-term, while unlisted financial assets and all non-financial assets will have to be held for at least two years to be classified as long-term. Unlisted bonds and debentures, debt mutual funds, and market-linked debentures, irrespective of the holding period, however, will attract tax on capital gains at applicable rates.
Taxpayer Services
All the major taxpayer services under GST and most services under Customs and Income Tax have been digitalized. All remaining services of Customs and Income Tax including rectification and order giving effect to appellate orders shall be digitalized and made paper-less over the next two years.
Litigation and Appeals
While our concerted efforts to reduce the pendency of appeals at various appellate fora are beginning to show good results, it will continue to engage our highest attention. To dispose of the backlog of first appeals, I plan to deploy more officers to hear and decide such appeals, especially those with large tax effects. For the resolution of certain income tax disputes pending in appeal, I am also proposing the Vivad Se Vishwas Scheme, 2024. Further, I propose to increase monetary limits for filing appeals related to direct taxes, excise, and service tax in the Tax Tribunals, High Courts, and Supreme Court to ₹60 lakh, ₹2 crore, and ₹5 crore respectively. With a view to reducing litigation and providing certainty in international taxation, we will expand the scope of safe harbor rules and make them more attractive. We will also streamline the transfer pricing assessment procedure.
Employment and Investment
I have a few proposals to promote investment and foster employment. First of all, to bolster the Indian start-up ecosystem, boost the entrepreneurial spirit and support innovation, I propose to abolish the so-called angel tax for all classes of investors. Second, there is tremendous potential for cruise tourism in India. To give a fillip to this employment-generating industry, I am proposing a simpler tax regime for foreign shipping companies operating domestic cruises in the country. Third, India is a world leader in the diamond cutting and polishing industry, which employs a large number of skilled workers. To further promote the development of this sector, we would provide for safe harbor rates for foreign mining companies selling raw diamonds in the country. Fourth, to attract foreign capital for our development needs, I propose to reduce the corporate tax rate on foreign companies from 40 to 35 percent.
Deepening the Tax Base
I have a couple of proposals for deepening the tax base. First, the Security Transactions Tax on futures and options of securities is proposed to be increased to 0.02 percent and 0.1 percent respectively. Second, for reasons of equity, I propose to tax income received on buyback of shares in the hands of the recipient.
Others
To improve social security benefits, the deduction of expenditure by employers towards NPS is proposed to be increased from 10 to 14 percent of the employee’s salary. Similarly, a deduction of this expenditure up to 14 percent of salary from the income of employees in the private sector, public sector banks, and undertakings, opting for the new tax regime, is proposed to be provided. Indian professionals working in multinationals get ESOPs and invest in social security schemes and other movable assets abroad. Non-reporting of such small foreign assets has penal consequences under the Black Money Act. Such non-reporting of movable assets up to ₹20 lakh is proposed to be de-penalized. Other major proposals in the Finance Bill relate to:
Personal Income Tax
Coming to Personal Income Tax Rates, I have two announcements to make for those opting for the new tax regime. First, the standard deduction for salaried employees is proposed to be increased from ₹50,000 to ₹75,000. Similarly, a deduction on family pension for pensioners is proposed to be enhanced from ₹15,000 to ₹25,000. This will provide relief to about four crore salaried individuals and pensioners. Second, in the new tax regime, the tax rate structure is proposed to be revised, as follows:
As a result of these changes, a salaried employee in the new tax regime stands to save up to ₹17,500 in income tax. Apart from these, I am also making some other changes as given in the annexure. As a result of these proposals, revenue of about ₹37,000 crore – ₹29,000 crore in direct taxes and ₹8,000 crore in indirect taxes – will be forgone while revenue of about ₹30,000 crore will be additionally mobilized. Thus, the total revenue forgone is about ₹7,000 crore annually.
Speaker Sir, with this, I commend the budget to this august House.
Jai Hind.
Annexure to Part – A
Prime Minister’s Package for Employment and Skilling
Coverage and Estimated Central Outlay
| Employment Linked Incentive | |||
| Scheme A (first timers) | 2 | 3 | 210 |
| Scheme B (bulk hiring of first timers in manufacturing) | 2 | 6 | 30 |
| Scheme C (job creation) | 2 | 6 | 50 |
| Internship Programme (Phase-1) | 2 | 3 | 30 |
| Internship Programme (Phase-2) | 3* | 4* | 70 |
| Upgradation of ITIs | N/A | 5 | 20 |
| Total | 410 | 2,00,000 |
*Starting from third year
Outline of Schemes
Employment Linked Incentive Scheme A: First Timers (Para 20)
Employment Linked Incentive Scheme B: Job Creation in Manufacturing (Para 21)
Applicable for substantial hiring of first-time employees in the manufacturing sector
All employers which are corporate entities and those non-corporate entities with a three-year track record of EPFO contribution will be eligible.
The employer must hire at least the following number of previously non-EPFO enrolled workers:
The incentive will be paid for four years partly to the employee and partly to the employer as follows:
The employer must maintain a threshold level of enhanced employment throughout, failing which the subsidy benefit will stop.
The employee must be directly working in the entity paying salary/wage (i.e., an in-sourced employee).
Employees with a wage/salary of up to ₹1 lakh per month will be eligible, subject to contribution to EPFO.
For those with wages/salaries greater than ₹25,000/month, the incentive will be calculated at ₹25,000/month.
The subsidy is to be refunded by the employer if the employment of the first-timer ends within 12 months of recruitment.
This subsidy will be in addition to the benefit under Part-A
The scheme will be for 2 years
Employment Linked Incentive Scheme C: Support to Employers (Para 22)
Skilling Programme and Upgradation of Industrial Training Institutes (Para 24)
Internship in Top Companies (Para 51)
Note: Details of the schemes are subject to modification during the process of appraisal and approval.
Annexure to Part B
Amendments relating to Indirect Taxes
A. LEGISLATIVE CHANGES IN CUSTOMS LAWS
A.1 Amendments in the Customs Act, 1962
(i) Section 28 DA is being amended to enable the acceptance of different types of proof of origin provided in trade agreements in order to align the said section with new trade agreements which provide for self-certification.
(ii) A proviso to sub-section (1) of Section 65 is being inserted to empower the Central Government to specify certain manufacturing and other operations in relation to a class of goods that shall not be permitted in a warehouse.
(iii) The expression “a class of importers or exporters” is being substituted with “a class of importers or exporters or any other persons” in Section 143AA of the Customs Act for purposes of facilitating trade. Consequential changes are being carried out in clause (m) of subsection (2) of Section 157 of the Customs Act.
These changes shall come into effect from the date of assent to the Finance (No.2) Bill
A.2 Amendments in the Customs Tariff Act, 1975
(i) Section 6 is being omitted on account of the winding up of the Tariff Commission.
(ii) The First Schedule to the Customs Tariff Act, 1975 is being amended to:
(a) Increase the rates on certain tariff items with effect from 24.07.2024.
(b) Create new tariff lines in respect of defense products, technical textiles, sustainable blended aviation fuel, products used in Indian semiconductor machines, e-bicycles, natural menthol, printer cartridge, etc. This is to align the tariff lines with WCO classification and better identification of goods. These changes shall come into effect from 01.10.2024.
A.3 Amendment of Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidized Articles and for Determination of Injury) Rules, 1995
The Customs Tariff (Identification, Assessment, and Collection of Countervailing Duty on Subsidized Articles and for Determination of Injury) Rules, 1995 have been amended to insert a provision for New Shipper Review. This will be effective from 24.07.2024.
B. LEGISLATIVE CHANGES IN GST LAWS [Save as otherwise provided, these changes will be brought into effect from a date to be notified in coordination with States, as per recommendations of the GST council]
AMENDMENT FOR TRADE FACILITATION
B.1 Amendment to keep Extra Neutral Alcohol outside the purview of central tax:
Section 9 is being amended to take Extra Neutral Alcohol used in the manufacture of alcoholic liquor for human consumption out of the purview of central tax. Similar amendments are also proposed in IGST Act and UTGST Act.
B.2 Amendment to regularize non-levy and short-levy of central tax due to general practice
Section 11A is being inserted to empower the government to regularize non-levy or short levy of central tax due to any general practice prevalent in trade. Similar power is being proposed in IGST Act, UTGST Act, and GST (Compensation to States) Act.
B.3 Amendment to relax the time limits to avail input tax credit
New sub-sections (5) and (6) are being inserted in section 16 of CGST Act to relax the time limit to avail input tax credit as per section 16(4) of the CGST Act with effect from 01.07.2017, as follows:
(a) In respect of initial years of implementation of GST, i.e., financial years 2017-18, 2018-19, 2019-20, and 2020-21:
In respect of an invoice or debit note for the Financial Years 2017-18, 2018-19, 2019-20, and 2020-21, the registered person shall be entitled to take input tax credit in any return under section 39 which is filed up to the 30th day of November, 2021
(b) with respect to cases where returns have been filed after revocation:
The time limit to avail input tax credit in respect of an invoice or debit note, in cases where returns for the period from the date of cancellation of registration/effective date of cancellation of registration till the date of revocation of cancellation of the registration, will be extended till the date of filing the said GSTR-3B return, subject to certain conditions, if the said return is filed by the registered person within thirty days of the order of revocation of cancellation of registration.
B.4 Insertion of new section to provide a common time limit for issuance of demand notices and orders
Section 74A is being inserted in the CGST Act to provide a common time limit for the issuance of demand notices and orders in respect of demands for FY 2024-25 onwards, for cases involving charges of fraud, suppression of facts or willful misstatement and the cases not involving the charges of fraud, suppression of facts or willful misstatement, etc. Also, the time limit for the taxpayers to avail the benefit of reduced penalty, by paying the tax demanded along with interest, is being increased from 30 days to 60 days.
B.5 Amendment to reduce the maximum amount of pre-deposit for filing appeals
Sections 107 and 112 of CGST Act are being amended to reduce the maximum amount of pre-deposit for filing appeal with the Appellate Authority from ₹25 crore of central tax to ₹20 crore of central tax and to reduce the amount of pre-deposit for filing appeal with the Appellate Tribunal from 20 percent with a maximum amount of ₹50 crore of central tax to 10 percent with a maximum of ₹20 crore of central tax. Besides, the time limit for filing appeals before the Appellate Tribunal is being modified w.e.f. 1st August 2024 to avoid the appeals from getting time-barred, on account of Appellate Tribunal not coming into operation.
B.6 Amendment to provide conditional waiver of interest or penalty or both relating to demands raised under section 73, for certain tax periods
Section 128A is being inserted in the CGST Act to provide for a conditional waiver of interest and penalty in respect of demands pertaining to financial years 2017-18, 2018-19, and 2019-20, in cases where demand notices have been issued under section 73 and full tax liability is paid by the taxpayer before a date to be notified.
B.7 Amendment to enable availment of the transitional credit of eligible CENVAT credit by Input Services Distributor in respect of invoices received prior to the appointed date
Section 140(7) of CGST Act is being amended with effect from 01.07.2017, to enable availment of transitional credit in respect of input services received by an Input Services Distributor prior to the appointed day, where invoices were also received prior to the appointed day.
B.8 Amendment to empower Government to notify Appellate Tribunal to handle anti-profiteering cases and to provide for a sunset clause for accepting anti-profiteering cases
Section 171 of CGST Act is being amended to enable the Government to notify the GST Appellate Tribunal to handle anti-profiteering cases and to empower the Government to notify a date after which the Authority for anti-profiteering shall not accept applications for examination.
B.9 Amendment to clarify various activities in the insurance sector as neither a supply of goods nor a supply of services
Paragraphs 8 and 9 are being inserted in Schedule III of CGST Act to provide that the activity of apportionment of co-insurance premiums by the lead insurer to the co-insurers in the co-insurance agreement and the services by insurers to reinsurers in respect of ceding/re-insurance commission will, subject to certain conditions, be treated neither as a supply of goods nor as a supply of services.
OTHER LAW AMENDMENTS IN CGST ACT
B10. Amendment to clarify the time of supply of services in reverse charge supplies.
Amendment is proposed in Section 13 of CGST Act to provide for time of supply of services where the invoice is required to be issued by the recipient of services in cases of reverse charge supplies.
B11. Amendment to restrict blockage of input tax credit for tax paid under section 74 to demands up to Financial Year 2023-24
Clause (i) of Section 17 of CGST Act is being amended to restrict blockage of input tax credit for tax paid under Section 74 for demands pertaining up to FY 2023-24.
B12. Amendment to provide for conditions and restrictions for revocation of cancellation of registration
Section 30 of the CGST Act is being amended to enable the government to prescribe conditions and restrictions for revocation of cancellation of registration.
B13. Amendment to prescribe the time period for issuance of invoice by recipient in Reverse Charge Mechanism supplies
Clause (f) of section 31 of CGST Act is being amended to provide for an enabling provision to prescribe the time period within which the invoice has to be issued by the recipient under reverse charge mechanism and to clarify that a person registered solely for the purpose of deducting TDS under section 51 of CGST Act shall be treated as a person not registered for the purpose of clause (f) of section 31(3) of the said Act.
B14. Amendment to make filing of monthly returns by TDS deductors mandatory.
Section 39 is being amended to mandate filing of returns by TDS deductors for every month, even if no deductions are made during the said month, and also to provide for an enabling clause for prescribing the time limit for filing such returns.
B15. Amendment to prohibit refund in zero-rated supply of goods where such goods are subjected to export duty.
Section 54 of CGST Act and section 16 of IGST Act are being amended to prohibit a refund of unutilized input tax credit or integrated tax on zero-rated supply of goods, which are subjected to export duty.
B16. Amendment for allowing appearance by an authorized representative on behalf of a summoned person
Sub-section 1A is being inserted in section 70 of the CGST Act to enable appearance by an authorized representative on behalf of a summoned person.
B17. Amendment to empower the government to notify cases which shall be heard only by the principal Bench of GST Appellate Tribunal
Section 109 of CGST Act is being amended to empower the government to specify cases to be heard only by the Principal Bench of the Appellate Tribunal.
B18. Amendment to restrict applicability of penal provisions under Section 122(1B) to Electronic Commerce Operators who deduct TCS
Section 122(1B) of CGST Act is being amended w.e.f. 01.10.2023 to restrict the applicability of penal provisions under this section to only those Electronic Commerce Operators who are required to collect tax at source under section 52.
B19. Consequential amendments due to the insertion of new section 74A in the CGST Act
Sections 73 and 74 of CGST Act are being amended to limit the applicability of these sections to demands up to FY 2023-24, since from FY 2024-25 onwards demands are to be ascertained as per provisions of newly inserted section 74A. Also, Section 75 of CGST Act is being amended to allow for redetermination of penalties if the charges of fraud, suppression, or willful misstatement are not established. Further, references to section 74A or the concerned sub-sections of section 74A are being inserted in section 10, section 21, section 35, section 49, section 50, section 51, section 62, section 63, section 64, section 65, section 66, section 104, and section 127.
C. OTHER PROVISIONS IN THE FINANCE (No. 2) BILL
C.1 Amendment of Customs duty notification dated 10.5.2023
Notification No. 37/2023- Customs dated 10.5.23 is being validated for the period from 1st April 2023 up to and inclusive of 10th May 2023 to provide exemption from basic customs duty and AIDC on imports of crude soybean oil and crude sunflower seed oil subject to availability of unutilized quota in TRQ authorization for FY 2022-23 allotted by DGFT and Bill of lading issued on or before 31st March 2023. The changes will come into effect from the date of assent to the Finance (No.2) Bill 2024
C.2 Amendment of Central excise duty notification dated 17.3.2012
Notification No 12/2012-Central Excise dated 17.3.2012 is being amended to extend the time period for submission of the final Mega Power Project certificate from 120 months to 156 months. The changes will come into effect from the date of assent to the Finance (No.2) Bill 2024
C.3 Exemption from Clean Environment Cess
The Clean Environment Cess, levied and collected as a duty of excise, is being exempted on excisable goods lying in stock as on 30th June 2017, subject to payment of appropriate GST Compensation Cess on the supply of such goods on or after 1st July 2017. The changes will come into effect from the date of assent to the Finance (No.2) Bill 2024
C.4 Exemption GST Compensation Cess, 2017
Based on the recommendation of the GST Council in its 53rd meeting, GST Compensation Cess is being exempted with effect from 1st July 2017 on imports in SEZ by SEZ units or developers for authorized operations. The changes will come into effect from the date of assent to the Finance (No.2) Bill 2024
CUSTOMS DUTY RATE CHANGES
D.1 Reduction in customs duty to reduce input costs, deepen value addition, promote export competitiveness, correct inverted duty structure, boost domestic manufacturing etc. [with effect from 24.07.2024]
| S. No. | Commodity | From (per cent) | To (per cent) |
|---|---|---|---|
| I. Agricultural Products | |||
| 1 | Shea nuts | 30 | 15 |
| II. Aquafarming & Marine exports | |||
| 1 | Prawn and Shrimps feed | 15 | 5 |
| 2 | Fish feed | 15 | 5 |
| 3 | Following inputs for the manufacture of Prawn and Shrimps feed or fish feed: (i) Mineral & vitamin premixes (ii) Krill Meal (iii) Fish lipid oil (iv) Crude fish oil (v) Algal prime (flour) (vi) Algal oil | 30/15/5 | Nil |
| 4 | Artemia | 5 | Nil |
| 5 | Artemia cysts | 5 | Nil |
| 6 | SPF Polychaete worms | 30 | 5 |
| 7 | Live SPF Vannamei shrimp (Litopenaeus vannamei) broodstock & Live Black tiger shrimp (Penaeus monodon) broodstock | 10 | 5 |
| 8 | Insect Meal for use in R&D for aquatic feed manufacturing | 15 | 5 |
| 9 | Single Cell Protein from Natural Gas for use in R&D for aquatic feed manufacturing | 15 | 5 |
| 10 | Pre-dust breaded powder for use in processing of seafood | 30 | Nil |
| III. Critical Minerals | |||
| 1 | Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, Potash, REE, Rhenium, Strontium, Tantalum, Tellurium, Tin, Tungsten, Vanadium, Zirconium, Selenium, Cadmium, Silicon other than Quartz & Silicon Dioxide | 10/7.5/5/2.5 | Nil |
| 2 | Graphite | 7.5/5 | 2.5 |
| 3 | (i) Silicon Quartz (ii) Silicon Dioxide | 7.5/5 | 2.5 |
| IV. Cancer Drugs | |||
| 1 | (i) Trastuzumab Deruxtecan (ii) Osimertinib (iii) Durvalumab | 10 | Nil |
| V. Precious Metals | |||
| 1 | Gold bar | 15 | 6 |
| 2 | Gold dore | 14.35 | 5.35 |
| 3 | Silver bar | 15 | 6 |
| 4 | Silver dore | 14.35 | 5.35 |
| 5 | Platinum, Palladium, Osmium, Ruthenium, Iridium | 15.4 | 6.4 |
| 6 | Coins of precious metals | 15 | 6 |
| 7 | Gold/Silver findings | 15 | 6 |
| 8 | Platinum and Palladium used in the manufacture of noble metal solutions, noble metal compounds and catalytic convertors | 7.5 | 5 |
| 9 | Bushings made of platinum and rhodium alloy when imported in exchange of worn-out or damaged bushings exported out of India | 7.5 | 5 |
| VI. Textile and Leather Sector | |||
| 1 | MDI for the manufacture of spandex yarn | 7.5 | 5 |
| 2 | Wet white, Crust, and finished leather for the manufacture of textile or leather garments, leather/synthetic footwear, or other leather products, for export | 10 | Nil |
| 3 | Certain additional accessories and embellishments for the manufacture of textile or leather garments, leather/synthetic footwear, or other leather products, for export | As applicable | Nil |
| 4 | Real Down Filling material from duck or goose for use in the manufacture of textile or leather garments for export | 30 | 10 |
| VII. Steel Sector | |||
| 1 | Ferro-Nickel | 2.5 | Nil |
| 2 | Ferrous Scrap | Nil (till 30.09.2024) | Nil (till 31.03.2026) |
| 3 | Certain specified raw materials for the manufacture of CRGO steel | Nil (till 30.09.2024) | Nil (till 31.03.2026) |
| VIII. Copper Sector | |||
| 1 | Blister Copper | 5 | Nil |
| IX. Capital Goods | |||
| 1 | Certain additional goods for use in petroleum exploration operations | As applicable | Nil |
| 2 | Certain additional capital goods for use in the manufacture of solar cells and modules | 7.5 | Nil |
| X. Shipping Sector | |||
| 1 | Components and consumables for the manufacture of vessels | As applicable | Nil |
| 2 | Technical documentation and spare parts for construction of warships | As applicable | Nil |
| XI. IT and Electronics | |||
| 1 | Cellular Mobile Phone | 20 | 15 |
| 2 | Charger/Adapter of cellular mobile phone | 20 | 15 |
| 3 | Printed Circuit Board Assembly (PCBA) of cellular mobile phone | 20 | 15 |
| 4 | Specified goods for use in the manufacture of connectors | 5/7.5 | Nil |
| 5 | Oxygen Free Copper for use in the manufacture of Resistors | 5 | Nil |
| XII. Medical Equipment | |||
| 1 | All types of polyethylene for use in the manufacture of orthopedic implants | As applicable | Nil |
| 2 | Special grade stainless steel, Titanium alloys, Cobalt-chrome alloys, and all types of polyethylene for use in the manufacture of other artificial parts of the body | As applicable | Nil |
| 3 | X-ray tubes and Flat panel detectors (including scintillators) for use in the manufacture of medical, surgical, dental, or veterinary X-ray machines | 15 (till 31.03.2025) | 5 (till 31.03.2025) |
| | | 7.5 (1.4.2025 to 31.3.2026) | 10 (1.4.2026 onwards) |
D.2 Increase in Customs duty [with effect from 24.07.2024]
| S. No. | Commodity | Rate of duties From (per cent) | To (per cent) |
|---|---|---|---|
| I. Plastics and Chemicals | |||
| 1 | Ammonium Nitrate | 7.5 | 10 |
| 2 | PVC Flex Films/Flex Banners | 10 | 25 |
| II. Chemicals | |||
| 1 | Laboratory Chemicals under heading 9802 | 10 | 150 |
| III. Renewable Sector | |||
| 1 | Solar Glass for the manufacture of solar cells or modules | Nil | 10 (w.e.f 1.10.24) |
| 2 | Tinned Copper Interconnect for the manufacture of solar cells or modules | Nil | 5 (w.e.f 1.10.24) |
| IV. Miscellaneous Items | |||
| 1 | PCBA of specified telecom equipment | 10 | 15 |
| 1 | Garden Umbrella (tariff item 6601 10 00) | 20 | 20 or ₹60 per piece whichever is higher |
D.3 Increase in tariff rate with no change in effective duty rate [With effect from 01.10.2024]
| S. No. | Commodity | Rate of duties From (per cent) | To (per cent) |
|---|---|---|---|
| 1 | Other roasted nuts and seeds, including areca nuts | 30 | 150 |
| 2 | Other nuts, otherwise prepared or preserved, including areca nuts | 30 | 150 |
D.4 Rationalization of Export duty on Raw hides, skins and leather [with effect from 24.07.2024]
| S. No. | Commodity | Rate of duties From (per cent) | To (per cent) |
|---|---|---|---|
| 1 | Raw Hides & skins, all sorts (other than buffalo) | 40 | 40 |
| 2 | Raw Hides & skins of buffalo | 30 | 30 |
| 3 | Raw fur and skins including lamb fur skin | 60/10 | 40 |
| 4 | Wet Blue Chrome Leather | 40 | 20 |
| 5 | Crust Leather | 40 | 20 |
| 6 | Tanned fur skin | 60 | 20 |
| 7 | E.I. Tanned Leather | Nil | Nil |
| 8 | Finished leather (as defined by DGFT) | Nil | Nil |
Trade Facilitation Measures
E.1 Increase in duration for re-import of goods exported out of India
The time period of duty-free re-import of goods (other than those under export promotion schemes) exported out under warranty from India has been increased from 3 years to 5 years, further extendable by 2 years.
E.2 Increase in duration for export of articles of foreign origin imported into India for repairs
Currently, articles of foreign origin can be imported into India for repairs subject to their re-exportation within six months extendable up to 1 year. The duration for export in the case of aircraft and vessels imported for maintenance, repair, and overhauling has been increased from 6 months to 1 year, further extendable by 1 year.
OTHERS
There are a few other changes of minor nature. For details of the budget proposals, the Explanatory Memorandum, and other relevant budget documents may be referred to.
Annexure to Part B
Amendments relating to Direct Taxes
(A) Providing tax relief
A.1 Substantial relief is proposed under the new tax regime with new slabs and tax rates as under:
| Total income | Rate of tax |
|---|---|
| Upto ₹3,00,000 | Nil |
| From ₹3,00,001 to ₹7,00,000 | 5 percent |
| From ₹7,00,001 to ₹10,00,000 | 10 percent |
| From ₹10,00,001 to ₹12,00,000 | 15 percent |
| From ₹12,00,001 to ₹15,00,000 | 20 percent |
| Above ₹15,00,000 | 30 percent |
A.2 Standard deduction: Standard deduction to salaried individuals and pensioners is proposed to be increased from ₹50,000 to ₹75,000 under the new tax regime.
A.3 Family pension deduction: Deduction from family pension of ₹15,000 is proposed to be increased to ₹25,000 under the new tax regime.
A.4 Non-government employer contribution to New Pension scheme: It is proposed to increase the amount of deduction allowed to an employer in respect of his contribution to a pension scheme referred to in section 80CCD, from the extent of 10 percent to the extent of 14 percent of the salary of the employee. Further, a non-government employee in the new tax regime shall be allowed a deduction of an amount not exceeding 14 percent of the employee’s salary in place of 10 percent.
(B) Measures to promote investment and employment
B.1 Incentives to IFSC
B.2 Reduction of rate of foreign companies to 35 percent: It is proposed to reduce the rate of income tax chargeable on the income of foreign companies (other than that chargeable at special rates) from 40 percent to 35 percent.
B.3 Tax on share premium: It is proposed that the provisions of clause (viib) of sub-section (2) of section 56 of the Act related to tax on share premium of private companies shall not apply from the financial year 2024-25.
B.4 Scheme of presumptive taxation for cruise ship operations by non-residents: It is proposed to put in place a presumptive taxation regime for cruise ship operations of non-residents. Further, it is proposed to provide an exemption for any income of a foreign company from lease rentals of cruise ships, received from a related company which operates such a ship or ships in India.
(C) Simplification and Rationalisation
C.1 Introduction of block assessment scheme for search and seizure cases: It is proposed to introduce a new scheme of block assessment for search cases. The block period is proposed to be six previous years and the period up to the date of conclusion of the search. The total income of the block period is proposed to be taxed at the rate of 60 percent.
C.2 Reducing the time limit for which reassessment can be done and rationalization of the provisions: The time limit for reassessment is proposed to be reduced from ten years to five years. Further, there are proposals to rationalize the procedure for reassessment. Further, it is proposed to omit reference to the Principal Chief Commissioner or Chief Commissioner in section 275 to provide clarity of time limitation for imposition of penalties. It is also proposed to withhold refunds up to sixty days of assessment under section 245 and to rationalize the time limit to file an appeal to ITAT under section 253.
C.3 Charitable trusts/Institutions
It is proposed to make amendments to merge the two schemes for exemption and also provide for the rationalization of filing of applications and the timelines for registration and approval of certain benefits to charitable trusts and institutions.
C.4 Simplification of taxation of Capital Gains: The taxation of capital gains is proposed to be rationalized and simplified. Short-term gains on specified financial assets shall henceforth attract a tax rate of 20 percent instead of 15 percent, while that on all other financial assets and non-financial assets shall continue to attract the applicable tax rate. Long-term gains on all financial and non-financial assets, on the other hand, will attract a tax rate of 12.5 percent. For the benefit of the lower and middle-income classes, it is proposed to increase the limit of exemption of capital gains on certain listed financial assets from ₹1 lakh to ₹1.25 lakh per year. Listed financial assets held for more than a year will be classified as long-term, while unlisted financial assets and all non-financial assets will have to be held for at least two years to be classified as long-term. Unlisted bonds and debentures, debt mutual funds, and market-linked debentures, irrespective of the holding period, however, will attract tax on capital gains at applicable rates. These proposals are proposed to be given effect with immediate force.
C.5 Rationalisation of tax deducted at source (TDS) rates: It is proposed to bring down TDS rates from 5 percent to 2 percent in certain sections and omit section 194F where the TDS rate is 20 percent, as given below:
| Section | Present TDS Rate | Proposed TDS Rate | With effect from |
|---|---|---|---|
| Section 194D – Payment of insurance commission (in case of person other than company) | 5% | 2% | 1.4.2025 |
| Section 194DA – Payment in respect of life insurance policy | 5% | 2% | 1.10.2024 |
| Section 194G – Commission etc on sale of lottery tickets | 5% | 2% | 1.10.2024 |
| Section 194H – Payment of commission or brokerage | 5% | 2% | 1.10.2024 |
| Section 194-IB – Payment of rent by individual or HUF | 5% | 2% | 1.10.2024 |
| Section 194M – Payment of certain sums by certain individuals or Hindu undivided family | 5% | 2% | 1.10.2024 |
| Section 194-O – Payment of certain sums by e-commerce operator to e-commerce participant | 1% | 0.1% | 1.10.2024 |
| Section 194F relating to payments on account of repurchase of units by Mutual Fund or Unit Trust of India | Proposed to be omitted | 1.10.2024 |
C.6 Credit of TDC and TCS: It is proposed to allow credit of all tax deducted or collected while computing the amount of tax to be deducted on salary income under section 192.
C.7 Claiming credit for TCS of minor in the hands of parent: It is proposed to empower the Board to make rules to provide credit of tax collected to persons other than the collectee.
C.8 Alignment of interest rate on delayed payment on TCS with TDS: It is proposed to increase the rate of simple interest from 1 percent to 1.5 percent on delayed payments of TCS after collection, as in the case of TDS.
C.9 Increase in limit of remuneration to working partners of a firm allowed as a deduction: It is proposed to increase the limit of remuneration to working partners to ₹3,00,000 or 90 percent of the book-profit, whichever is more, on the first ₹6,00,000 of the book-profit or in case of a loss.
(D) Widening and deepening of the tax base and anti-avoidance
D.1 Buy-back of shares: It is proposed that the income from the buy-back of shares by companies be chargeable in the hands of the recipient investor as a dividend, instead of the current regime of additional income tax in the hands of the company. Further, the cost of such shares shall be treated as a capital loss to the investor.
D.2 Securities transaction tax (STT) rates: It is proposed to increase the rates of STT on the sale of an option in securities from 0.0625 percent to 0.1 percent of the option premium, and on the sale of futures in securities from 0.0125 percent to 0.02 percent of the price at which such futures are traded.
D.3 Income from letting out of house property: It is proposed that income from letting out of a house or part of the house by the owner, shall not be charged under the head ‘profits and gains of business or profession’ and will be chargeable to tax under the head ‘income from house property’ only.
D.4 Transfer of capital asset: It is proposed to provide that the transfer of a capital asset, under a gift or will or an irrevocable trust, by an entity other than an individual or a Hindu undivided family (HUF) only, shall be regarded as transfer for the purpose of calculation of capital gain.
D.5 TDS on payment to a partner: It is proposed that payments made by a firm to its partner in the nature of salary, remuneration, commission, bonus, and interest, etc. shall be subject to TDS at the rate of 10 percent for aggregate amounts of more than ₹20,000 in a financial year.
D.6 TCS on notified luxury goods: To enable TCS on luxury goods, it is proposed to levy TCS of 1 percent on notified goods of value exceeding ten lakh rupees.
D.7 TDS on sale of immovable property: It is proposed to clarify that where there is more than one transferor or transferee in respect of an immovable property, then such consideration for transfer of the immovable property shall be the aggregate of the amounts paid or payable by all the transferees to the transferor or all the transferors for the transfer of such immovable property.
D.8 TDS on Floating Rate Savings (Taxable) Bonds (FRSB) 2020: TDS is proposed on interest exceeding ten thousand rupees on Floating Rate Savings (Taxable) Bonds (FRSB) 2020 or any other notified security of the Central or State Governments.
D.9 Inadmissibility of non-business expenditure by life insurance companies: It is proposed to provide that any expenditure which is not admissible under the provisions of section 37 in computing the profits and gains of a business shall be included in the profits and gains of the life insurance business.
D.10 Inclusion of taxes withheld outside India for purposes of calculating total income: It is proposed to provide that income tax paid outside India by way of deduction is deemed to be income received for the purpose of computing the income of the assessee.
D.11 Excluding income mentioned in section 194J from applicability of section 194C: It is proposed to explicitly state that any sum referred to in sub-section (1) of section 194J (fees for professional or technical services) does not constitute “work” for the purposes of TDS under section 194C (payments to contractors).
D.12 Claim of settlement amounts as business expenditure: It is proposed to disallow expenses incurred as settlement fees for any contravention of law, as may be notified by the Central Government.
D.13 Definition of Fair Market Value (FMV): It is proposed to provide for a method of calculation of fair market value on 31.01.18 under section 55(2) (ac) in the case of the sale of unlisted equity shares in an offer for sale in an initial public offer.
(E) Tax Administration
E.1 Introduction of Vivad se Vishwas Scheme, 2024: It is proposed to introduce a new scheme for the settlement of pending appeals. It is proposed to be made operational from a specified date. The last date for the scheme is also proposed to be notified.
E.2 Equalisation Levy: It is proposed that Equalisation Levy at the rate of 2 percent of consideration received for e-commerce supply of goods or services shall no longer be applicable on or after 1st August 2024.
E.3 Non-reporting of small foreign assets has penal consequences under the Black Money Act. Such non-reporting of movable assets up to ₹20 lakh is proposed to be de-penalised.
E.4 It is proposed to decriminalize late payment of tax deducted at source (TDS) if the payment is made before the time prescribed for filing the TDS statement.
**E.5 It is proposed to provide that no order for failure to deduct/collect tax from any person shall be passed after the expiry of six years from the end of the financial year in which payment is made.
E.6 Enabling processing of statements other than those filed by deductors: It is proposed to provide that the Board may make a scheme for processing of such statements.
E.7 Lower deduction/collection certificate of tax at source: It is proposed to allow for the application for a lower deduction/collection certificate of tax for section 194Q (TDS on payment for the purchase of goods) and sub-section (1H) of section 206C (TCS on receipt of sale of goods).
E.8 Notification of certain persons or class of persons as exempt from TCS: It is proposed to empower the government to notify persons or class of persons from whom no collection of tax shall be made or collection of tax shall be made at a lower rate in respect of specified transactions.
E.9 Time limit to file correction statement for TDS/TCS statements: It is proposed to provide that no correction statement shall be delivered after the expiry of six years from the end of the financial year in which the TDS/TCS statements are respectively required to be delivered.
E.10 Penalty for failure to furnish statements: It is proposed to provide for a penalty on the late furnishing of TDS or TCS statements beyond one month instead of the existing period of 12 months.
E.11 It is proposed to prescribe the period within which the annual statement of activities of a liaison office is required to be furnished. It is further proposed to provide for a penalty on failure of submission of the annual statement within the due period.
**E.12 It is proposed to enable the Transfer Pricing Officer to deal with specified domestic transactions which have not been referred to him by the Assessing Officer.
**E.13 It is proposed to discontinue the quoting of Aadhaar Enrolment ID in place of the Aadhaar number.
**E.14 It is proposed to provide those applications before the Board for Advance Rulings transferred from the Authority of Advance Rulings may be allowed to be withdrawn before 31.10.2024.
**E.15 It is proposed to empower the Commissioner (Appeals) to set aside ex-parte assessment orders.
E.16 Amendment in Section 271FAA: It is proposed to amend section 271FAA to provide for a penalty on failure to comply with the due diligence requirement relating to compliance with the Automatic Exchange of Information (AEOI).
E.17 Tax Clearance Certificate: It is proposed to include a reference to the Black Money Act, 2015 for the purposes of obtaining a tax clearance certificate.
E.18 Returns filed after the condonation of delay: It is proposed that in respect of returns filed after the condonation of delay, the assessment can be made up to 12 months from the end of the financial year in which such return was furnished.
E.19 Donations to National Sports Development Fund: Any sums paid as donations to the National Sports Fund set up by the Central Government are presently eligible for deduction under section 80G. The name of the fund is proposed to be corrected as the National Sports Development Fund.
E.20 Removing reference to National Housing Board: As housing finance companies are now under the purview of the Reserve Bank of India as a category of Non-Banking Financial Companies (NBFCs), it is proposed to remove reference to the National Housing Board in section 43D of the Act.
E.21 Adjusting liability under the Black Money Act, 2015 against seized assets: It is proposed to insert a reference to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 in section 132B of the Income-tax Act, 1961 so as to enable the recovery of liabilities under the Act out of seized assets.