New Income Tax Scheme relaxations in standard deduction, slabs reduction and family pension deduction relaxation may help in savings of around Rs 35,000 per taxpayer
Vijay C Roy
New Delhi, July 23
Providing relief to the middle class by reducing tax burden in selected categories and boosting employment through skilling, incentivising employers, especially MSMEs and enhancing allocation for housing, agriculture and rural roads, are some of the major announcements that Finance Minister Nirmala Sitharaman made while presenting her seventh consecutive budget.
The Finance Minister began her Union Budget speech by singing an erudite pean to India’s economic development over the last decade under the Narendra Modi government and said the current budget particularly focus on employment, skilling, MSMEs, and the middle class.
Related News
- In Sitharaman’s Budget speech, copious references to Bihar, help to rain-wrecked Himachal, Uttarakhand, but silence on Punjab
- Budget 2024: One-month wage for first-time employees, announces FM Sitharaman
- ‘Kursi Bachao Budget’: Rahul Gandhi slams government, says Budget intended to ‘appease allies, cronies’
- Budget 2024: New tax regime slabs changed, standard deductions hiked by Rs 25,000
- Budget heralds better growth, bright future: PM Modi
Propelled by a robust tax revenue buoyancy during FY 23-24, she announced that the focus now is on job creation through GDP growth by putting in more disposable income in the hands of the common man. New Income Tax Scheme relaxations in standard deduction, slabs reduction and family pension deduction relaxation may help in savings of around Rs 35,000 per taxpayer, she added.
For job creation, she announced, five schemes to focus on 4.1 crore youth over five years with a central outlay of Rs 2 lakh crore, which includes one month wage to new entrants in all formal sectors for the first timers.
It also includes incentive to employees and employers for job creation in manufacturing.
Finance Minister Sitharaman lists out roadmap to pursue nine priorities for India’s growth, including productivity and resilience in agriculture, employment opportunities, inclusive growth, urban development, energy and security, innovation, and next generation reforms, among others.
Agriculture
New 109 high-yielding and climate-resilient varieties of 32 field and horticulture crops will be released for cultivation by farmers. In the next two years, 1 crore farmers across the country will be initiated into natural farming supported by certification and branding. Also, 10,000 need-based bio-input resource centres will be established. For achieving self-sufficiency in pulses and oilseeds, the FM says will strengthen their production, storage and marketing. Also, financial support for setting up a network of Nucleus Breeding Centres for Shrimp Broodstocks will be provided.
Employment & Skilling
The government will implement following three schemes for ‘Employment Linked Incentive’, as part of the Prime Minister’s package. 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 3 installments to first-time employees, as registered in the EPFO, will be up to Rs 15,000. The eligibility limit will be a salary of Rs 1 lakh per month. The scheme is expected to benefit 210 lakh youth. Also, for job creation in manufacturing, a scheme will incentivise additional employment in the manufacturing sector, linked to the employment of first-time employees. An incentive will be provided at 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. The government will also ensure higher participation of women in the workforce through setting up of working women hostels in collaboration with industry, and establishing crèches. A new centrally sponsored scheme, for skilling in collaboration with state governments and Industry.
Inclusive Human Resource Development and Social Justice
The government 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. Also, more than 100 branches of India Post Payment Bank will be set up in the North East region to expand the banking services.
On the Amritsar-Kolkata Industrial Corridor, the FM says, we will support development of an industrial node at Gaya. This corridor will catalyse industrial development of the eastern region. The centre will also support 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 river Ganga at Buxar at a total cost of Rs 26,000 crore. The requests of Bihar government for external assistance from multilateral development banks will be expedited. Recognising the Andhra’s need for a capital, the centre will facilitate special financial support through multilateral development agencies. In the current financial year Rs 15,000 crore will be arranged, with additional amounts in future years.
Manufacturing & Services
For facilitating term loans to MSMEs for purchase of machinery and equipment without collateral or third-party guarantee, a credit guarantee scheme will be introduced. Public sector banks will build their in-house capability to assess MSMEs for credit, instead of relying on external assessment. a new mechanism for facilitating 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. The limit of Mudra loans will be enhanced to Rs 20 lakh from the current Rs 10 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category. 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. The government will facilitate 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.
Urban 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. Under the PM Awas Yojana Urban 2.0, housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of Rs 10 lakh crore. This will include the central assistance of Rs 2.2 lakh crore in the next five years. A provision of interest subsidy to facilitate loans at affordable rates is also envisaged. The FM says that the centre 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.
Energy Security
The PM Surya Ghar Muft Bijli Yojana scheme has generated remarkable response with more than 1.28 crore registrations and 14 lakh applications, and the centre will further encourage it. A policy for promoting pumped storage projects will be brought out for electricity storage. To promote Nuclear energy, the 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. A joint venture between NTPC and BHEL will set up a full scale 800 MW commercial plant using AUSC technology.
Infrastructure
This year, the government have provided Rs 11,11,111 crore for capital expenditure. This would be 3.4 per cent of our GDP. The centre will encourage states to provide support of similar scale for infrastructure, subject to their development priorities. A provision of Rs 1.5 lakh crore for long-term interest free loans has been made this year also to support the states in their resource allocation. Investment in infrastructure by private sector will be promoted through viability gap funding and enabling policies and regulations.
Innovation, Research & Development
The FM said, “We will start 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 commercial scale with a financing pool of Rs 1 lakh crore in line with the announcement in the interim budget. For expanding space economy by 5 times in the next 10 years, a venture capital fund of Rs 1,000 crore will be set up.”
Next Generation Reforms
The Centre will initiate and incentivise reforms for improving productivity of factors of production, and facilitating markets and sectors to become more efficient. These reforms will cover all factors of production, namely land, labour, capital and entrepreneurship, and technology as an enabler of improving total factor productivity and bridging inequality. Also, for promoting competitive federalism and incentivising states for faster implementation of reforms, the FM proposed to earmark a significant part of the 50-year interest-free loan.