Decoded: What Budget 2024 means for the middle-class, investors, and more

What Budget 2024, presented by Modi govt 3.0, actually mean for the middle class, students, and more

When you think of your basic expectations, what comes to mind? Jobs, taxes, housing, loans, right? So, did Finance Minister Nirmala Sitharaman manage to address these pressing issues in Budget 2024-25? She focused on what she called the "four major castes": farmers, the poor, women, and youth. The theme revolved around employment, skills development, and the middle class. 
 

Here's what the Budget actually means for your pocket:

1. Taxes: Middle-class’s biggest concern 

How does the Budget impact your taxes?

The government has introduced several changes aiming to reduce compliance burdens and promote entrepreneurship. Here are some key points:

— Short-term gains on financial assets will now attract a 20% tax rate
 

 

— Long-term gains on all assets will attract a 12.5% tax rate.

— The exemption limit for capital gains on financial assets has increased to Rs 1.25 lakh per year.

— Angel tax is abolished for all investor classes.

According to CA Pitam Goel, Co-Founder of Tattvam Group, the increase in Securities Transaction Tax (STT) rates for derivatives and futures might not sit well with investors. "The increase in STT rates for derivatives to 0.1% and futures to 0.02% may not go well with investors. Further, the increase in capital gains tax for listed equity instruments to 12.5% will leave investors dejected. Proposing to tax buy-back proceeds as dividends may also pose challenges as the buy-back route is opted not only for profit distribution but also for internal restructuring," he noted.

New Income Tax Slabs:

The new income tax slabs proposed in Budget 2024 are as follows:

Up to Rs 3 lakh: Nil

Rs 300,001 to Rs 7 lakh: 5%

Rs 700,001 to Rs 10 lakh: 10%

Rs 100,001 to Rs 12 lakh: 15%

Rs 120,001 to Rs 15 lakh: 20%

Above Rs 15 lakh: 30%

In addition, the standard deduction has been increased to Rs 75,000 from Rs 50,000 for the new regime, and the deduction on family pension for pensioners has increased from Rs 15,000 to Rs 25,000.

Budget 2024 reduce TDS on life insurance policy payout from 5% to 2%

"Rationalisation of tax deducted at source (TDS) from 5% to 2% for payment of insurance commission to individual agents will ensure additional income in the hands of such individuals for payments made by the insurers. TDS reduction to 2% for payment of bonus or proceeds made on life insurance policies upon maturity will also ensure higher receivables for individual policyholders," says Parimal Heda, Chief Investment Officer, Go Digit General Insurance.

What the govt missed? 

The government must address the unchanged deduction limit on health insurance premiums under Section 80D, which has not been revised for nine years despite soaring healthcare costs. Given that India surpasses its South Asian peers with a medical inflation rate of 14%, linking the deduction limit to inflation and revising it periodically will offer necessary financial relief and promote wider adoption of health insurance," said Deepanker Mahajan, Co-Founder and CEO of CoverYou.

2. Budget 2024 on meeting the housing needs of common man

What’s new for home buyers and renters?

The Budget promises significant investments under the PM Awas Yojana (Urban) 2.0, aiming to address the housing needs of 1 crore urban poor and middle-class families with an investment of Rs 10 trillion. This includes policies for efficient and transparent rental housing markets.

"More homes under PMAY (U), transit development, creative redevelopment of cities, industrial parks, rental housing for industrial workers, digitisation of land records, development of industrial parks, and calls for moderation in stamp duty, particularly for women buyers, are some of the measures that will usher Indian cities towards the path of modernization, enhancing livability and enabling them as growth and employment centres," says Mohit Jain, Managing Director, Krisumi Corporation.

3. Budget 2024 for employment: Addressing the Job Market

What initiatives are there for job-seekers?

The Indian economy needs to create nearly 7.85 million jobs annually until 2030 to meet the demands of a growing workforce. Here’s how the Budget plans to address this:

Employment-linked incentive schemes:
 

— One-month wage to new entrants in all formal sectors in three instalments up to Rs 15,000, expected to benefit 210,000 youth.

— Incentives for first-time employees and employers for EPFO contributions for the first four years, expected to benefit 3 million youth.

—Government reimbursement of employers' EPFO contributions up to Rs 3,000 per month for two years for all new hires, expected to generate 5 million jobs.

— Support for women's workforce participation through hostels and creches.

— Loans for students up to Rs 7.5 lakh with a government guarantee, helping 25,000 students annually.

— Financial support for higher education with loans up to Rs 10 lakh and direct e-vouchers for 100,000 students every year, along with an annual interest subvention of 3%.

— Skill development initiatives to train 5 million youth over five years and upgrade 1,000 Industrial Training Institutes.

4. Budget 2024 on electricity: Free power for households

Who benefits from the PM Surya Ghar Muft Bijli Yojana?

Under this scheme, 10 million households will receive up to 300 units of free electricity every month. So far, there have been 12.8 million registrations and 1.4 million applications.

5. Budget 2024 brings a new plan for children

What is NPS Vatsalya?

Sitharaman announced NPS Vatsalya, a plan allowing parents and guardians to contribute for their minor children. Once the child reaches adulthood, the plan can seamlessly convert into a non-NPS plan, offering flexibility and continued support.

6. Budget 2024: What are the changes in import duties?

One of the significant changes in the Budget is the reduction of import duties on gold and silver from 15% to 6%. This move is expected to boost retail demand and help curtail smuggling in the world's second-biggest consumer of bullion. "To enhance domestic value addition in gold and precious metal jewellery, I propose to reduce customs duties on gold and silver to 6%," Sitharaman announced.

She also introduced an import duty exemption for 25 critical minerals, including lithium, crucial for electric vehicle batteries.

Here's what's gotten cheaper in Budget 2024:

Solar sets

Mobile phones, parts, batteries, and chargers

Cancer medicines

Gold, silver, and platinum jewellery

Clothes and shoes

X-ray equipment

Electric cars and lithium batteries

Copper and leather goods

Fish and fish products

25 essential minerals

Here's what's gotten costlier:

Plastic goods

Telecom equipment