Union Budget 2023-24: Know the big takeaways

In a move to reduce the fiscal deficit to 4.9 per cent of GDP, Finance Minister Nirmala Sitharaman has announced that the Centre has marginally reduced its gross borrowing target from the markets for 2024-25 to Rs 14.01 lakh crore.  The new target represents a reduction of Rs 1.4 lakh crore compared to the previous estimate of Rs 15.43 lakh crore for the financial year 2023-24. Here are the key takeaways from the Budget: 

Angel tax removed:

FM Sitharaman announced the abolishment of angel tax for all classes of startup investors. In order to bolster startup investments in the country, Finance Minister Nirmala Sitharaman has announced that the angel tax will be abolished for all classes of investors in Budget 2024.

“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,” the Finance Minister said in her Budget speech in the Parliament on Tuesday. 

Capex 

Finance Minister Nirmala Sitharaman on Tuesday presented the first budget of the Modi 3.0 government. FM Sitharaman laid out the total capital expenditure to Rs 11,11,111 crore for the Financial Year 2025 In the budget speech, FM informed the lower house that the government will end up spending 3.4 per cent of the Budget on capex compared with 3.2 per cent in the previous year, and almost double of what it spent five years ago.

Fiscal Deficit

Finance Minister Nirmala Sitharaman presenting the Union Budget 2024 on Tuesday shared the revised estimate of the fiscal deficit for the Financial Year 2025 at 4.9 per cent of national GDP. The budget continues the government's focus on boosting economic growth through maintaining capital expenditure. The capex outlay has been set at Rs 11.11 lakh crore as the government continues to focus on infrastructure development and job creation.

Energy

In a move to boost India's energy sector, Finance Minister Nirmala Sitharaman in the Union Budget 2024 has announced a series of major initiatives aimed towards energy security, promoting sustainable energy, and fostering technological advancements. “Nuclear energy is expected to form a very significant part of the energy mix for Viksit Bharat,” said Sitharaman. 

The measures are set to transform the landscape of India's energy production and consumption, with a special focus on nuclear energy, renewable energy integration, and advanced thermal power technologies.

Capital gains tax 

In a policy shift, the government has announced an increase in taxes on equity investments as part of the Union Budget for 2024-25. Finance Minister Nirmala Sitharaman, in her budget speech on Tuesday, outlined the changes, which include higher tax rates for both short-term and long-term equity investments.

The tax rate for equity investments held for less than one year has been raised from 15 per cent to 20 per cent. For shares held for more than 12 months, the long-term capital gains tax has been increased from 10 per cent to 12.5 per cent. These changes are aimed at generating additional revenue and simplifying the tax structure for capital gains.

Workforce expansion 

Facilitate higher participation of women in the workforce through setting up of working women hostels in collaboration with industry, and establishing creches. As many as 20 lakh youth will be skilled over a 5-year period. 1,000 Industrial Training Institutes will be upgraded in hub and spoke arrangements with outcome orientation. The course content and design will be aligned as per skill needs of industry. In terms of the financial support for loans up to Rs 10 lakh for higher education in domestic institutions, direct e-vouchers to 1 lakh students will be given every year.  

What is set to become cheaper   

After a Basic Customs Duty (BCD) on mobile phones, mobile chargers to 15 percent as announced by the Finance Minister Nirmala Sitharaman in her Budget speech on Tuesday, mobile phones are expected to become cheaper. 

Stating that there has been a huge boost to mobile phone production in the country, with almost a five-fold increase in production and 100 per cent increase in their exports, the basic custom duty on mobile phones  stands reduced. 

The customs duty on gold and silver has also been reduced to 6 percent and platinum to 6.4 percent, said the Finance Minister. Three cancer treatment medicines have been exempted from Basic Customs Duty.

The Finance Minister also proposed a list of exempted capital goods used in the manufacturing of solar panels. 

Reduction in tax deducted at source (TDS) rate on e-commerce from 1 per cent to 0.1 per cent has also been announced by the Finance Minister in her Budget speech. 

Besides, basic customs duty on ferronickel, blister copper have been removed.

Market reaction 

Benchmark indices fell on Tuesday after the government proposed increases in taxes on capital gains and derivatives trading, a move that analysts warn could negatively impact the markets in the short term. In her budget speech, Finance Minister Nirmala Sitharaman announced that the tax rate for equity investments held for less than a year would rise to 20 per cent from 15 per cent. Additionally, the tax rate for shares held for more than 12 months would increase to 12.5 per cent from 10 per cent.