The 2024 Indian Budget has sparked considerable debate, with opinions divided on whether it is beneficial or detrimental. In this blog post, we’ll dissect the key aspects of the budget, highlighting both its positives and negatives, to provide a comprehensive overview.
Positive Aspects of the 2024 Budget
Increased Standard Deduction Limit: For salaried individuals, the budget raises the standard deduction limit from ₹50,000 to ₹75,000. This change offers some relief by reducing taxable income. However, this increase is minimal compared to the potential tax burden.
Enhanced Long-Term Capital Gains (LTCG) Exemption Limit: The exemption limit for LTCG on equity and mutual funds has been increased from ₹1 lakh to ₹1.25 lakh. This change is advantageous for investors who hold assets for more than a year, as it allows for a higher tax-free gain.
Infrastructure Investment: The budget allocates over ₹11 lakh crore for infrastructure development, which is expected to boost economic growth and create jobs. Notably, the PM Awas Yojana for urban areas has been given significant funding, with ₹1,000 crore for lower-income groups and ₹500 crore for middle-income groups.
Agriculture Sector Support: The government has allocated ₹1.52 lakh crore for the agriculture sector, which should aid farmers and related industries. Additionally, ₹2 lakh crore has been earmarked for skill development programs, aiming to train over 4 crore youth over the next five years.
Negative Aspects of the 2024 Budget
Reduction in Indexation Benefits: Previously, indexation benefits adjusted for inflation were available for assets like gold, property, and bonds. This helped in reducing taxable gains by accounting for inflation. However, the current budget removes this benefit, potentially increasing the tax liability on the sale of such assets.
Increased Tax on Long-Term Capital Gains: While the exemption limit for LTCG has increased, the overall tax rate has been raised. For long-term gains, the rate has been increased from 10% to 12.5%. This change is likely to impact investors negatively.
Higher Securities Transaction Tax (STT): The STT on options and futures has been increased. For options, it has gone from 0.0625% to 0.1%, and for futures, from 0.015% to 0.02%. This hike raises the cost of trading and could deter retail investors.
Government Spending Priorities: There is concern that the budget’s spending priorities reflect political considerations rather than genuine development needs. For instance, states like Bihar and Andhra Pradesh, which have political significance, are receiving significant allocations, while other states with substantial contributions to the BJP, like Madhya Pradesh and Telangana, are receiving less support.
Infrastructure Discrepancies: Despite the large allocation for infrastructure, there are concerns about the actual implementation and the quality of infrastructure projects. Examples like the condition of metro stations and roads suggest that while the budget promises substantial investments, the on-ground reality often falls short.
Conclusion
While the 2024 Budget has introduced several positive measures, such as increased deductions and investments in infrastructure, it also has significant drawbacks. The removal of indexation benefits, higher taxes on capital gains, and increased STT could burden taxpayers and investors. Additionally, the allocation of funds seems to be influenced by political considerations rather than balanced national development.
As the budget unfolds, it will be crucial to observe how these policies are implemented and whether they achieve their intended goals. Share your thoughts and opinions in the comments below, and let’s continue this discussion.
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