Union Budget FY 2024-25: Savart Analysis Report 

The Indian government led by the Finance Minister Ms. Nirmala Sitharaman presented the Union Budget for FY 2024-25 on 23^rd July. The Union Government is focused on achieving ‘Viksit Bharat’ through a strategic roadmap presented in the budget, emphasizing nine key priorities: 

• Productivity & Resilience in Agriculture 

• Employment & Skilling  

• Inclusive Human Resource Development and Social Justice  

• Manufacturing & Services 

• Urban Development 

• Energy Security 

• Infrastructure 

• Innovation, Research & Development  

• Next Generation Reforms 

Overview of the Key Takeaways:  

1. The government made a provision of INR 1.52 lakh crore for Agriculture and Allied sector. 

2. Three schemes for Employment Linked Incentives 

3. 1. Capital gains: The Union Budget 24-25 brings a change in the capital gain tax slabs: 

2. Short Term Capital Gain Tax: Increased from 15% to 20% for equity-based asset classes. 

3. Long Term Capital Gain Tax: Increased from 10% to 12.5% for all asset classes including real estate and gold investments. The exemption limit is revised from INR 1 lakh to 1.25 lakh. 

4. A salaried employee in the new tax regime stands to save up to INR 17,500/- in income tax. 

5. Three crore houses under the PM Awas Yojana in rural and urban areas in the country have been announced.  

PM Awas Yojana Urban 2.0: 

In the Union Budget, under this scheme, the Government is planning to provide housing needs of 1 crore urban poor and middle-class families 

6. NTPC and BHEL will set up a full scale 800 MW commercial plant using AUSC technology. 

7. Allocation of INR 15,000 crore to the Andhra Pradesh state capital Amaravati. 

8. To develop tourism in the state of Bihar, and additional 2-lane bridge over river Ganga at Buxar at a total cost of INR 26,000 crore and setting up 2400 MW power plant at a cost of INR 21,400 crore. 

9. The government announced that it will set up a Venture Capital fund of INR 1,000 crore to support the Space Economy. 

10. The Government to support the Indian Startup ecosystem, abolished the Angel Tax. 

11. The Government reduced the corporate tax rate on foreign companies from 40% to 35%. 

12. The Limit of Mudra loan is increased to INR 20 lakhs from INR 10 lakhs, under the TARUN category. 

13. The government has provided INR 11,11,111 crore for the capital expenditure. It is around 3.4% of GDP. 

14. The government reduced the Customs duty from 15% to 6% on gold and silver. 

15. The government is planning to launch a scheme for providing internship opportunities in top 500 companies to 1 crore youth in 5 years.  

16. The government reduced the BCD on mobile phones, mobile PCBA and mobile charger to 15%. Currently, the BCD on them is 20%. 

Key Takeaway #1: Productivity and resilience in Agriculture 

This year, the Government in the union budget, made a provision of INR 1.52 lakh crore for Agriculture and Allied sectors.  

Shrimp production & Export: The government will set up a network of Nucleus Breeding Centers for shrimp broodstock. Financing for shrimp farming, processing and export will be facilitated through NABARD. Government reduced basic custom duty on broodstock, polychaete worms, shrimp, and fish feed to 5% from 15%. 

Why do you need to focus on this sector?  

Shrimp production: Setting up Nucleus Breeding Centers aims to improve the quality and yield of shrimp broodstock, leading to higher production efficiency and output. This can enhance the overall supply chain and reduce dependency on imported broodstock. 

Cost Reduction: The reduction of BCD (Basic Custom Duty) on essential inputs like broodstock, polychaete worms, shrimp, and fish feed to 5% will lower production costs. Exemption from customs duty on inputs for feed manufacturing further reduces operational expenses. 

Historical Performance: India’s seafood exports have already reached a record high of over ₹60,000 crore in the last financial year, with frozen shrimp constituting about two-thirds of these exports. 

Future Growth: With the government’s support and cost reductions, the shrimp industry is poised for further growth. This can lead to an increase in export revenues and contribute positively to the trade balance. Companies involved in shrimp farming, processing, and export stand to benefit directly from these initiatives. Industries related to cold storage, transportation, and logistics for seafood exports could also experience growth due to the expanded shrimp production and export activities. 

Key Takeaway #2: Focus on Employment & Skilling 

There was an announcement of three schemes for Employment Linked Incentives in the union budget: 

• Scheme A: First Timers: One-month wage to new entrants in all formal sectors in 3 instalments up to INR 15,000. This is expected to benefit 210 lakh youth through immediate financial aid to young people entering the workforce, easing their transition.  

• Scheme B: Job Creation in Manufacturing: This is linked to first time employees and is an Incentive to both employee & employer for EPFO contributions in the specified scales for the first 4 years. This is expected to benefit 30 lakh youth. 

• Scheme C: Support to Employers: Government will reimburse EPFO contributions of employers up to ₹3000 per month for 2 years for all new hires. This is expected to generate 50 lakh jobs. 

The government will also upgrade 1,000 Industrial Training Institutes in hub and spoke arrangements.  

Key Takeaway #3: Awas Yojana 

Additional 3 crore houses under the PM Awas Yojana in rural and urban areas in the country have been announced in union budget, for which the necessary allocations are being made. 

PM Awas Yojana Urban 2.0: 

In the union budget, under this scheme, the Government is planning to provide housing needs for 1 crore urban poor and middle-class families, and they will be addressed with an investment of INR 10 lakh crore. This will include central assistance of INR 2.2 lakh crore in the next 5 years.  

This will boost the housing industry and increase demand for the steel and cement industry. Companies working in the housing development space may benefit from these initiatives.  

Key Takeaway #4: Advanced Ultra Super Critical Thermal Power Plants:  

Government announced that the development of indigenous technology for Advanced Ultra Super Critical (AUSC) thermal power plants with much higher efficiency has been completed. Advanced ultra supercritical (AUSC) plants are the only solution to generate electricity in thermal power plants in the most efficient way with minimum pollution to the environment. 

It also mentioned that NTPC and BHEL will set up a full scale 800 MW commercial plant using AUSC technology. The government will provide the required fiscal support.  

Key Takeaway #5: Allocations to Andhra Pradesh 

The government allotted INR15,000 crore, in the union budget for the state. As there is a need for state capital, the government will finance support through multilateral development agencies.  

It will help build the new city and meet the necessary requirements while creating employment opportunities as well. The government is also committed to financing and early completion of Polavaram Irrigation Project. 

It will help build the new city and meet the necessary requirements while creating employment opportunities as well.  

It will help build the new city and meet the necessary requirements while creating employment opportunities as well. 

The government is also committed to financing and early completion of Polavaram Irrigation Project.  

Polavaram project is crucial because this multi-purpose major irrigation project is intended for development of a gross irrigation potential of 4,36,825 hectare (ha). 

The project also envisages generation of 960MW of hydro power, drinking water supply to a population of 28.50 lakh in 611 villages and diversion of 80 TMC of water to Krishna River basin. 

Key Takeaway #6: Allocations to Bihar 

The Government will support development of road connectivity projects: 

• Patna-Purnia Expressway 

• Buxar-Bhagalpur Expressway 

• Bodhgaya, Rajgir, Vaishali and Darbhanga spurs 

An additional 2-lane bridge over River Ganga at Buxar at a total cost of INR 26,000 crore has also been announced. 

The distance between Patna and Purnia is approximately 300 km, currently taking around six to eight hours to travel. The proposed greenfield highway, which will be access-controlled, aims to cut this travel time down to about three to four hours. Additionally, Buxar and Bhagalpur, located around 400 km away, currently require about eight to nine hours to reach. The new expressway will reduce this travel time to roughly four hours. 

Buxar is close to the Uttar Pradesh border, while Bhagalpur is near the Jharkhand border. The new expressway will also facilitate smoother transit for those traveling through Bihar for longer distances. There are additional power projects, which include setting up of a new 2400 MW power plant at Pirpainti, which will be taken up at a cost of INR 21,400 crore.  

Key Takeaway #7: Tourism sector 

The Government is focused on the development of the tourism sector. It is aiming to position India as global tourist destination which also helps in job creation, stimulate investments and unlock economic opportunities for other sectors.  

The government will develop Vishnupad Temple in Gaya and Mahabodhi Temple at Bodh Gaya in Bihar. 

These temples will be modelled on the successful Kashi Vishwanath Temple Corridor to transform them into world class pilgrim and tourist destinations.  

The development of Nalanda as a Tourist Centre besides reviving Nalanda University to its glorious stature has also been made a priority.  

A comprehensive development initiative for Rajgir will also be undertaken.  

Key Takeaway #8: Space Economy 

The government announced that it will set up a Venture Capital fund of INR 1,000 crore to support the Space Economy.  

This fund is expected to catalyze important advancements in space technology, which will contribute to job creation and economic growth.  

According to the Department of Space, the Indian Space Economy is expected to grow from around $8.4 billion to $44 billion by 2033. The number of Space Start-Ups have gone up, from just 1 in 2014 to 189 in 2023 as per DPIIT Start-Up India Portal. 

The investment in Indian Space Start-Ups has increased to $124.7 Million in 2023. So, this fund which will be set up by the government will help the space sector grow further.  

Key Takeaway #9: Abolishing the Angel Tax 

In the union budget, Government abolished the Angel Tax, a long pending overhand for the Indian startup ecosystem.  

But what is this Angel Tax? Angel tax is a term used in India to describe the tax imposed on investments made by external startup investors. It was introduced in the Finance Act, 2012, under Section 56(2)(viib) of the Income Tax Act, 1961. 

When startups raise funds by issuing shares, and if the investment received exceeds the fair market value (FMV) of the shares, the excess amount is treated as income from other sources. 

Abolishing Angel Tax is good for startups as it will encourage investments and attract more investors. Early-stage startups often rely on angel investments as a crucial source of seed funding. The abolishment of the Angel Tax signifies a positive shift towards a more supportive environment for startups in India.  

Key Takeaway #10: Corporate Tax rate 

The government mentioned in the budget that it is reducing the corporate tax rate on foreign companies from 40% to 35%.  

This is very good for the economy, as foreign companies would be encouraged to invest in India and increase inward FDI.  

Key Takeaway #11: Mudra Loans 

In this budget, the government has increased the Mudra loan limit from INR10 lakh to INR 20 lakh.  

This is for those entrepreneurs who have availed and successfully repaid previous loans under the “Tarun” category. The Pradhan Mantri MUDRA Yojana (PMMY) is a scheme launched by the Government of India to provide loans to non-corporate, non-farm small/micro enterprises. Under this scheme, the loans are classified into three categories based on the stage of growth and funding needs of the beneficiary micro unit. These categories are Shishu, Kishore, and Tarun. 

• Shishu: For new and early-stage businesses (up to ₹50,000). 

• Kishore: For growing businesses that need additional funds (₹50,000 to ₹5 lakh). 

• Tarun: For established businesses looking to expand further (₹5 lakh to ₹10 lakh). 

MUDRA loans play a crucial role in supporting micro and small enterprises by providing access to finance, encouraging entrepreneurship, generating employment, and fostering economic development. 

Key Takeaway #12: Capital Expenditure 

The government has provided INR 11,11,111 crore for the capital expenditure. It is around 3.4% of GDP. The government also mentioned that it will continue to invest and maintain strong fiscal support for infrastructure over the next 5 years.  

The government also announced a provision of Rs 1.5 lakh crore for long-term interest free loans this year to the states. This move will help states to support infrastructure development.  

Increase in the Capital expenditure in a developing nation is crucial, as it results in the creation of long-term assets that can generate revenue over many years.  

Government capital expenditure on infrastructure projects (like roads, bridges, and public facilities) stimulates economic activity, creates jobs, and enhances the overall quality of life. 

Key Takeaway #13: Customs duty on gold and silver  

The government has announced that it has reduced the customs duty on gold & silver.  

Th has reduced the Customs duty from 15% to 6% on gold and silver. This includes a decrease in the Basic Customs Duty (BCD) from 10% to 5% and the Agricultural Infrastructure Development Cess (AIDC) from 5% to 1%. It also reduced the customs duty on platinum to 6.4%.  

Due to the reduction in custom duty, gold and silver prices dropped. Gold prices on MCX dropped by INR 4000 per 10 grams. Silver prices dropped by INR 4,720 per kg.  

Key Takeaway #14: Internship Opportunities 

The government is planning to launch a scheme for providing internship opportunities in 500 top companies to 1 crore youth in 5 years.  

During this internship period, they will gain exposure for 12 months to real-life business environment, varied professions and employment opportunities.  

This internship will also provide an allowance of INR 5,000 per month along with a one-time assistance of INR 6,000. Companies will be expected to bear the training cost and 10 per cent of the internship cost from their CSR funds. 

Key Takeaway #15:  Income Tax Slab 

The standard deduction limit was hiked from INR 50,000 to INR 75,000.  

As per the proposal, a 5 per cent tax will be levied on income between ₹3-7 lakh, 10 per cent between ₹7-10 lakh, 15 per cent for ₹10-12 lakh. 

However, 20 per cent tax will continue to be levied on income between ₹12-15 lakh and 30 per cent for income above ₹15 lakh. 

Under the existing new IT regime, a 5 per cent tax is levied on income between ₹3-6 lakh, 10 per cent for income between ₹6-9 lakh.  

Income between ₹9-12 lakh and ₹12-15 lakh is subject to 15 per cent and 20 per cent tax, respectively. A 30 per cent IT would be applicable on income above ₹15 lakh. 

Key Takeaway #16: Capital gains 

 
The Union Budget 24-25 brings a change in the capital gain tax slabs:  

Short Term Capital Gains Tax: Increased from 15% to 20% for equity-based asset classes. 

Long Term Capital Gains Tax: Increased from 10% to 12.5% for all asset classes including real estate and gold investments. The exemption limit is revised from INR 1 lakh to 1.25 lakh. 

This is how it will impact you as a taxpayer: 

If you had invested Rs 10 Lakhs 2 years ago 

Key Takeaway #17: Mobile Phone and Related parts 

In the union budget, the government announced that it will reduce the BCD on mobile phones, mobile PCBA and mobile charger to 15 percent. Currently the BCD on them is 20%. This will likely reduce the prices of mobiles.  

Key Takeaway #18: Items that will be Cheaper versus Expensive 

Cheaper items: 

• Cancer Medicines: Full exemption from customs duty on three major cancer drugs: Trastuzumab Deruxtecan, Osimertinib, and Durvalumab. 

• X-ray Equipment: Exempted from basic customs duty, making medical diagnostics more affordable. 

• Essential Metals and Minerals: Removal of basic customs duty on ferro nickel, blister copper, and 25 critical minerals, supporting industrial production. 

• Solar Panels: Expanded list of exempted items for manufacturing solar panels, encouraging renewable energy growth 

Expensive Items:  

• Plastic and Related Goods: Increased customs duty on plastic products, aiming to encourage domestic production and reduce imports. 

• Ammonium Nitrate: Customs duty raised from 7.5% to 10%, impacting industries reliant on this chemical. 

• Telecom Equipment: Customs duty increased from 10% to 15%, focusing on boosting local manufacturing and self-reliance in the telecom sector.  

The views expressed are as per our analysis. Savart is a SEBI-registered investment advisor. The purpose of this content is to educate & not advise/recommend any particular security. Please remember that investments are subject to market risks. Please conduct thorough due diligence or seek professional guidance before making any investment. Do not believe in any speculations.