The Union Budget 2024
As a leading compliance consultancy, Karma Management Global Consulting Solutions Pvt. Ltd. is dedicated to providing our clients with the latest insights and professional guidance on regulatory and compliance matters. The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, brings forth significant changes and proposals impacting various sectors, especially in taxation, labour laws, and compliance. This advisory note aims to highlight the key aspects of the budget, particularly focusing on its implications for compliance, the upcoming labour codes, and new ceilings for Provident Fund (PF) and Employees’ State Insurance (ESI).
Narrative and Analysis
Taxation Highlights:
The Union Budget 2024 has introduced several pivotal changes in the income tax regime. The new tax regime, now the default option, offers exemption limit of ₹3 lakhs and an increased standard deduction of ₹75,000 for salaried employees. The revised tax slabs under the new regime are structured to provide relief across various income levels, encouraging taxpayers to adopt the simplified tax structure.
Changes in Tax Structure Under the New Regime
| Old Income slab (in INR) | New Income slab (in INR) | Tax Rate | Tax Savings |
| (excluding surcharge and cess) | |||
| Up to 3,00,000 | Up to 3,00,000 | 0% | 0.00 |
| 3,00,001 to 6,00,000 | 3,00,001 to 7,00,000 | 5% | 5,000.00 |
| 6,00,001 to 9,00,000 | 7,00,000 to 10,00,000 | 10% | 5,000.00 |
| 9,00,001 to 12,00,000 | 10,00,001 to 12,00,000 | 15% | 0.00 |
| 12,00,001 to 15,00,000 | 12,00,001 to 15,00,000 | 20% | 0.00 |
| 15,00,001 and above | 15,00,001 and above | 30% | 0.00 |
As a result of above changes, a salaried Employee in new tax regime can save up to Rs. 17500 in taxes
Additionally, the standard deduction for family pensioners has been increased from Rs. 15,000 to Rs. 25,000.
TDS Announcements made in the budget:
- 5 per cent TDS rate on many payments merged into 2 per cent TDS rate.
- 20 per cent TDS rate on repurchase of units by mutual funds or UTI withdrawn.
- TDS rate on e-commerce operators reduced from one to 0.1 per cent.
- Delay for payment of TDS up to due date of filing statement decriminalized
Package of PM’s five schemes for Employment and Skilling:
- Scheme A – First Timers: One-month salary of up to `15,000 to be provided in 3 instalments to first-time employees, as registered in the EPFO.
- Scheme B – Job Creation in manufacturing: Incentive to be provided at specified scale directly, both employee and employer, with respect to their EPFO contribution in the first 4 years of employment.
- Scheme C – Support to employers: Government to reimburse up to `3,000 per month for 2 years towards EPFO contribution of employers, for each additional employee.
- New Scheme for Internship in 500 Top Companies to 1 crore youth in 5 years
Implications for Compliance:
The budget emphasizes ease of doing business through the digitization of compliance processes. This move aims to reduce bureaucratic hurdles, streamline regulatory procedures, and enhance transparency. For businesses, especially MSMEs, this simplification is expected to lower compliance costs and improve operational efficiency.
Services to Labour
- Integration of e-Shram portal with other portals to facilitate such one-stop solution.
- Open architecture databases for the rapidly changing labour market, skill requirements and available job roles.
- Mechanism to connect job-aspirants with potential employers and skill providers.
Reforms in Employment and Investment:
- Angel Tax has been abolished for all classes of investors to strengthen the start-up ecosystem.
- A simpler tax regime has been introduced for foreign shipping companies operating domestic cruises, aiming to boost cruise tourism in India.
- The corporate tax rate for foreign companies has been reduced from 40% to 35%.
Increased Deduction on Employer’s Contribution to Pension Scheme:
Section 80CCD provides a deduction for the employer’s contribution to the Pension scheme up to 10%. Budget 2024 has now increased the limit deduction limit to 14% of the salary of the employee during the previous year.
Direct Taxes changes:
For classifying assets into long-term and short-term, there will only be two holding periods: 12 months and 24 months. The 36-month holding period has been removed.
The holding period for all listed securities is 12 months. All listed securities with a holding period exceeding 12 months are considered Long-Term. The holding period for all other assets is 24 months.
The taxation of Short-Term Capital Gain for listed equity shares, a unit of an equity-oriented fund, and a unit of a business trust has been increased to 20% from 15%. Other financial and non-financial assets which are held for short term shall continue to attract the tax at slab rates.
For the benefit of the lower and middle-income classes, the limit on the exemption of Long-Term Capital Gains on the transfer of equity shares or equity-oriented units or units of Business Trust has increased from Rs.1 Lakh to Rs.1.25 lakh per year. However, the rate at which it is taxed has increased from 10% to 12.5%.
Custom duty changes:
Here’s a sector-specific customs duty proposal in Budget 2024-25 as follows with rates
| Sr No | Particulars | From Old budget | To New Budget |
| 1 | Mobile phone, mobile PCBA and chargers | 20% | Basic customs duty reduced to 15% |
| 2 | Gold and silver | 15% | Customs duty reduced to 6% |
| 3 | Platinum | 15.40% | Customs duty reduced to 6.4% |
| 4 | Broodstock, polychaete worms, shrimp and fish feed | 10%, 30%, and 15% respectively | Basic customs duty reduced to 5% |
| 5 | Alkali or alkaline earth metals, 25 rare earth minerals (like lithium) | 5% | Exempted from customs duty |
| 6 | Capital goods for manufacturing of solar panels | 7.50% | Exempted from customs duty |
| 7 | Cancer drugs (Trastuzumab Deruxtecan, Osimertinib and Durvalumab) | 10% | Exempted from customs duty |
| 8 | Ferro nickel and blister copper | 2.50% | Nil BCD |
| 9 | Ammonium nitrate | 7.50% | 10% |
| 10 | PVC flex banners | 10% | 25% |
| 11 | PCBA of specific telecom equipment’s | 10% | 15% |
In conclusion, the Union Budget 2024 introduces transformative measures that aim to bolster compliance, streamline labour laws, and foster economic growth through enhanced skilling and employment initiatives. These changes present opportunities for businesses to thrive in a simplified regulatory environment while empowering the workforce with improved social security and job prospects.