Nirmala Sitharaman, the Finance Minister, delivered the Union Budget 2024-25 to Parliament on Tuesday during the Monsoon Session. Nirmala Sitharaman became the first finance minister to deliver seven consecutive budget addresses, surpassing former prime minister Morarji Desai's record of six consecutive budgets from 1959 to 1964.
Nirmala Sitharaman's seventh Budget emphasized important themes aimed at boosting economic growth and generating enough possibilities. These included productivity and resilience in agriculture, employment and skill development, and services.
"India's economic growth continues to be the shining exception (in a world gripped by policy uncertainties) and will remain so in the coming years," Sitharaman said while delivering the Budget to Parliament. "In this budget, we particularly focus on employment, skilling, MSMEs, and the middle class."
Increase in the standard deduction
In the budget, Finance Minister Nirmala Sitharaman proposed a 50% rise in the standard deduction for salaried personnel from ₹50,000 to ₹75,000 under the new income tax regime.
The standard deduction is a set deduction from an employee's total annual compensation before computing the appropriate income tax rate. Notably, no change has been announced to the basic deduction under the previous tax structure.
New Income Tax Slabs
Nirmala Sitharaman indicated in her budget address that the income tax slabs will be relaxed under the new tax regime for the current fiscal year.
The new income tax slabs are as follows:
Up to ₹3 lakh: 0%
₹3 to ₹7 lakh: 5%
₹7 lakh to ₹10 lakh: 10%
₹10 lakh to ₹12 lakh: 15%
₹12 lakh to ₹15 lakh: 20%
Above ₹15 lakh: 30%
"As a result of these changes, a salaried employee in the new tax regime stands to save up to ₹17,500/- in income tax," she told the press.
Increase in tax deduction for family pensions
Sitharaman also announced plans to boost the family pension deduction amount to improve the financial security of salaried workers and pensioners.
The new tax system proposes increasing the deductible amount from ₹15,000 to ₹25,000.
The finance minister has recommended increasing the deduction on family pension for pensioners from ₹15,000 to ₹25,000. This move will benefit around 4 crore salaried workers and pensioners.
All new recruits in the formal sector will get a one-month pay
Nirmala Sitharaman also said that the government will pay a one-month salary to all new employees in all official sectors. According to the finance minister, the government would immediately send the sum to employees as a provident fund contribution.
"...one month's pay for all new employees in all formal sectors. First-time EPFO employees can get a Direct Benefit Transfer of one month's pay in three installments, up to ₹15,000. The minimum monthly salary need is ₹1 lakh. "The scheme will benefit 210 lakh youth," the finance minister stated when presenting the budget.
The announcements were part of the prime minister's job creation and skill-building plan.
In addition to the direct benefit transfer, the government has stated that incentives would be granted directly to both employees and employers depending on their EPFO contributions during the first four years of employment. Employers would be paid up to ₹3,000 per month for two years for EPFO contributions for each extra employee.
Internship with top 500 firms
The finance minister also announced in her budget statement on Tuesday that the government will start an internship program for youngsters in 500 major corporations.
Sitharaman noted that the plan will benefit 10 million young people over a five-year period. Interns will earn a monthly allowance of ₹5,000 and a one-time help of ₹6,000.
