In simple words - The Indian Union Budget Session - 2024

This is my takeaway from the union budget session for this year, hoping to be educational for those who wish to have a glimpse of the entire session

Topics range from :

1. Changes in Tax reforms

2. Anger among people due to these changes

3. Why people aren't part of consumption

We all know that consumption is one of the most important parameters for GDP, but ironically, this is the main problem in the Indian economy, ie. People don't spend, companies continue targeting the richer sector of our society.

This problem of consumption can be solved in easy terms in two main ways ;

1. Give a reason for the consumer to spend more money, answering the question, Why should I spend money?

2. Give jobs to those who don't have money

Changes made in the new budget meeting:

1. Income tax :

People thought this budget would be different where income tax would be reduced for individuals giving them more grants on money, but the government did its best to try and do so.

Firstly, the standard deduction on the new income tax regime was 'increased', basically that income of your salary that you can remove on which you don't have to pay any taxes.

This might seem like a good measure for which it is, but quite negligible, increased by just 25,000 rupees. Along with this, many Income tax slabs were also changed. The benefit of this is just 17,500 rupees.

2. Tax on short-term and long-term gains :

The main reason for anger among investors of the stock market, in simple words, the reason being, the increase in taxes in the stock market

Short-term gains, any stock held for a period less than 1 year, has a hike of 5% in taxes from, 15% to 20% this year.

Long-term gains, any stock held for more than 1 year, has a hike of 2.5% from, 10% to 12.5% this year.

India stands blow many countries such as the USA, where 61 % of the total population invests in the stock market, whereas in India, only 3 % do. The government has taken these steps to ensure heavy loading on the stock market stops, however, an average earning investor sees only disadvantages.

3. Removal of indexation benefit :

In simple words ;

Let's say you have bought a house worth 1 crore a few years back and no wish to sell it for 3 crores, based on inflation the worth has risen by 1 crore and the house is now worth 2 crores, so you're asking for 1 crore extra

If you were to sell the house on the same terms last year, by the indexation benefit you would only pay the taxes on the 1 crore extra, but this year, you will be paying not only on the Extra cost but also the inflation prices

The government, however, has reduced the long-term capital gains tax, ie. The tax amounts from, 20 % to 12.5 %.

So it's now up to you to decide whether it's the tax, or the removal of indexation benefit that's getting you a net profit or net loss.

4. Quote on quote, Internships :

As stated by Nirmala Sitharaman, 1 crore people will get "internships" in the top 500 companies in the next 5 years.

Is this feasible?

This means that every year, every company, must employ 4000 people through internships, but what about its execution, this isn't possible

A company only provides Internships or can be in the state of providing internships when a company grows, if the company isn't making money, why would it give internships?

In a way,

Urban taxpayers don't have a problem as such to pay such taxes but at the same time they all have one question: "What do we get in return by paying such taxes ?"

The one answer they expect is, "Quality of Life"

However, in India, Road Infrastructure, Public Transport, Air Pollution, and waste management systems say otherwise

"Accountability" and "Decentralisation" are one solution, but decentralization is only for the sake of it.

Actual statistics say the least amount of money spent by the government of all three levels (federal, state, local) is at the local level. This is the sole reason for the current authoritative state of India

Final thoughts :

The main approach of the Modi government is to target a reduction in fiscal deficit, ie. From 5.1 % to 4.9 % of it's GDP. They wish to Save money for now and spend it for the future.

Thus working on incentives and accountability through decentralization mustn't depend completely on the Budget, but we as citizens must also take responsibility for the same.