Union Budget 2024 & the markets

The Union Budget 2024-25, the first from the new coalition government led by Narendra Modi, had equity investors on pins and needles. And its revelation has left them stunned with sweeping changes, especially on the taxation front. Meanwhile, the key sectoral outlays did not have any big surprises to offer. Some other notable policy changes had to do with custom duty changes across various commodities. We bring you a rundown of key policy announcements from the Budget. Let's start with the tax proposals:

Taxation:

• Short-term capital gains on equity-oriented assets will be taxed at 20 per cent, up from 15 per cent previously.
  
• Long-term capital gains on equity-oriented assets will be taxed at 12.5 per cent, up from 10 per cent previously.
  
• The exemption limit for long-term capital gains will be increased to Rs 1.25 lakh a year from Rs 1 lakh.
  
• Security transaction tax or STT will be increased on derivatives:
  
• From 0.0625 per cent to 0.1 per cent on sale of Options
  
• From 0.0125 per cent to 0.02 per cent on sale of Futures
• Corporate taxation on foreign companies will be reduced to 35 per cent from 40 per cent.
  
• Income from share buybacks will be taxed in the hands of the receiver. Until now, the company making the buyback paid the taxes.

Also read: Union Budget 2024 and your money

Infrastructure and housing:

• The government has budgeted a capital expenditure outlay of Rs 11.11 lakh crore (about 3.4 per cent of GDP), unchanged from the interim budget announced early this year.
  
• Development of four major road connectivity projects worth Rs 26,000 crore has been proposed.
  
• Rs 10 lakh crore has been allocated for PM Awas Yojana 2 to address housing needs of 1 crore urban poor and middle-class families.
  
• The government plans to facilitate development of investment-ready industrial parks in around 100 cities in partnership with states and the private sector.

Power:

• Allocation to nuclear power projects has been increased to Rs 2,228 crore from Rs 442 crore budgeted in 2023-24.
  
• Allocation to solar power has been increased to Rs 10,000 crore from Rs 4,970 crore budgeted in 2023-24.
  
• A joint venture between NTPC and BHEL will set up a full scale 800 MW commercial plant.
  
• Power projects, including setting up of a 2400 MW power plant in Piranpainti, will be undertaken for Rs 21,400 crore.

Commodity-specific changes in custom duties:

• Import duty or basic custom duty on mobile phones, their printed circuit board assembly (PCBA) and chargers will be reduced to 15 per cent from 20 per cent.
  
• 25 critical minerals including lithium, copper and cobalt will be fully exempt from custom duty.
  
• Various capital goods used in manufacturing solar cells and panels will be exempt.
  
• Custom duty on certain shrimp broodstock (used for breeding) will be reduced from 10 per cent to 5 per cent. It will be reduced from 30 per cent to 5 per cent on polychaete worms and from 15 per cent to 5 per cent on shrimp and fish feed.
  
• Custom duty on methylene diphenyl diisocyanate (MDI) used in manufacturing spandex yarn will be reduced to 5 per cent from 7.5 per cent.
  
• Custom duty on gold and silver will be reduced to 6 per cent each from 15 per cent. For platinum, it will be reduced to 6.4 per cent from 15.4 per cent.
  
• Custom duty on import of PVC flex banners will be increased to 25 per cent from 10 per cent.
  
• Custom duty on PCBA of specified telecom equipment will be raised from 10 per cent to 15 per cent.

Other important highlights:

• Rs 4.5 lakh crore has been allocated for the defence sector.
  
• Rs 15,000 crore has been allocated for the reconstruction of Amravati, Andhra Pradesh's new capital.
  
• The outlay for the renewable energy sector has been increased nearly 2.5 times to Rs 17,553 crore.
  
• Rs 1.5 lakh crore has been allocated to state governments as long-term interest-free loans to support resource allocation.
  
• Rs 1.52 lakh crore has been allocated to agriculture and allied sectors.
  
• Rs 2.66 lakh crore has been allocated for rural development.
  
• Rs 1,000 crore has been allocated for a venture capital fund to expand the space economy.