How Will New Tax Policies in Budget 2024 Affect the Price of Electric Vehicles?
On July 23, 2024, Finance Minister Nirmala Sitharaman presented the Union Budget for the fiscal year 2024-25, marking her seventh consecutive budget presentation.
This budget, notable for its comprehensive and forward-looking measures, aims to stimulate economic growth, enhance infrastructure, support MSMEs, and drive the adoption of green technologies.
Key Tax Reforms and Incentives
One of the significant highlights of the budget is the revision of tax rates under the new tax regime, aimed at benefiting salaried individuals. The revised tax rates are structured to provide relief and encourage compliance:
- ₹0-3 lakh: Nil
- ₹3-7 lakh: 5%
- ₹7-10 lakh: 10%
- ₹10-12 lakh: 15%
- ₹12-15 lakh: 20%
- Above ₹15 lakh: 30%
Additionally, the budget includes a reduction in capital gains tax to stimulate investment and the abolition of the Angel Tax, which previously hindered investment despite its anti-money laundering intent.
The budget maintains a strong focus on infrastructure, with the Centre’s capital expenditure for FY25 pegged at ₹11.1 lakh crore. This includes significant investments in infrastructure development, with a focus on boosting the manufacturing sector.
Prime Minister Narendra Modi emphasized the budget’s role in making India a global manufacturing hub, particularly benefiting the MSME sector, which is a major employment provider.
Special attention has been given to MSMEs, with measures including credit guarantee schemes and term loans for machinery purchases. A technology support package for MSMEs and the opening of 24 new SIDBI branches aim to enhance support for these enterprises.
The Mudra loan limit has been increased from ₹10 lakh to ₹20 lakh for previous borrowers, further aiding MSMEs.
To tackle unemployment and improve workforce skills, the budget introduces five schemes targeting 4.1 crore youth over five years, with a central outlay of ₹2 lakh crore.
This includes a comprehensive internship scheme for one crore youth and women-specific skilling programs. Employment-linked incentives, such as one month’s wage support for first-time employees, are also part of the initiative.
With a provision of ₹2.66 lakh crore for rural development, the budget emphasizes transforming agricultural research to boost productivity and introduce climate-resilient crop varieties. An initiative to introduce one crore farmers to natural farming over two years underscores the commitment to sustainable agriculture.
In line with India’s ambitious EV adoption targets, the budget proposes significant measures for the renewable energy sector.
The introduction of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME III) policy is expected to increase subsidies for EV buyers and encourage the setup of battery manufacturing plants in India.
Import duties on critical minerals such as lithium have been waived, which is expected to reduce the manufacturing costs of EV batteries and subsequently lower EV prices for consumers.
The budget also proposes substantial investments in EV charging infrastructure to address range anxiety and promote EV usage. These measures are crucial for achieving net-zero carbon emissions and enhancing the adoption of EVs in delivery services.
The budget outlines nine priority areas, including agriculture, employment, inclusive development, manufacturing and services, urban development, energy, infrastructure, innovation and R&D, and next-generation reforms.
A noteworthy allocation of over ₹3 lakh crore is dedicated to schemes benefiting women and girls, reflecting the government’s commitment to women-led development.
The extension of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) for five years will continue to benefit over 80 crore people, ensuring food security for the underprivileged.
Additionally, the development of Digital Public Infrastructure (DPI) applications for credit, e-commerce, law and justice, and corporate governance is expected to drive technological advancements and improve service delivery.