Budget 2024-2025: Key Employment and Labour Law Updates

The Union Budget 2024-2025, presented by Finance Minister Nirmala Sitharaman, brings a wave of significant updates and initiatives focused on employment and labour law. These changes are designed to boost job creation, enhance workforce participation, and support both employees and employers across various sectors. Here’s an in-depth look at the major highlights and what they mean for the employment landscape in India.

1. Employment Linked Incentive Schemes

The budget introduces three major schemes under the Employment Linked Incentive framework. These schemes are tailored to promote job creation and offer substantial support to employees and employers alike.

Scheme A: First Timers This scheme is aimed at individuals entering the workforce for the first time. It offers:

• One-Month Wage Subsidy: Individuals who are newly employed will receive a one-month wage subsidy of up to ₹15,000.

• Direct Benefit Transfer: The subsidy will be transferred directly to the beneficiaries in three equal installments.

• Eligibility: This scheme is applicable to those earning up to ₹1 lakh per month.

• Impact: Expected to benefit around 210 lakh youth, providing a significant boost to their initial employment journey.

Scheme B: Job Creation in Manufacturing Targeted at the manufacturing sector, this scheme focuses on incentivizing additional employment:

• EPFO Contributions: The scheme provides benefits linked to Employees' Provident Fund Organisation (EPFO) contributions for the first four years of employment.

• Employer Support: Employers in the manufacturing sector will receive financial incentives to hire more employees.

• Impact: Aimed at benefiting 30 lakh youth and encouraging growth in the manufacturing sector.

Scheme C: Support to Employers This scheme provides comprehensive support to employers across all sectors to encourage job creation:

• Reimbursement for EPFO Contributions: Employers will be reimbursed up to ₹3,000 per month for two years for each additional employee hired.

• Wide Coverage: The scheme covers new employment across all sectors.

• Impact: Expected to incentivize the employment of 50 lakh individuals, promoting overall job growth.

2. Enhancing Women’s Workforce Participation

The budget emphasizes increasing women's participation in the workforce through various supportive measures:

• Working Women Hostels: The government plans to set up hostels for working women in collaboration with industries to provide safe and affordable accommodation.

• Crèches: Establishment of crèches to support working mothers and help them balance work and family responsibilities.

• Skilling Programs: Women-specific skilling programs to enhance their employability and skills.

• Market Access: Initiatives to promote market access for women self-help group (SHG) enterprises, enabling them to expand their businesses and reach broader markets.

3. Skilling Programs and Loans

Recognizing the importance of skilling, the budget introduces several initiatives to enhance skill development:

• Centrally Sponsored Skilling Scheme: A new scheme in collaboration with state governments and industries to provide comprehensive skilling opportunities.

• Skilling Loans: Loans up to ₹7.5 lakh under a revised Model Skill Loan Scheme, benefiting around 25,000 students annually.

• Higher Education Loans: Financial support for higher education loans up to ₹10 lakh, with an annual interest subvention of 3% for 1 lakh students.

4. Changes in Income Tax in the 2024 Budget

The 2024 budget has introduced several significant changes to the income tax structure, aimed at providing relief to taxpayers and encouraging investment. Here’s a detailed breakdown of the key changes in the income tax regime:

New Income Tax Slab Rates for 2024

One of the most notable changes is the introduction of new tax slabs. The revised rates are designed to offer substantial relief under the new tax regime. The new slabs and rates are as follows:

• Income up to ₹3,00,000: No tax

• Income from ₹3,00,001 to ₹7,00,000: 5%

• Income from ₹7,00,001 to ₹10,00,000: 10%

• Income from ₹10,00,001 to ₹12,00,000: 15%

• Income from ₹12,00,001 to ₹15,00,000: 20%

• Income above ₹15,00,000: 30%​(budget_speech 2024)​

Increased Standard Deduction

To provide further relief, the standard deduction for salaried individuals and pensioners has been increased:

• Previous Deduction: ₹50,000

• New Deduction: ₹75,000

This increase is expected to benefit around four crore salaried individuals and pensioners​(budget_speech 2024)​​​.

Enhanced Family Pension Deduction

For family pensioners, the deduction has been enhanced from ₹15,000 to ₹25,000 under the new tax regime. This change aims to ease the financial burden on families relying on pension income​(budget_speech 2024)​​​.

Increased Deduction for Non-Government Employer Contributions to NPS

The budget has also proposed an increase in the deduction allowed for non-government employer contributions to the New Pension Scheme (NPS):

• Previous Deduction: 10% of the employee’s salary

• New Deduction: 14% of the employee’s salary

Similarly, non-government employees will be allowed a deduction of up to 14% of their salary, up from the previous 10%​(budget_speech 2024)​​.

Measures to Promote Investment and Employment

In addition to changes in personal income tax, the budget has introduced several measures to promote investment and foster employment:

• Reduction in Corporate Tax Rate for Foreign Companies: The rate has been reduced from 40% to 35%​(budget_speech 2024)​.

• Incentives for IFSC: Retail schemes and Exchange Traded Funds in the International Financial Services Centre (IFSC) will enjoy tax exemptions similar to specified funds. Certain incomes of Core Settlement Guarantee Fund set up in IFSC will also be exempt​(budget_speech 2024)​.

Additional Provisions

The budget includes other provisions aimed at simplifying and rationalizing the tax system:

• Vivad Se Vishwas Scheme 2024: A new scheme for the resolution of pending income tax disputes​(budget_speech 2024)​.

• Decriminalization of Late TDS Payment: Late payment of Tax Deducted at Source (TDS) will no longer be criminalized if payment is made before the filing deadline of the TDS statement​(budget_speech 2024)​​.

5. Comprehensive Approach to Social Justice

The budget adopts a saturation approach to ensure that all eligible individuals benefit from various educational and health programs aimed at enhancing their capabilities:

• Craftsmen and Artisans Support: Enhanced implementation of schemes for craftsmen and artisans to preserve and promote traditional skills.

• Women Entrepreneurs: Initiatives to support women entrepreneurs, providing them with the necessary resources and opportunities to grow their businesses.

• Purvodaya Plan: Focus on the development of the eastern region, including Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh, through targeted initiatives and investments.

Conclusion

The Budget 2024-2025 presents a robust framework for enhancing employment and labour laws in India. The introduction of new schemes and incentives is poised to drive significant job creation, support the skilling of the workforce, and ensure comprehensive social justice. These measures set a strong foundation for the country’s workforce, aiming to build a more inclusive and dynamic employment landscape.

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Source: The Budget Speech 2024 (https://www.indiabudget.gov.in/doc/budget_speech.pdf).