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Budget 2024-25: Major Takeaways and Financial Projections Part – 2
Budget 2024-25: Major Takeaways and Financial Projections
Part – 2
Introduction
As India navigates the complexities of a dynamic global economy, the Union Budget for 2024-25 has set ambitious goals and introduced significant reforms aimed at bolstering economic growth, enhancing infrastructure, and ensuring social equity. This article delves into the key takeaways and financial projections of the budget, providing insights into how these measures will shape India's economic landscape in the coming fiscal year.
Budget 2024-25: Major Takeaways and Financial Projections
- Changes in the New Income Tax Regime
The new income tax regime has seen significant revisions to its tax slabs, as detailed in Table 1. Key changes include:
- Increased Standard Deduction: For salaried individuals and pensioners, the standard deduction has been raised from? 50,000 to? 75,000.
- Enhanced Family Pension Deduction: The deduction for family pensions is now increased from? 15,000 to? 25,000.
- Higher Pension Contribution Deduction: Both employer and employee pension contributions are now tax-deductible up to 14% of the salary, up from the previous 10%.
- Capital Gains Tax Adjustments
The revised capital gains tax structure includes the following changes:
- Increased Short-Term Capital Gains Tax: The tax on short-term capital gains from listed equity shares, equity mutual funds, and REITs/INVITs will rise from 15% to 20%.
- Updated Long-Term Capital Gains Tax: Long-term capital gains will be taxed at 12.5% across all asset categories, replacing the previous rates of 10% for listed equities and 20% with indexation for other assets.
- Removal of Indexation: Indexation for calculating long-term capital gains on property, gold, and other unlisted assets will be removed. Long-term status for listed financial assets requires a holding period of more than one year, while unlisted financial assets and non-financial assets must be held for at least two years.
- Increased Exemption Limit: The exemption limit for long-term capital gains from listed equity shares, equity mutual funds, and business trusts will be raised from? 1 lakh to? 1.25 lakh.
- Buyback of Shares: Buybacks will be treated on par with dividends for tax purposes.
- Securities Transaction Tax Updates
The Securities Transaction Tax (STT) will be adjusted as follows:
- Options: The STT on the sale of options will increase from 0.0625% to 0.1% of the option premium.
- Futures: The STT on the sale of futures will rise from 0.0125% to 0.02% of the trading price.
- Revised Tax Deducted at Source (TDS) Rates
The Tax Deducted at Source (TDS) rates will be revised as follows:
- General Reductions: The TDS rate will be cut from 5% to 2% for payments including insurance commissions, life insurance policies, rent, and commission or brokerage.
- E-Commerce Transactions: The TDS on payments made by e-commerce operators to e-commerce participants will be reduced from 1% to 0.1%.
- Direct Tax Vivad Se Vishwas Scheme, 2024
The Direct Tax Vivad Se Vishwas Scheme, 2024, will be introduced to resolve tax-related disputes. This scheme offers leniency by reducing or waiving the payment of disputed interest or penalties on tax amounts.
- Equalisation Levy
Effective August 1, 2024, the 2% equalisation levy on proceeds received by non-resident e-commerce operators for the supply of goods or services will no longer apply.
- Changes in Customs Duty
Customs duty rates have been adjusted for various goods. The duty has been reduced on items such as gold, silver, and mobile phones along with their chargers and adapters. Additionally, exemptions from customs duty have been granted for certain items used in the textile, steel, and capital goods sectors. Conversely, customs duty has been increased on solar glass (used in manufacturing solar cells or modules) and specific chemicals.
- Angel Tax: The Income Tax Act's provision for taxing unlisted companies on funds received above the face value of their shares will be abolished.
- Disclosure of Foreign Assets: The Black Money Act, of 2015, which imposes penalties for failing to declare foreign assets, will no longer apply to movable assets valued up to 20 lakh.
- Immunity from Benami Transactions: Under the Prohibition of Benami Property Transactions Act, 1988, both the benamidar and the beneficial owner are jointly liable. To encourage benamidars to become whistleblowers, a new provision will offer immunity to those who come forward.
Conclusion
The Union Budget 2024-25 represents a strategic effort to balance immediate economic needs with long-term growth objectives. With significant investments in infrastructure, innovation, and social equity, the budget aims to propel India toward sustainable development while addressing critical areas such as employment, health, and energy security. As these measures are implemented, they hold the potential to shape a resilient and inclusive economic future for the nation.
