Income tax, LTCG, to exemptions: Top 12 proposals from Sitharaman’s Budget 2024 that impact tax payers, salaried class

Budget 2024: The expectations remained high on some relief being provided by the Finance Minister Nirmala Sitharaman to the individual tax payers during the budget. The hopes also had increased looking at rising tax collection following special dividend by the Reserve Bank of India leading to better fiscal health

The Finance Minister did not disappoint much providing some relief to the tax payers.

Key income tax changes

1. Standard deduction for salaried employees increased from ₹50,000 to ₹75,000.

2. Deduction on family pension for pensioners enhanced from ₹15,000/- to ₹25,000/-

3. The 5% tax rate slab was changed from ₹5 lakh to ₹7 lakh.

Revised tax rate structure under the new income tax regime _ as per the income tax scheme

0-3 lakh rupees- Nil

3-7 lakh rupees- 5%

7-10 lakh rupees- 10%

10-12 lakh rupees-15%

12-15 lakh rupees -20%

Above 15 lakh rupees- 30%

Thus the Salaried employee in the new tax regime stands to save up to ₹ 17,500/- in income tax.

4. NPS - The benefit for social securities of salaried people can accrue as deduction of expenditure by employers towards NPS (new pension scheme is proposed to be increased from 10 to 14 per cent of the employee’s salaried.

Capital Gains tax changes

5. Exemption limit for LTCG extended The increase in exemption limit for Long Term Capital Gains tax from ₹1 lakh to ₹1.25 lakhs is a welcome change.

However the changes in rates for short and Long term capital gains tax (LTCG and STCG) were not anticipated, and will be looked at with disappointment.

6. Short term capital gains (STCG) on certain financial assets will now attract a tax rate of 20 per cent.

7. Long term Capital gains (LTCG) on all financial and non-financial assets will attract a tax rate of 12.5 per cent.

Other changes

8. Two tax exemption regimes for charities to be merged into one. The 5 per cent TDS rate on many payments merged into 2 per cent TDS rate.

9. TDS on repurchase of mutual fund units withdrawn- The 20 per cent TDS rate on repurchase of units by mutual funds or UTI withdrawn.

10. TDS rate on e-commerce operators has also been reduced from one to 0.1 per cent.

11. Delay for payment of TDS up to due date of filing statement decriminalized, which is looked at as another positive

12. Simplification of Reassessment

Assessment can be reopened beyond three years up to five years from the end of Assessment Year only if the escaped income is ₹ 50 lakh or more.

In search cases, time limit reduced from ten to six years before the year of search.

Expert Views

Venkat Chalasani, Chief Executive, AMFI said that The emphasis on job creation, skilling, a boost to the MSME sector as well as tax relief to the middle classes will add more income in the hands of the people.

The increase in exemption limit for Long Term Capital Gains tax from ₹1 lakh to ₹1.25 lakhs is a welcome change. While the changes in rates for LTCG and STCG were not anticipated, the markets will take them in their stride added Chalasani

Karthick Jonagadla, smallcase Manager and Founder Quantace Research said that “Empowering the Lower Middle Class. Budget 2024 addresses the needs of the lower middle class by increasing disposable income through higher standard deductions and a simplified new income tax regime. Tax slabs now provide significant relief, ensuring more money for essential spending. This financial support aims to enhance the economic resilience of lower-income households, impacting over 5 crore families"