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PremiumIncome Tax Budget 2024 Highlights: Finance Minister Nirmala Sitharaman presented Budget 2024 on July 23. The FM announced a marginal income tax relief for the middle class. Sitharaman raised the standard deduction -- a flat deduction from the total salary earned by an employee in a year before calculating the applicable income tax rate -- by 50 per cent to ₹75,000 and tweaked tax slabs for taxpayers opting for the new income tax regime.
Commenting on the budget, Prime Minister Narendra Modi said it "will act as a catalyst in making India the third-largest economy in the world (from fifth largest today) and will lay a solid foundation for a developed India".
How to access Budget 2024 documents:
You can view the Budget 2024 through the Union Budget Mobile App, available on Android and iOS platforms. The Budget speech documents is accessible on the web portal at www.indiabudget.gov.in.
Read the latest news on Budget 2024 with our live coverage on the Income Tax Slab, Impact on Share Market, Budget Key Highlights, and Corporate Reactions.
Income Tax Budget 2024 LIVE: Commenting on Finance Minister Nirmala Sitharaman's announcement of the comprehensive review of the Income Tax Act, 1961, CBDT Chairman Ravi Agrawal said that CBDT will work in the next six months to bring a more simplified version of the I-T Act and added that the inputs of chartered accountants would be important in the matter.
Income Tax Budget 2024 LIVE: Around 66 per cent of taxpayers out of the over 4 crore filers have opted for the new income tax regime for income tax return (ITR) filing. During a post-budget interview with PTI, CBDT Chairman Ravi Agrawal said that the focus of the government and the direct taxes administration is on “simplification" of the tx processes including filing ITRs and conduct of other businesses with the Income Tax Department.
Income Tax Budget 2024 LIVE: The new capital gains tax on listed equity will be effective from July 23. The rate for short term capital gains tax on listed equity, equity oriented mutual funds and units of business trust has increased from 15 per cent to 20 per cent and they will come in effect from July 23.
Income Tax Budget 2024 LIVE: After the announcement of changes to the capital gains tax, the Income Tax department has issued FAQs on the changes.
Simplification of any tax structure has benefits of ease of compliance viz computation, filing, maintenance of records. This also removes the differential rates for various classes of assets," the income tax department said in an FAQ.
Revenue Secretary Sanjay Malhotra on Wednesday said the idea behind changes in the capital gains tax on investments in listed equities is to encourage retail investors to hold on to their investments for a longer period of time.
Malhotra further said the proposal will not hurt small investors holding onto shares for over one year as the LTCG exemption limit has been hiked in the Budget.
"We would encourage people to hold on to these shares for longer period of time because that is investment. Second, this increase impinges mostly on the higher incomes, not on the middle and lower income class category. The benefit of ₹1.25 lakh exemption for LTCG helps middle and low-income categories," Malhotra told PTI.
He further said the hike in securities transaction tax (STT) on futures and options (F&O) will send a message to retail investors to stay away from such speculative trades.
"While we do believe that this will not fully curb this speculative instinct, but this is still a message to retail investors to stay away from F&Os as some study by Sebi shows 9 out of 10 investors in F&O actually lose money.
"So it's more of a signal to them. More, of course, we believe needs to be done if this is to be curbed. Taxation is only one measure and will have only that minimal impact perhaps on this trading," Malhotra said.
Speaking on the Budget proposal regarding the STT rate hike, Saurabh Jain, Vice President of Research at SMC Global Securities, said, “The decision to raise the rate for equity and index traders is going to have a negative impact on the Indian stock market in the near term. It will discourage F&O trade if this budget proposal gets implemented."
On whether the move is aimed at discouraging the retail investors from moving from cash to F&O segment, Saurabh Jain said, “We can say that as the government has announced to raise the limit of exemption of capital gains from ₹1 lakh to ₹1.25 lakh per year."
Sunil Damania, Chief Investment Officer, MojoPMS:
The budget outlines a strategic plan to propel India towards its goal of becoming a developed nation, Vikshit Bharat, by 2047. The anticipated adjustments to the capital gains tax were implemented, addressing a significant need. The gap between short-term and long-term capital gains has widened from 5 per cent to 7.5 per cent, which will enhance government revenue from personal income tax. Despite the increase in capital gains tax, there was no reduction or removal of the Securities Transaction Tax (STT), which is perceived as unfair to equity investors. However, the increase in STT on derivatives is a positive step towards curbing excessive speculation in futures and options (F&O) markets.
The budget also reflects coalition politics, with increased allocations to Bihar and Andhra Pradesh. Given the record dividends received from the Reserve Bank of India (RBI), a higher allocation for infrastructure was anticipated, but the budget maintained the levels set in the interim budget. Overall, the budget is favourable for macroeconomic stability but may be less encouraging for the stock market. One possible reason is the government's intention to temper the market due to its high valuations.
Analyzing the changes in mutual fund investments, Radhika Gupta, Edelweiss MD and CEO of Edelweiss Asset Management Company (AMC), claimed that with this budget, the concept of indexation has gone away.
Gupta explained the changes in mutual funds (MFs) following the presentation of the Union Budget 2024 in the Lok Sabha today. The market expert said that before the Budget, mutual funds had different taxation categories.
‘’Some mutual funds were taxed as long term and short term, some mutual funds were taxed with marginal taxation rates, and some mutual funds had this concept of indexation. With this Budget, all of this gets simplified, and the concept of indexation goes away,'' said Gupta. Read full story here
The Income Tax department on Wednesday said 'substantial tax savings' are expected for a vast majority of taxpayers due to reduction in the long term capital gains tax (LTCG) rate in the real estate sector.
The Budget has reduced tax rates on capital gains earned from sale of house properties held for long term, but has removed the indexation benefit available to taxpayers.
The indexation benefit allowed taxpayers to compute gains arising out of sale of capital assets after adjusting inflation.
In a post on X, the income tax department said the nominal real estate returns are generally in the region of 12-16 per cent per annum, much higher than inflation.
"The indexation for inflation is in the region of 4-5 per cent, depending on the period of holding. Therefore, substantial tax savings are expected to a vast majority of such taxpayers," it said.
Removal of the Angel tax for startups was a long pending issue as this levy was on investment coming into the country and such overseas inflows should not be taxed, a top government official said.
Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Rajesh Kumar Singh said the decision will help in attracting foreign investments, promoting innovation and further strengthening the startup ecosystem of the country, which is the third largest in the world.
"So this was an ease of doing business issue as well as a tax issue. Ultimately, it was a tax not on income but on investments and investments should not get taxed, that is the basic idea," Singh told PTI.
Giving a big relief to startups, the government on Tuesday announced removal of angel tax for all classes of investors.
Angel tax (income tax at the rate of over 30 per cent) refers to the income tax that the government imposes on funding raised by unlisted companies, or startups, if their valuation exceeds the company's fair market value.
The real estate sector has cautioned the government that the proposal to remove indexation benefits for long-term capital gains in real estate will hurt the growth of the sector.
"The removal of the indexation benefit for long-term capital gains in real estate is likely to significantly impact property owners' holdings assets for more than ten years. Owners of heritage homes may face a higher tax burden upon sale, as the absence of indexation prevents adjusting the property's cost basis for inflation. The change could result in higher taxes for individuals who want to sell assets held for more than ten years" said Niranjan Hiranandani, Chairman, NAREDCO.
The budget 2024-25 has proposed a flat budget 2024-25 of 12.5 per cent on capital appreciation on selling a property with no indexation benefits.
The removal of indexation benefits from real estate transactions will turn out to be beneficial for taxpayers when it is seen through the prism of "actual market dynamics" rather than plain mathematics, CBDT Chairman Ravi Agrawal said on Wednesday.
The head of the direct taxes administration in the country told PTI in a post-budget interview that the department did "some calculations" in this context before the measure announced by Union Finance Minister Nirmala Sitharaman on Tuesday in Parliament.
Agrawal also underlined that the new system says there will be "less tax obligation" for a taxpayer here. The Budget 2024-25 has reduced tax rates on capital gains earned from the sale of house properties held for the long term but has removed the benefit of indexation available to taxpayers.
he 'Vivad se Vishwas' scheme announced in the Budget for settlement of pending direct tax appeals will be launched this year and its notification apart from relevant FAQs would be issued soon, CBDT chairman Ravi Agrawal said Wednesday.
Speaking to PTI during a post-Budget interview, the head of the direct taxes administration in the country said that a "substantial" number of income tax appeals are logged at the appellate stage in different forums and it is expected that a "reasonable" number of taxpayers will avail the new scheme.
The first 'Vivad se Vishwas' scheme for cases under the direct taxes or income tax category was brought out by the government in 2020 and, according to the CBDT chief, it was "quite successful" with about ₹75,000 crore revenue being garnered and about a lakh taxpayers availing the scheme.
The new long-term capital gains tax (LTCG) rates announced in the budget would be beneficial to property sellers, unless the price appreciation of the real estate is unrealistically low of less than nine per cent per annum, sources said.
The budget has lowered the LTCG from 20 per cent to 12.5 per cent but removed the indexation benefits. The new rates have come into effect from July 23, 2024. The indexation benefit allowed taxpayers to compute gains arising out of the sale of capital assets after adjusting for inflation.
The nominal returns on real estate are generally much higher than the inflation rate and often work out to be in the range of 12 per cent to 16 per cent. The indexation of inflation is mostly in the region of 4-5 per cent, depending on the period of holding.
The abolition of Angel tax for all classes of investors will act to "prompt" innovators and venture capitalists to better invest in startups and any instances of money laundering here will be taken care of by the existing legal mechanism, CBDT Chairman Ravi Agrawal said on Wednesday.
He said the removal of this tax will act to boost the startup ecosystem in India. He would urge the community to "please come forward, please invest as the country is waiting for your investment, initiatives and innovations", Agrawal told PTI in a post-Budget interview.
Asked how would a possible case of money laundering through investor funds be tackled after the removal of the Angel tax, he said if such a violation is found or it is detected that the fund has come through "undisclosed" sources, there are provisions in the respective statute and that will be taken care of.
About 66 per cent of taxpayers out of the over 4 crore filers have opted for the new regime for income tax return (ITR) filing during the current season till now, CBDT Chairman Ravi Agrawal said Wednesday.
He told PTI during a post-Budget interview that the focus of the government and the direct taxes administration is on "simplification" of the tax processes including filing of ITRs and conduct of other businesses with the Income Tax Department.
"The philosophy (of the government) is that the more you simplify, the more it will make it easy for people to comply leading to increased compliance.
"This is also reflected from the fact that, as on date, the number of returns (ITRs) that have been filed till yesterday is significantly more than the returns filed during the same time in the corresponding (last) year," Agrawal said.
The Income Tax Department has denied reports that people will have to pay higher taxes on profits made on selling a house or land under the budget proposal of a flat 12.5 percent tax without indexation.
In a social media post on "X," the income tax department says thatthe proposed new tax rate without indexation is beneficial in most cases.
The meme series breaks down complex budget details in a fun, relatable way.
The government has confirmed that indexation benefits will remain applicable to properties purchased before 2001. According to Revenue Secretary Sanjay Malhotra, this entails taxing such properties based on their 2001 valuation adjusted for indexation, or their purchase price plus indexation up to 2001, whichever is lower.
Properties acquired after 2001 will be subject to a flat tax rate of 12.5 percent without indexation.
The government has confirmed that indexation benefits will remain applicable to properties purchased before 2001. Revenue Secretary Sanjay Malhotra states that this entails taxing such properties based on their 2001 valuation adjusted for indexation, or their purchase price plus indexation up to 2001, whichever is lower.
Properties acquired after 2001 will be subject to a flat tax rate of 12.5 per cent without indexation.
Union Minister Ashwini Vaishnaw on Tuesday said that the 2024-25 budget includes provisions to simplify tax rates, reduce taxes, and help middle-class families fulfil their dream of owning a home.
"(Provision is made in this budget) for simplifying tax rate, working on reducing the tax rate, and fulfilling the biggest dream of middle-class families to build their own house," he told ANI.
“A big relief on reassessment and reopening of returns filed for earlier years, which has been reduced to 6 years as opposed to 10 years earlier, including in search cases. LTCG on shares has been increased from 10% to 12.5%. The period for non-financial assets to qualify as LTCG is brought down to 2 years. Lowering of LTCG rate on sale of land/gold/unlisted shares to 12.5% in place of 20% is beneficial even though indexation is removed - overall will benefit most taxpayers," said Sweta Kochar, Founder & Partner, PKC Management Consulting around the Budget reactions pertaining to personal tax
“However, looking at the benefits and deductions which a salaried person has to forgo for opting in New Tax Regime like House Rent Allowance, Leave Travel Concession, deduction under Section 80C and 80D and tax benefits in respect of home loan , in most of the cases, the old tax regime is beneficial specially for the younger people who are either staying in rented premises or are servicing a home loan," says Mumbai-based investment and tax expert Balwant Jain
“The Union Budget 2024-25 while pursuing fiscal consolidation is largely focused on private demand revival with a slew of fiscal measure targeting the middle class, MSMEs and employment generation. The thrust to agriculture productivity, infrastructure, climate transition and rationalization of capital gains taxation regime are the deeper facets of the transformation that Budget seeks to achieve. From banking perspective budget is pro-growth and offers scope for balance sheet expansion. In all, Budget remains well grounded in domestic and international realties and has chalked the best strategy for future."
Manikandan. S, Tax Expert, ClearTax
The budget has focused well on key areas for India’s development viz, infrastructure, housing, manufacturing, job creation, skill development, and employment. The initiative to reimburse employers towards EPFO contributions for additional employees will boost job creation. The initiative to provide internship support to focus on employment and skill development is a boost for the youth. This will help to bridge the skill gap and give the students first-hand practical exposure thereby increasing their preparedness to join the workforce. Overall, the Budget has ticked all the green boxes to align with the vision of Viksit Bharat.
On the taxes front, abolishing angel tax is a very bold move and will prove to be a game-changer for start-ups giving more liquidity in their hands; this step will also contribute in reducing litigation and tax uncertainty. This move will make the start-up space more appealing and encourage investors to fearlessly invest in start-ups.
On the personal taxes front, the biggest respite has come in the form of rationalisation of re-assessment of reassessment procedures. After a considerable back and forth, the time limit reassessment has been reduced from current 10 years to 6 years. Along with this, extending the scope of certificate for nil/ lower certificate is a welcome move removing the additional compliance burden and facilitate the ease of doing business.
Increasing standard deduction under the new regime will provide relief to the tax-payers and boost adoption of the new tax regime. This is also in-line with the government’s aim of a simplified tax regime. Lastly, the rationalisation of capital gains taxation with respect to both holding period and rates is welcome although the cut-off date for implementation may be a cause for confusion to several tax payers.
Lastly, the Vivaad se Vishwaas scheme will bring much needed respite to resolve pending litigation at various levels and help in quicker disposal of long pending litigation.
Atul Puri, Managing Partner and Co-Founder at SW India
In order to rationalize and simplify the taxation of capital gains & provide benefit to the middle and lower-income classes of people, following changes / amendments were made:
• The Government of India has increased the short-term capital gains tax under provisions of section 111A of the Act on STT paid equity shares, units of equity oriented mutual fund and unit of a business trust to 20% from the present rate of 15% as the benefit from such low rate is flowing largely to high-net-worth individuals.
Other short-term capital gains (on all other financial assets and non-financial assets) shall continue to be taxed at applicable rate.
• The long-term gains tax on all financial and non-financial assets will be taxed at 12.5 per cent for the financial year 2024-25. This rate earlier was 10% for STT paid listed equity shares, units of equity-oriented fund and business trust under section 112A and for other assets it was 20%.
• Further, the government aims to provide benefit to the middle and lower-income classes of people through its proposal of increasing the limit of exemption of capital gains u/s 112A to ₹1.25 lakh per year, from the previous value of ₹1 lakh per year.
• For sake of simplification, the holding period for all listed securities is proposed to be 12 months and for all other assets, it shall be 24 months.
Income Tax Budget 2024 LIVE:
2% TDS is being withdrawn on Mutual funds
Credit of TCS is proposed to be given in salary
Standard operating procedure of TDS procedure
Income Tax Budget 2024 LIVE Update: FM Sitharaman hiked the standard deduction by 50% to ₹75,000 and tweaked tax slabs under the new income tax regime to provide more money for the salaried class. However, no changes were announced for the old income tax regime. Read More
Income Tax Budget 2024 LIVE:
Changes in capital gains tax
STCG raised to 20%
LTCG raised to 12.5% from 10%
Income Tax Budget 2024 LIVE: Short-term gains on certain financial assets will be taxed at 20%, while the rest will be subjected to the applicable tax rate.
Income Tax Budget 2024 LIVE: 'Increase in STT rates for Derivatives to 0.1% and futures to 0.02% may not go well with investors. Further, an increase in capital gains for listed equity instruments to 12.5% will leave investors dejected. Proposing to tax buy-back proceeds as dividends may also pose challenges as buy-back route is opted not only for profit distribution but also for internal re-structuring" CA Pitam Goel, Co Founder - Tattvam Group said
Income Tax Budget 2024 LIVE : "There have been changes in the tax slab...This year, three main changes have been made to the personal income tax slab...As a result of these changes, a salaried employee in the new tax regime stands to save up to ₹17,500 in income tax...," said Revenue Secretary Sanjay Malhotra
Income Tax Budget 2024 LIVE: FM Sitharaman announced a comprehensive review of the Income-tax Act 1961. The move aims to make the Act concise, lucid, and easy to read and understand. This will reduce disputes and litigation, thereby providing tax certainty to the taxpayers.
Income Tax Budget 2024 LIVE: Budget 2024 has increased the standard deduction for salaried employees to 75,000 rupees from 50,000 rupees earlier
Income Tax Budget 2024 LIVE Updates: The budget proposes to raise the contribution limit for employers in the private sector from 10% to 14% of the employee's basic salary. This new limit applies to both private and public sector employees, exclusively under the new tax regime.
Income Tax Budget 2024 LIVE:
Nil for income between ₹0 and 3 lakh
5% for income between ₹3 and 7 lakh
10% for income between ₹7 and 10 lakh
15% for income between ₹10 and 12 lakh
20% for income between ₹12 and 15 lakh
30% for income above ₹15 lakh
Income Tax Budget 2024 LIVE Updates: For an individual earning an income of ₹10 lakh, one will have to pay as little as ₹45,000 in taxes, and here, one will keep around ₹9,55,000 according to Siddharth Maurya, Founder & Managing Director of Vibhavangal Anukulakara Private Limited. Read More
Income Tax Budget 2024 LIVE: Key income tax changes
The budget announcements to give a huge push for skill development. Top 500 companies to create 1 crore internship opportunities for youth in next 5 years. Will create employable youth with skills for future. Conflict with requirements under the Apprentices Act to be resolved," said, Puneet Gupta, Tax Partner, EY India
Huge push to consumption through increased focus and outlay for agriculture reforms, employment generation, urban housing, etc is a big positive for the consumer sector, said, Paresh Parekh, Tax Leader - Consumer Products and Retail Sector, EY India
Arpit Jain, Joint MD, Arihant Capital Markets, said, “The hike in securities transaction tax (STT) on F&O from 0.01% to 0.02% and long-term capital gains tax (LTCG) from 10% to 12.5% is a negative for investors. The street expected a level playing field for domestic and foreign investors by taxing gains from equities for foreign institutions. Instead, LTCG was hiked, which disappointed market players."
“However, the reduction in fiscal deficit is estimated to be 4.9% from 5.1%, and the target of 4.5% for next year is very good for the Indian economy in the long run. The 4.9% fiscal deficit translates to the borrowing target coming down to ₹1.4 lakh crore compared to the estimated ₹15.43 lakh crore for FY24."
Alekh Yadav, Head of Investment Products, Sanctum Wealth, said, “Union Budget of 2024 addresses key concerns evident in this year's general elections. It focuses on employment, skilling, MSMEs, and the middle class. The government introduces measures to incentivize job creation and enhance skilling programs. Additionally, it implements incremental personal income tax rationalization and urban development initiatives aimed at benefiting the middle class."
Fiscal prudence is maintained with lower fiscal deficit and gross borrowing compared to the interim budget, which is viewed positively in fixed income markets. Capital expenditure (capex) remains unchanged from the interim budget. As anticipated, the budget includes incentives for coalition partners, with specific measures for Bihar and Andhra Pradesh.
“With the aim of rationalising the capital gains tax regime, the period of holding and tax rates have been adjusted in the Budget proposals. Firstly, the current long-term capital gains tax exemption of INR 1 lakh is increased to INR 1.25 lakh," Manoj Purohit, Partner & Leader, financial services tax, tax & regulatory services, BDO India.
The period of holding for listed financial assets is proposed to be fixed at one year, and for other assets (unlisted financial assets and all non-financial assets), it is set at two years to qualify as 'long-term capital assets.' Long-term capital gains across listed and unlisted assets are proposed to be taxed at a uniform rate of 12.5%, bringing uniformity to the current tax rates of 10% and 20%. However, the indexation benefit for long-term capital assets is proposed to be removed.
Sagar Sinha, Corporate Trainer, and Business Coach pointed out the increase in the security transaction tax on futures and options as a significant move with multi-dimensional impacts on the market. He cautioned that higher transaction costs could lead to less efficient markets due to the increased cost of arbitrage, potentially diminishing the effectiveness of price discovery in futures and options markets. As a result, institutional investors might extend their hedging and trading activities to other markets or instruments to avoid the higher STT in the domestic market.
Finance Minister Nirmala Sitharaman has announced an increase in the standard deduction from ₹50,000 to ₹75,000, alongside adjustments to the tax slabs under the New Tax Regime (NTR). These changes are set to provide individual taxpayers with an annual tax saving of up to ₹17,500 under the NTR.
The Old Tax Regime remains unchanged in the Union Budget 2024-25. The enhancements in the NTR are part of the government's ongoing effort to make this simplified, exemption-free regime more attractive to salaried taxpayers. The aim is to encourage more taxpayers to switch to the NTR, which has been positioned as a straightforward alternative to the traditional tax system.
Income Tax Budget 2024 LIVE: On changes in STT and long term tax rate, CA Pitam Goel, Co Founder - Tattvam Group says that Increase in STT rates for Derivatives to 0.1% and futures to 0.02% may not go well with investors. Further, anincrease in capital gains for listed equity instruments to 12.5% will leave investors dejected. Proposing to tax buy-back proceeds as dividends may also pose challenges as buy-back route is opted not only for profit distribution but also for internal re-structuring.
Income Tax Budget LIVE
Santosh Meena, Head of Research, Swastika Investmart Ltd.
The 2024 budget presents a mix of expected and surprising measures. While capital expenditure and the fiscal deficit target remain steady, significant changes to tax policies, particularly the increases in LTCG, STCG, and STT, are likely to impact market sentiment. Introducing new income tax benefits under the new tax regime provides some relief to taxpayers, potentially saving up to ₹17,500.
Income Tax Budget LIVE:
₹0- ₹3 lakh - Nil;
₹3-7 lakh - 5% ;
₹7-10 lakh - 10% ;
₹10-12 lakh - 15%;
12-15 lakh - 20%; and
Above ₹15 lakh - 30%
Sitharaman said that the taxpayers would save up to ₹17,500 in tax with the revised structure.
FM proposes new income tax slabs - up to ₹3 lakh nil, ₹3-7L 5%, ₹7-10L 10%, ₹10-12L 15%, ₹12-15L 20%, above ₹15L 30%.
New tax regime, standard deduction to increase form 50 to 75,00
