Union Budget 2024 was presented by the Hon’ble Finance Minister Smt. Nirmala Sitharaman in Parliament on 23rd July 2024. This year, the Union Budget has placed its focus on the four major castes namely:
– Firstly, Annadata (Farmers)
– Secondly, Garib (Poor)
– Thirdly, Yuva (Youth)
– Fourthly, Mahilayen (Women)
Apart from this, the Union Budget 2024 has also brought changes in the Direct as well as Indirect Taxes. And, these are as follows:
Union Budget 2024: Direct Tax Reforms
Standard Deduction Under The New Tax Regime
Through the Union Budget, there is an increase in the Standard Deduction Limit under the New Tax Regime. The Standard Deduction limit is now Rs. 75000 from the previous Rs. 50,000. By doing so, the New Tax Regime opters can have more tax savings of upto Rs. 17,500.
Please note that the Standard Deduction under the New Tax Regime has gone through various reforms ever since it has been introduced. And it is as follows:
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Changes in the Income Tax Slab Rates
Apart from the changes in the Standard Deduction limit under the New Tax Regime, there are also changes in the Income Tax Slab Rates under the New Tax Regime. These changes are as follows:
Deduction on Family Pension
There is also an increase in deduction on family pension for pensioners. Having said that, the new limit is Rs. 25,000 from the previous deduction amount of Rs. 15,000.
Simplification of Capital Gains Taxation
For simpler calculation of long-term and short-term capital gains, the classification of duration will be only of types: 12 months and 24 months (about 2 years). Accordingly, 36 months (about 3 years) duration will not be applicable.
Further, the holding period of all listed securities is 12 months. If the duration of holding of the listed shares is less than 12 months, then it will be short-term capital gains. Whereas, if the duration of holding is more than 12 months, then it will be long-term capital gains. Accordingly, the holding period of 24 months (about 2 years) has also been removed.
In addition to the above, unlisted bonds as well as debentures taxation will be like the tax on debt mutual funds and market-linked debentures. And they will attract tax on capital gains at applicable slab rates. (i.e., their treatment will be as short-term irrespective of the period of holding.)
Long-Term & Short-Term Capital Gains Changes in Tax Rates
In addition to the above, the Union Budget 2024 has also made changes in the various other tax rates such as Long-Term Capital Gains, Short–Term Capital Gains, Securities Transactions Tax on Futures & Options. These changes are as follows:
Increase in Capital Gains Exemption Limit
Through the Union Budget 2024, there is also an increase in the capital exemption limit under the Long-Term Capital Gains. The new limit is now Rs. 1.25 lacs from the previous Rs. 1.5 lacs. This is to say that if you have an income of upto Rs. 1.25 lacs from long-capital gains, then you do not have to pay any tax.
Removal of Indexation Benefits on Property
There will be no indexation benefits on properties held after 2021. Further, the long-term capital gains on properties has been reduced from 20% to 12.5%.
Changes in TDS Rates
In order facilitate businesses and easier tax compliances, the Union Budget 2024 has also made reductions in TDS Rates. And these are as follows:
TDS Sections
Current TDS Rates
Proposed TDS Rates
Effective From
Section 194D – Payment of insurance commission in case of other than company
5%
2%
01.04.2025
Section 194DA – Payment in respect of life insurance policy
5%
2%
01.10.2024
Section 194G -Commission on sale of lottery tickets
5%
2%
01.10.2024
Section 194H – Payment of commission or brokerage
5%
2%
01.10.2024
Section 194-IB – Payment of Rent by certain individuals or HUF
5%
2%
01.10.2024
Section 194M – Payment of certain sums by certain individuals or HUFs
5%
2%
01.10.2024
Section 194-O – Payment of certain sum by e-commerce operator to e-commerce participants
1%
0.1%
01.10.2024
Section 194F – Payment on account of repurchase of units by mutual funds or UTI
Proposed to be omitted
01.10.2024
Other major changes in Direct Taxes
Lastly, apart from the above changes, the following changes are also made in the Direct Taxes. These are as follows:
– No angel tax for all classes of investors.
– Simpler tax regime to operate the domestic cruise
– Safe harbour rates for foreign mining companies that sell raw diamonds
– Lastly, reduction of corporate tax on foreign companies from 40% to 35%.
Indirect Tax Reforms
Reduction in Custom Duty
The Union Budget 2024 has made tremendous changes in the custom duties for various items, and these are as follows:
GST Notice for Tax Not Paid or Short Paid and other reasons
As per the GST laws, the taxpayer will get the GST Notice if there is any
– non-payment of taxes
– under payment of taxes
– erroneously refund of tax
– wrongly claiming or utilizing of Input Tax Credit
Through this GST Notice, the proper officer asks the responsible person to explain why they should not pay the due amount with interest and penalty. However, no notice will be issued if the amount in question for a financial year is less than Rs. 1,000.
GSTR-7 Filing
There must be filing of GSTR-7 for TDS under GST even if there is no deduction of TDS.
GST Refund
GST refund of unutilised ITC or IGST will not be allowed for the zero-rated supply of goods subject to export duty.
Authorization by Summoned Person
A summoned person can authorise another person to appear on their behalf in compliance with GST summons issued by the GST officer.
Other Major Tax Reforms
Apart from the Direct and Indirect Tax Reforms, following reforms are also made through the Union Budget, 2024:
– NPS Vatsalya: Introduction of a new plan for contribution by parents as well as guardians for minors.
– New Pension Scheme (NPS): A solution that addresses the relevant issues, protects the common citizen and maintains fiscal prudence will be formed.
– Scheme for providing internship opportunities in 500 top companies to 1 crore youth in 5 years. Further, allowance of ₹5,000 per month along with a one-time assistance of ₹6,000 through the CSR funds.
– Mudra Loans: The limit enhanced to ₹ 20 lakh from the current ₹ 10 lakh under the ‘Tarun’ category.
– Credit Guarantee Scheme for MSMEs in the Manufacturing Sector.
What becomes cheaper and costlier?
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