Outlook Money
The personal tax announcements made by the finance minister, Nirmala Sitharaman lays impetus on three broad areas of tax—the new tax regime, tax on investments, and the simplification of the tax processes. All of these have some positive and some negative ramifications for taxpayers.
In budget 2024, the standard deduction limit has been increased from Rs 50,000 to Rs 75,000 for salaried taxpayers who opt for the new tax regime.
For individuals who opt for the old tax regime, there are no changes or extra benefits. The standard deduction remains the same at Rs 50,000 since it was not mentioned in the Budget announcement. In addition, the tax slabs remain the same.
The capital gains tax has been increased with long-term capital gains (LTCG) tax going up from 10 per cent to 12.5 per cent and short-term capital gains (STCG) tax by 5 per cent.
The tax-free portion on some assets has been increased from Rs 1 lakh to Rs 1.2 lakh for investments held for at least one year. However, this increase for all assets may result in rates becoming lower for some. For instance, for real estate, the rate has been reduced from 20 per cent to 12.5 per cent, though the indexation benefit has been removed.
The increase in the STCG rate can discourage people from switching too soon and may put a spanner on trading activities that the market regulator has been cautioning against when it comes to retail investors.
Simplification of tax laws and processes related to it has been proposed. Along with rationalizing capital gains, simplification of tax deducted at source (TDS) regime and digitization of several functions for taxpayers' convenience were also a part.
Compiled by Syed Muskan