Six Key Features Of Budget 24-25

The Union Budget 2024-25 focuses on simplification of the tax laws, ease of compliance, standardisation of capital gains tax, and lays greater emphasis on the new tax regime

The Union Budget 2024-25 presented on July 23, 2024 set out a distinct futuristic vision for India, focusing on sectors, such as agriculture, employment, skilling, and urban development, among others.

The focus was on simplifying the tax law, ease of compliance, while also bringing about certainty.

In an effort to enhance the coverage of the new tax regime, the government increased the standard deduction on salary from Rs 50,000 to Rs 75,000, and on pension from Rs 15,000 to Rs 25,000. Along with a widened income tax slab, this will lead to a tax savings of Rs 17,500.

Here are the six key takeaways from Budget 2024-25.

NPS Deduction At 14%

The Budget increased the employer’s contribution to the National Pension System (NPS) to 14 per cent of the salary at par with what is available to government employees. However, this is applicable only for those who have opted for the new tax regime.

TCS Offset Against Salary

Employers can now consider tax collection at source (TCS) on various transactions, such as remittance of funds outside India, and purchase of car for employees, while withholding taxes on their monthly salary. For individuals, this will imply better take-home pay, while for employers, it will do away with the processing of TCS refunds when the employee files the tax returns.

Capital Gains Tax

Long-term capital gains (LTCG) tax has been fixed at 12.5 per cent as against 10 per cent on equity and 20 per cent on others. Further, LTCG taxed under Section 112A of the Income-tax Act, 1961, which was exempted up to Rs 1 lakh, has been increased to Rs 1.25 lakh. Indexation benefit has also been abolished.

STT On F&O

The securities transaction tax (STT) on sale of options has been increased from 0.0625 per cent to 0.1 per cent, while that on futures has been increased from 0.0125 per cent to 0.02 per cent.

Black Money Act

Effective October 1, 2024, penal provisions under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 will apply only if the aggregate value of foreign assets not disclosed exceeds Rs 20 lakh. While the Budget is favourably looking at the penalty provisions, no changes have been made to the current prosecution provisions. It means, technically, the regulators have the power to prosecute even though there may not be any penalty considering the revised threshold.

TDS Changes

Any tax deduction at source (TDS) is typically remitted within the prescribed due date (the 7th of the following month) along with the eTDS return. The Budget proposes to decriminalise the delay in payment of TDS up to the due date for filing the eTDS return. The details of the compounding scheme and guidelines were still awaited at the time of publishing.

With India being the fourth largest economy in the world, achieving a fiscal deficit of 4.9 per cent of the gross domestic product (GDP) is no easy feat. The Budget directionally strives to bring in appropriate measures to ease, and simplify and ensure compliance of taxpayers and propel the economy towards greater heights.

By Sudhakar Sethuraman, Partner, Deloitte India