Income Tax Slab 2024-25 (Key Highlights)

Finance Minister Nirmala Sitharaman has proposed the Budget for 2024 on July 23rd 2024 at 11.00 AM. She has announced that there will be a comprehensive review of the Income Tax Act 1961 intending to make it simpler and easier to understand for the public. The 2024 budget has brought significant changes in direct taxes namely in the capital gains segment, standard deductions on budget 2024 income tax slabs and also increasing the tax exemption limits on capital gains, and various amends in the corporate and custom duty taxes as well.

Income Tax Slab Comparison

Key Changes in the New Tax Regime

1. Exemptions and Deductions:

Certain exemptions like House rent allowance, Leave Travel allowances, deductions under section 80 and more have been allowed only under the old tax regime and won't be considered under the new regime.

2. Standard Deduction:

Standard deductions of the income tax budget 2024 have been increased from Rs.50,000 to Rs.75,000 for the AY 2025-26.

3. Deduction on Family pension

Deduction on Family pension has been increased from Rs.15,000 to Rs.25,000 under the new tax regime.

4. Taxpayer under New Regime

Taxpayers under the New tax regime will be getting tax savings of Rs.17,500 through increased tax deductions and revised tax slabs.

Note: It should be noted that the old tax regime which is eligible for deductions under section 80 has remained unchanged

Key Changes on Capital Gains:

1. Short-Term Capital Gains (STCG):

The tax rate on short-term capital gains has increased from 15% to 20% for all listed financial assets realized within one year of holding. Listed financial assets primarily include stocks, equity mutual funds, and certain other financial instruments.

2. Long-Term Capital Gains (LTCG):

The capital gains tax on financial assets has increased from 10% to 12.5% in the new budget. This applies to profits gained on listed financial assets held for more than one year. For listed financial assets, the holding period must exceed one year to qualify as long-term capital gains. 

For unlisted financial assets and non-financial assets, the holding period is extended to two years. Unlisted financial assets include private equity, private debts, partnerships, and similar investments. Non-financial assets encompass real estate holdings, intellectual properties, luxury goods, and more.

3. Exemption Limit:

 The limit for capital gains on the listed financial assets was fixed at Rs 1,00,000 for exemption on paying tax. This has now been revised and increased to Rs.1,25,000 in the new union budget. 

Key Changes on Corporate Tax Rates:

1. Abolishing of Angel Tax:

Angel taxes are charges levied on startups that receive funding from angel investors to bootstrap their operations. This tax is now being abolished under the new budget.

2. Revised Corporate tax rate:

Aiming to make India attractive for foreign investors and companies, under the new budget the tax rate for foreign companies has been reduced to 35% from 40%.

3. Safe Harbour Rates:

It is implemented to simplify compliance for foreign mining companies and reduce the burden associated with price verification. This move aims to potentially increase the diamond trade in India, thereby boosting the diamond industry.

Key Changes on Custom Duties:

1. Reduction of duties on precious metals:

Under the new union budget, the customs duties on Gold, silver, and other precious metals are reduced from 15% to 6%. This is to reduce the current high prices of these metals

2. Exempting the duties on Medicines:

Additionally, 3 cancer medicines were exempted from customs duties under the new budget.

3. Reduction of Basic Custom Duties(BCD) in the mobile industry and Marine Exports:

The basic custom duties on mobile phones, mobile PCBA and chargers are reduced to 15% from 20%. Moreover, the custom duty on shrimp and fish feed is also reduced to 5%.

4. Exempted additional goods in the energy sector:

As per the budget, more capital goods for manufacturing solar cells and panels are exempted from customs duties.

5. Exemption on Critical Minerals:

Under the revised budget customs duties are fully exempt on 25 critical minerals.

Conclusion

The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, brings significant changes aimed at simplifying the tax system and providing substantial relief to taxpayers. Key revisions include adjustments to union budget 2024 income tax slabs under the new tax regime, increased standard deductions, and higher exemption limits on capital gains.

Capital gains taxation sees notable changes with increased rates for both short-term and long-term gains and extended holding periods for unlisted and non-financial assets. The exemption limit for capital gains on listed financial assets has been raised, offering additional relief.

Corporate tax rates have been strategically reduced to make India more attractive to foreign investors. The abolition of the angel tax is expected to boost the startup ecosystem, and reduced customs duties on precious metals aim to lower prices, benefiting consumers and the industry.

Overall, the 2024 budget reflects a balanced approach to stimulate economic growth, enhance tax simplicity, and provide targeted benefits to individuals and businesses, fostering a more favourable investment climate in India.