On July 23, 2024, Hon. Finance Minister Smt. Nirmala Sitharaman delivered the Union Budget 2024 to the Parliament. This year’s budget focuses on four major castes: Annadata (Farmers), Garib (Poor), Yuva (Youth), and Mahilayen (Women). Additionally, significant changes have been introduced in both Direct and Indirect Taxes. Here’s a comprehensive look at these reforms:

Union Budget 2024: Direct Tax Reforms

Standard Deduction Under The New Tax Regime

One of the major highlights is the increase in the Standard Deduction limit under the New Tax Regime. The limit has been raised from Rs. 50,000 to Rs. 75,000, allowing for more tax savings of up to Rs. 17,500 for taxpayers. This change aims to provide greater relief to individuals opting for the New Tax Regime.

Changes in the Income Tax Slab Rates

The budget has also revised the Income Tax Slab Rates under the New Tax Regime. These changes are designed to offer more favourable tax rates, though specific details of the new slab rates were not included.

Deduction on Family Pension

For pensioners, the deduction on family pension has been increased from Rs. 15,000 to Rs. 25,000. This adjustment is aimed at providing better financial support to pensioners.

Simplification of Capital Gains Taxation

To simplify the calculation of long-term and short-term capital gains, the classification of duration has been revised to only two types: 12 months and 24 months. The 36-month duration has been removed. For listed securities, the holding period is set at 12 months for long-term capital gains and less than 12 months for short-term capital gains. Additionally, the taxation of unlisted bonds and debentures will now align with that of debt mutual funds, attracting tax at applicable slab rates irrespective of the holding period.

Changes in Tax Rates for Capital Gains

The Union Budget 2024 has introduced changes in the tax rates for Long-Term and Short-Term Capital Gains, as well as the Securities Transactions Tax on Futures & Options.

Increase in Capital Gains Exemption Limit

The exemption limit for Long-Term Capital Gains has been increased from Rs. 1.5 lakhs to Rs. 1.25 lakhs. This means that income up to Rs. 1.25 lakhs from long-term capital gains will be exempt from tax.

Removal of Indexation Benefits on Property

Indexation benefits on properties held after 2021 have been removed, and the long-term capital gains tax rate on properties has been reduced from 20% to 12.5%.

Changes in TDS Rates

To facilitate businesses and simplify tax compliance, the budget has proposed reductions in TDS rates across various sections. For example, the TDS rate on the payment of insurance commission has been reduced from 5% to 2%, effective from 1st April 2025. Similar reductions have been made in other categories, such as rent payments, e-commerce transactions, and lottery ticket commissions.

Other Major Changes in Direct Taxes

Additional changes include:

• No angel tax for all classes of investors.
• The simpler tax regime for operating domestic cruises.
• Safe harbour prices for international mining firms that sell unprocessed diamonds.
• Reduction of corporate tax on foreign companies from 40% to 35%.

Union Budget 2024: Indirect Tax Reforms

Reduction in Custom Duty

The budget has significantly changed customs duties for various items, though specific details were not provided.

GST Notice for Underpaid or Unpaid Tax

Under GST laws, taxpayers will receive notices for non-payment, underpayment, erroneous refunds, or wrongful claims of Input Tax Credit. However, no notice will be issued if the amount in question for a financial year is less than Rs. 1,000.

GSTR-7 Filing

Filing of GSTR-7 for TDS under GST is mandatory, even if no TDS is deducted.

GST Refund

GST refunds for 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 authorize another individual to appear on their behalf in compliance with GST summons issued by the GST officer.

Other Major Tax Reforms

In addition to Direct and Indirect Tax Reforms, the budget introduces:

• NPS Vatsalya: A new plan for contributions by parents and guardians for minors.
• A new Pension Scheme (NPS) to address relevant issues while maintaining fiscal prudence.
• An internship scheme providing opportunities in 500 top companies to 1 crore youth over 5 years, with an allowance of ₹5,000 per month and one-time assistance of ₹6,000 through CSR funds.
• Mudra Loans: The limit has been 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?

The Union Budget 2024 also outlines changes in the prices of various goods, though specific items were not listed.

In conclusion, the Union Budget 2024 introduces a range of reforms aimed at supporting different segments of society and simplifying the tax regime. For personalized advice and services related to these changes, consult or contact TaxHelpdesk.

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