Notably, the Union Budget is presented every year on February 1 but 2024 was a year of general elections. Therefore, the final budget was presented in July after the BJP-led NDA government was re-elected on June 4.
For the uninitiated, the previous Budget was fairly crucial for most taxpayers as the entire capital gains tax structure was revamped. The rate of tax was reduced from 20 per cent to 12.5 percent, indexation benefit was removed and the exemption limit was raised from ₹1 LAKH To ₹1.25 lakh.
After taxpayers raised a hue and cry over the phasing out of indexation benefits, the government offered relief while presenting the Finance Bill 2024 on August 7. Taxpayers were given an option to choose between the indexation benefit and 20 per cent tax, or 12.5 per cent tax without indexation for properties that were bought prior to the date of the Budget, i.e., July 23, 2024.
Let us examine some of these key provisions before we witness the next wave of changes in the forthcoming Budget on February 1, 2025.
Budget 2024: Key provisions relating to personal finance
I. Short-term capital gains tax: Short-term capital gains of financial assets to be taxed at 20 per cent instead of the slab rate earlier.
II. LTCG: Long-term gains on all financial and non-financial assets to attract a tax rate of 12.5 per cent rather than 20 per cent earlier.
III. Exemption on LTCG: Increase in limit of exemption of capital gains on financial assets was raised to ₹1.25 lakh from ₹1 lakh
IV. Standard deduction: The standard deduction for salaried employees was raised from ₹50,000 to ₹75,000.
V. Deduction on pension: The Finance Ministry also raised the deduction on family pension for pensioners from ₹15,000 to ₹25,000.
VI. Properties purchased before July 23: To offer relief to property buyers, the government introduced a change after the Budget wherein taxpayers were given a choice to choose between the two: 20 per cent tax with indexation or 12.5 per cent tax without indexation.
However, this option was given only to the owners of assets bought before the date of Budget i.e., July 23, 2024.
VII. Angel tax: Angel tax was abolished for all classes of investors.
VIII. New tax regime slab: A new slab structure was introduced for taxpayers opting for the new tax regime. There is no tax on income up to ₹3 lakh.
There will be a 5 per cent tax on income between ₹3 lakh and 7 lakh, a 10 per cent tax on income between ₹7 lakh and ₹10 lakh, a 15 per cent tax on income between ₹10 and 12 lakh, a 20 per cent tax on income between ₹12 and 15 lakh, and a 30 per cent tax on income above ₹15 lakh.
