Budget 2024 Highlights: Changes In Income Tax Slab And Capital Gain Tax Rate

The Finance Minister announced changes in direct tax in the July 2024 Budget speech. Let’s dive in.

Heads of Income and Changes

Understanding the heads of income in India is essential to better understanding the budget highlights. In India, there are a total of five heads of income, as mentioned below:

1. Income from Salary: Change in the new tax regime

2. Income from House Property: No change

3. Income from Business or Profession: Change in the new tax regime

4. Income from Capital Gains: Changes in LTCG & STCG

5. Income from Other Sources: No change

If you notice, the changes apply to three heads only: Income from Salary, Business or Profession, and Capital Gain.

Highlights On Income Tax and Personal Finance

✔️Long-term Capital Gain tax (LTCG) increased from 10% to 12.5 % on financial and non-financial assets.

✔️Exemption of long-term capital gains increased to Rs 1.25 lakh per year for certain assets.

✔️Short-term Capital Gain tax (STCG) increased from 15% to 20 % on financial assets.

✔️New tax slab introduced to simplify New Tax Regime for FY 2024-25

SlabNew Tax Rate
₹0- ₹3 lakhsNil
₹3- ₹7 lakhs5% (With Tax Rebate Under Sec. 87A up to ₹7 lakhs)
₹7- ₹10 lakhs10%
₹10- ₹12 lakhs15%
₹12- ₹15 lakhs20%
> ₹15 lakhs30%

✔️Standard Deduction for salaried employees increased from ₹50,000 to ₹75,000

✔️Deduction on family pension for pensioners increased from ₹15,000 to ₹25,000

✔️No changes in the Old Tax Regime

✔️New NPS scheme (NPS Vatsalya) introduced for minors: Now parents can plan pensions for their kids too, which will be transferred to them once they attain majority

Source: Ministry of Finance (Download key feature of budget 2024-25)

Will the Changes Impact Your Personal Finance?

Yes, the changes will impact your financial planning due to changes in the long-term and short-term capital gain tax rates. Such changes are part of the process; they happened in 2018 when capital gain tax was introduced for the first time and now when the rates have been increased. Do not panic; let’s plan and take action for a secure and peaceful financial future.

Disclaimer: The views expressed above should not be considered professional investment advice, advertisement, or otherwise. No specific product/service recommendations have been made, and the article is only for general educational purposes. The readers are requested to consider all the risk factors, including their financial condition, suitability to risk-return profile, and the like, and take professional investment advice before investing.

Salma Sony, CFPCM

A Certified financial plannerCM and SEBI Registered Investment Adviser with 12 years of experience in the financial industry aims to improve India’s financial literacy and enable people to learn about financial planning in the most simplified way.

Thank you for reading.

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