🔰BUDGET 2024 HIGHLIGHTS 🆕
Overall Financials :- The total receipts (excluding borrowings) are estimated at ₹32.07 lakh crore, and the total expenditure is estimated at ₹48.21 lakh crore. The net tax receipts are estimated at ₹25.83 lakh crore, with the fiscal deficit pegged at 4.9% of GDP. Gross and net market borrowings through dated securities during 2024-25 are estimated at ₹14.01 lakh crore and ₹11.63 lakh crore, respectively. The fiscal consolidation path initiated in 2021 continues to benefit the economy, with a target to reduce the fiscal deficit below 4.5% next year.
1. What's for Individuals and Salary Earners! :
A) The Tax Structure/Slab for New Tax Regime has been Revised (Revised Rates):
This provides some tax savings for salaried employees as the 3-7 Lakh Slab & 7-10 Lakh has been widened by 1 Lakh. The revised tax slabs provide benefits up to ₹17,500 for salaried employees as claimed by the Finance Ministry.
No Change in Tax Slab as per Old Tax Regime.
(B) Standard Deduction and Salaried Benefits:
In the New Tax Regime, the standard deduction for salaried individuals is increased from ₹50,000 to ₹75,000 (No Change in Standard deduction for Old Tax regime), and the deduction on family pension is enhanced from ₹15,000 to ₹25,000.
Assessments can now be reopened beyond three years up to five years if the escaped income exceeds ₹50 lakh.
2. Taxation of Capital Gains: -
This Budget proposed change in LTCG and STCG Rates, Changes made in Holding Period & Indexation Benefits for Long Term Capital Gains has been withdrawn with effect from 23.7.2024.
✅ The holding period for capital gains has been simplified: for listed securities, it is one year, and for other assets, it is two years.
✅ The holding period for Business Trust units is reduced from 36 to 12 months, and for gold and unlisted securities (excluding shares), it is reduced from 36 to 24 months.
✅ The rate for short-term gains on STT-paid listed equity, equity-oriented mutual funds, and business trust units has increased from 15% to 20%, and for long-term gains, from 10% to 12.5%.
✅The exemption limit for LTCG on these assets has increased to ₹1.25 lakh from existing ₹1.00 lakh .
✅The long-term capital gains rate for all other assets is now 12.5% without indexation, simplifying the tax computation. While on the other hand, the indexation benefit that previously was available on sale of long-term assets, has now been done away with. So, any sale of long-term asset made from 23rd July, 2024, will attract a tax rate of 12.5% only without indexation benefit. These changes apply from 23.7.2024, with no alterations to the existing rollover benefits. 📣
3. Corporate and Startup Incentives:
To promote investment, the angel tax is abolished for all investors, and the corporate tax rate for foreign companies is reduced from 40% to 35%.
A simpler tax regime for foreign shipping companies and mining companies is introduced to foster the cruise tourism and diamond industry, respectively.
4. TDS Reforms: -
There is a reduction in TDS Rate and few Other TDS Reforms in this Budget.
There are various provisions of Tax Deduction at Source (TDS) with different thresholds and multiple rates between 0.1%, 1%, 2%, 5%, 10%, 20%, 30%, and above.
To improve the ease of doing business and better compliance by taxpayers, the TDS rates are proposed to be reduced. However, no change would occur with respect to sections such as TDS on salary, TDS on virtual digital assets, TDS on winnings from lottery/race horses, payment on transfer of immovable property, and payments to non-residents, TDS rates for TDS on contracts, etc. The changes section-wise are as follows:
❇️ Section 194D - Payment of insurance commission (in case of person other than company): 5% to 2%, effective from 1.4.2025.
❇️ Section 194DA - Payment in respect of life insurance policy: 5% to 2%, effective from 1.10.2024.
❇️ Section 194G - Commission on sale of lottery tickets: 5% to 2%, effective from 1.10.2024.
❇️ Section 194H - Payment of commission or brokerage: 5% to 2%, effective from 1.10.2024.
❇️ Section 194-IB - Payment of rent by certain individuals or HUF: 5% to 2%, effective from 1.10.2024. (This was applicable for individuals paying monthly Rent exceeding 50K)
❇️ Section 194M - Payment of certain sums by certain individuals or Hindu undivided family: 5% to 2%, effective from 1.10.2024.
❇️ Section 194-O - Payment of certain sums by e-commerce operator to e-commerce participant: 1% to 0.1%, effective from 1.10.2024.
❇️ Section 194F relating to payments on account of repurchase of units by Mutual Fund or Unit Trust of India: Proposed to be omitted, effective from 1.10.2024.
5. Dispute Resolution: -
The Vivad se Vishwas Scheme aims to resolve pending income tax disputes, with increased monetary limits for appeals in High Courts, Supreme Court, and tribunals. The scope of safe harbour rules is expanded, and the transfer pricing assessment procedure is streamlined.
6. Partnership Firms and LLPs:
✳️ Section 40(b) is amended to increase the deduction limit to ₹6 lakh and the remuneration limit to ₹3 lakh or 90% of book profit.
✳️ A new section 194T introduces a 10% TDS on salary, remuneration, or commission payments to partners exceeding ₹20,000. ❗
The provisions of section 194T of the Act will take effect from the 1st day of April, 2025.
7. Increase in Securities Transaction Tax (STT)
The Budget proposed to increase the rates of securities transaction tax on
💹 Sale of an option in securities from 0.0625 per cent to 0.1 per cent of the option premium, and
💹 On sale of a futures in securities from 0.0125 per cent to 0.02 per cent of the price at which such “futures” are traded. 4.
This amendment is proposed to be made effective from the 1st day of October 2024.
8. Buy Back of Shares -Taxation Impact: -
Starting October 1, 2024, payments from buy-back of shares by domestic companies will be treated as dividend income for shareholders and taxed at applicable rates. Capital loss from buy-back can be set off against future capital gains. See Below Image/Analysis:
9. Custom Duties and Basic Customs Duty (BCD) Reforms:
(a) Cancer Treatment Medicines: Full exemption from custom duties on Trastuzumab Deruxtecan, Osimertinib, and Durvalumab.(From Existing 10%)
(b) Medical Equipment: Reduction in BCD on X-ray machine tubes and flat panel detectors.
(c) Mobile Phones and Accessories: BCD on mobile phones, Printed Circuit Board Assembly (PCBA), and mobile chargers reduced to 15% from 20%.
(d) Solar Panel Manufacturing: Exemption of custom duties on capital goods used for manufacturing solar panels. (from Existing 7.5%)
(e) Seafood Exports: BCD on broodstock, polychaete worms, shrimp, and fish feed reduced to 5%.
(f) Leather and Textiles: Reduction in BCD on Methylene Diphenyl Diisocyanate (MDI) used for manufacturing spandex yarn from 7.5% to 5%.
(g) Gold, Silver, and Platinum: Custom duties on gold and silver reduced to 6% (from Existing 15%) and on platinum to 6.4%.(From Existing 15.4%)
(h) Raw Materials for Industry: Removal of BCD on ferro nickel and blister copper, and an increase in BCD on ammonium nitrate from 7.5% to 10% to support domestic capacities.
(i) PVC Flex Banners: Increase in BCD from 10% to 25% due to environmental concerns.
(j) Telecom Equipment: BCD on PCBA for specific telecom equipment increased from 10% to 15%.
(k) Rare Earth Minerals: Full exemption of custom duties on 25 rare earth minerals like lithium and reduction in BCD on two rare earth minerals.
We at Swati K and Co. Chartered Accountants, Bangalore consisting Chartered Accountant and Professionals will assist in any income tax services . In case you need our services, please write to us at [email protected]. We will be happy to assist you