The Union Budget 2024-25 brought several significant changes that affect taxpayers across all categories. Here's what you need to know:
New Tax Regime Changes
The new tax regime has been made more attractive with revised slabs. The basic exemption limit remains at ₹3 lakhs, but the standard deduction for salaried employees has been increased to ₹75,000 (from ₹50,000). The revised slabs offer better rates in the ₹7-12 lakh income range, potentially saving taxpayers up to ₹17,500 compared to the previous year.
Capital Gains Tax Overhaul
This is perhaps the most impactful change. Short-term capital gains (STCG) on listed equity and equity mutual funds will now be taxed at 20% (up from 15%). Long-term capital gains (LTCG) tax rate has been increased to 12.5% (from 10%), but the exemption limit has been raised to ₹1.25 lakhs per year (from ₹1 lakh).
For property and other assets, the indexation benefit has been removed for properties acquired after 2001, and the LTCG rate is now a flat 12.5% without indexation. This is a significant change that requires careful analysis for property investors.
Key Indirect Tax Changes
On the GST front, several rate rationalization measures have been implemented. Input Service Distributor (ISD) mechanism has been made mandatory for distributing ITC of common services. The budget also signals the government's intent to bring certain excluded items under the GST ambit in the coming year.
What Should You Do?
- **Review your investment strategy** in light of changed capital gains rates
- **Compare old vs new tax regime** with the revised slabs — the new regime is now beneficial for more taxpayers
- **Plan property transactions carefully** considering the removal of indexation benefits
- **Consult your CA** for personalized assessment — every taxpayer's situation is unique
At Jigar Shah & Associates, we are helping our clients navigate these changes with personalized tax planning strategies. Contact us for a free budget impact assessment.