Ever wonder how the budget affects your wallet? This year’s Union Budget might have some surprises! Let’s break it down into easy-to-understand chunks:
1. Paying Less Tax (Maybe!)
- Good News! Standard deduction for salaried individuals has increased from Rs. 50,000 to Rs. 75,000. This translates to ZERO income tax for those earning up to Rs. 7.75 lakhs annually. Woohoo!
- New Tax Slabs Introduced: The new tax regime offers revised slabs with lower tax rates. Check the image for details!
- Tax Rebate: A tax rebate of Rs. 25,000 helps eliminate tax liability for some.
- The Not-So-Good News: The maximum tax saving remains Rs. 17,500, even for higher earners. Some might be disappointed, but remember, it’s the first year of this government’s term. Patience!
2. Investments & Taxes: A Balancing Act
- Short-Term Capital Gains: Holding your stocks/equity mutual funds for less than a year? The tax on profits (short-term capital gains) has increased from 15% to 20%.
- Long-Term Capital Gains: Held your investments for longer than a year? The tax rate has gone up from 10% to 12.5%. However, the tax-free limit has also increased from Rs. 1 lakh to Rs. 1.25 lakh. Let’s use an example to learn its not-so-good impact:
- Invested Rs. 1 lakh, grew to Rs. 5 lakhs in 10 years (Long-term capital gain: Rs. 4 lakhs).
- Pre-budget tax: Rs. 30,000 (tax on Rs. 3 lakhs at 10%).
- Post-budget tax: Rs. 34,375 (tax on Rs. 2.75 lakhs at 12.5%).
- Silver Lining: Investments in Gold mutual funds/Foreign ETFs/Foreign Stocks held for 2 years or more will be taxed at a flat 12.5% from April 1, 2026, onwards. Bonds/Debt Mutual Funds and Fixed Deposits continue to be taxed based on your income tax slab.
- Real Estate Revamp: Thinking of selling that property you bought ages ago? The way real estate profits are taxed has changed. Gone are the days of indexation (which factored in inflation and lowered your tax burden). Now, the entire gain is taxed at a flat rate of 12.5%. This could mean a bigger tax bill for some folks who’ve held onto property for a long time.
3. Price Cuts!
- Cheaper Shiny Things: Import duty on gold and silver was reduced from 10% to 6%, potentially leading to lower gold jewellery prices.
- Tech for Less: The basic customs duty on mobiles and chargers has decreased, hinting at possible price reductions.
- Other: Custom duty cuts on specific seafood, solar energy parts, leather, and footwear could lead to lower prices for these items.
4. A Healthier Economy?
- Economic Sunshine: India’s fiscal deficit (difference between government income and expenditure) is lower than expected (4.9% vs. 5.1%). This indicates a strengthening economy.
- Good News Again!: The Economic Survey predicts India’s real GDP growth at 6.5% to 7%. Inflation is also decreasing, moving closer to the 4% target.
- Startups Surge: The controversial angel tax has been removed, making it easier and more transparent for investors to invest in startups. This could significantly benefit India’s startup ecosystem in the long run.
That’s a Wrap!
This is just a glimpse into the 2024 budget and its impact on your money. Numerous resources are available, including the official finance bill.
Let us know in the comments if this breakdown was helpful!