Union Budget 2024: A Quick Look at the Personal Tax Impact

Individuals and businesses expect a lot from every budget and seek answers to multiple questions like these: Will the government slash interest rates? Will there be any new benefits or incentives for individuals?

All of us know that our honorable Finance Minister Nirmala Sitharaman presented the union budget for 2024 on July 23, 2024, and announced multiple benefits.

Although the media was abuzz with the details, greytHR spoke to CA Anurag Jain, Co-founder and Partner, BytheBook Consulting, to decode the union budget. During this session (Parichay webinar), he focused on the personal taxation aspect and provided valuable answers to our attendees’ questions. Here are the highlights of the session:

New Personal Income Tax Regime (NPTR)

• The budget has proposed a few new slab rate changes in the new personal income tax regime: 5% for INR 300,001 to 700,000 and 10% for INR 700,001 to 1,000,000. Everything else remains the same.
• The standard deduction has been increased from INR 50,000 to INR 75,000.
• Exemptions are available on certain allowances like travel allowance, daily allowance, conveyance allowance, and transportation for handicapped (Sec 10(14) with Rule 2BB).
• Family pension: A deduction is available with an increased limit of INR 25,000.
• Deductions are also available under the provisions of Chapter VI-A (Sections 80CCD(2), 80JJAA, and 80CCH(2).

National Pension Scheme

The employer’s contribution limit to an employee’s NPS has been increased from 10% to 14%. Earlier, the 14% limit was applicable only to government organizations.

Family Pension

Individuals receiving a family pension were eligible for a standard deduction of 33.33% of this income, or INR 15,000. Now this limit has been increased to INR 25,000 under the new regime.

Letting Out House Property

As per an amendment to Section 28, the rent from a full house, or a part of it, will be taxable under ‘Income from House Property’. This prevents taxpayers from declaring it under the ‘Profit and Gains of Business or Profession’ to minimize the tax liability.

Capital Gain Taxation

• The budget has proposed two holding periods (short and long terms): 12 months for listed securities and 24 months for all other assets.
• Units of a listed business trust will now be at par with listed equity shares at 12 months instead of 36 months.
• The holding period for other assets such as bonds, debentures, and gold will reduce from 36 months to 24 months and qualify as LTCG.
• The capital gain on the sale of an unlisted bond or debenture shall be treated as STCG, irrespective of the holding period, and shall be taxed at applicable rates.
• The tax on short-term capital gains (after STT) from equity shares, equity-based funds, and units of listed business trusts has been increased from 15% to 20%.
• The exemption on the aforesaid shares, funds, and units has been increased to INR 125,000.
• The exemption on the LTCG on the sale of STT-paid equity shares, units of equity-oriented MFs, and units of a business trust has been increased to INR 125,000.
• The tax on long-term capital gains has been reduced to 12% for all categories of assets that were taxed at 10/20%.
• The tax on LTCG arising out of the sale of immovable property (land and building) has been reduced from 20% to 12.5%. But the indexation benefit has been withdrawn.
• Relevant amendments have been proposed to ensure parity in capital gains taxation for resident and non-resident taxpayers.

TDS/TCS-related Changes Impacting Individuals

• Credit for TCS of minor in the hands of parent: The proposed change allows the parent to claim the credit of TCS collected in the name of a minor child. However, it applies only if both their incomes are clubbed.
• Claiming credit for TDS/TCS by salaries employees: The budget has proposed amendments to Section 192(2B) to report any other income and loss under
  ‘House Property’, so that the employer can calculate TDS/TCS accordingly.
• As per Section 194-IA, the buyer of an immovable property has to deduct a TDS of
  1% TDS (of the sales consideration) while paying a resident seller. Now, there’s a proposed amendment: In case there is more than one transferor or transferee in an immovable property sale, the consideration shall be an aggregate of the total amount.
• TCS on notified goods: A 1% TCS (collected by the seller) will be levied on notified luxury goods purchases worth over INR 10 lakhs. The same can be reported to the employer under Section 192(2B) and taken as credit during ITR filing.

Other Miscellaneous Proposals

• Relief for individuals with foreign ESOPs and those with movable assets abroad.
• Reintroduction of Vivad Se Vishwas Scheme, 2024, to settle tax disputes.
• The budget has provided a six-year time limit, from the end of the financial year, for filing TDS/TCS correction statements (effective April 1, 2025).
• TDS/TCS return deadline has been revised to one month from the quarterly return date to prevent mismatches. (effective April 1, 2025).
• Presently, those who delay the deposit of the deducted tax amount will face prosecution with imprisonment. The budget has introduced some relief, but some conditions will apply (effective October 1).
• Employment-linked incentive based on enrolment in EPFO: There are benefits for first-time employees and employers providing additional employment in the manufacturing sector.

Disclaimer:

This blog is a quick summary based on the insights we gleaned from a session by a seasoned expert. However, we advise you to refer to the government sources before making any financial decision.

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