Budget 2024-25: Sop for salaried class, but hike in capital gains tax to pinch

Vijay C Roy

New Delhi, July 23

In a relief for the salaried class, Finance Minister Nirmala Sitharaman on Tuesday hiked standard deduction by 50 per cent from Rs 50,000 to Rs 75,000 and tweaked tax slabs under the new income tax regime to provide more money in their hands, which will in turn boost consumption.

The salaried employees in the new tax regime could save up to Rs 17,500 in income tax annually following these changes, Sitharaman said. Similarly, deduction on family pension for pensioners has been enhanced from Rs 15,000 to Rs 25,000. “This will provide relief to about four crore salaried individuals and pensioners,” the minister said.

However, nothing has been announced for those who are still opting for the old tax regime. Both changes will reduce the tax liability for those who choose the new tax regime, with savings potentially reaching up to Rs 17,500. More money in the hands of individuals will help boost personal consumption, which has slowed down.

The tax slabs under the new regime have been rejigged. Now, income from Rs 3 lakh to 7 lakh will be taxed at 5 per cent; Rs 7 lakh to 10 lakh at 10 per cent; Rs 10 lakh to 12 lakh at 15 per cent; Rs 12 lakh to 15 lakh at 20 per cent and above Rs 15 lakh at 30 per cent. The basic exemption limit remains unchanged at Rs 3 lakh. No change has announced for the old tax regime.

Due to the changes, a revenue of about Rs 37,000 crore – Rs 29,000 crore in direct taxes and Rs 8,000 crore in indirect taxes – will be forgone, while a revenue of about Rs 30,000 crore will be additionally mobilised through dividend from public sector undertakings (PSUs) and through optimum utilisation of resources. Thus, the total revenue forgone is pegged at Rs 7,000 crore annually, the Finance Minister said.

In a setback for investors, the tax liability will now be higher on capital gains. The short-term capital gain tax on listed financial assets has been increased from 15 per cent to 20 per cent. Similarly, the long-term capital gain tax on listed financial assets has been hiked from 10 per cent to 12.50 per cent. At the same time, the exemption limit on long-term capital gains has been raised from Rs 1 lakh to Rs 1.25 lakh.

The Finance Minister also announced the removal of indexation benefits on the sale of property.

Investing gets more taxing

• Short-term capital gains tax on listed assets up from 15% to 20%
• Long-term capital gains tax goes up from 10% to 12.5%
• Exemption limit on long-term capital gains hiked from Rs 1L to Rs 1.25L
• Securities transaction tax on futures & options hiked to 0.02% & 0.1%