Union Budget 2024
The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, is a significant milestone in India’s economic journey, reflecting the government’s vision for sustainable growth, fiscal discipline, and social welfare. This year, due to the elections, Budget 2024 is announced on 23rd July 2024 than usual i.e. February 1. As India stands at the crossroads of rapid development and global economic uncertainties, this budget aims to strike a balance between fostering economic growth and ensuring inclusive development.
Priorities of the budget were as follows:
- Tax Reforms and Relief for the Middle Class
- Focus on Infrastructure and Development
- Boosting Agriculture and Rural Economy
- Focus on Education and Skill Development
- Health and Social Welfare
- Green Economy and Sustainability
In this article, we will majorly focus on those changes that will impact the middle class of the economy.
1. Direct Tax Proposals
Changes in Tax Structure Under the New Regime
For those opting new regime of taxation, the tax slabs are revised as follows:
| Tax Slab | Existing New Regime | Revised New Regime | Net Benefit |
| 0-3 Lakhs | NIL | NIL | – |
| 3-6 Lakhs | 5% | 5% | – |
| 6-7 Lakhs | 10% | 5% | 5,000 |
| 7-9 Lakhs | 10% | 10% | – |
| 9-10 Lakhs | 15% | 10% | 5,000 |
| 10-12 Lakhs | 15% | 15% | – |
| 12-15 Lakhs | 20% | 20% | – |
| Above 15 Lakhs | 30% | 30% | – |
| Net Benefit | 10,000 | ||
Enhanced Limit of Standard Deduction and Family Pension Deduction Under New Regime
Under the new regime, the standard deduction for salaried individuals has been increased to Rs. 75,000 from Rs. 50,000. and for those who are getting family pension, deduction on family pension has been increased to Rs. 25,000 from Rs. 15,000.
Increased Deduction on Employer’s Contribution to National Pension Scheme
The deduction against employer’s contribution to pension scheme (i.e. u/s 80CCD (2)) has been increased to 14% from the earlier 10% of Salary (Basic + Dearness Allowance), for other employers as well. However, the benefit of this amendment will be applicable only to the taxpayers who are opting for the new tax regimes.
Credit for TCS paid against the TDS on salary
In Budget 2024, salaried individuals can now claim Tax Collected at Source (TCS) on overseas remittances against their Tax Deducted at Source (TDS) on salary.
Changes in Taxation of Capital Gains
There will only be two holding periods: 12 months and 24 months for classifying assets into long-term and short-term. The 36-month holding period has been removed.
The taxation of Short-Term Capital Gain is increased to 20% from 15%.
The tax on long-term capital gains on the listed equities is increased from 10% to 12.5%.
The tax on long-term capital gains on other financial and non-financial assets is reduced from 20% to 12.5%. However, the indexation benefit that previously was available on sale of such assets will not be available anymore. So, any sale of long term asset made from 23rd July, 2024, will attract tax rate of 12.5% only without indexation benefit.
The exemption limit on Capital Gains has been increased to Rs. 1.25 lakhs for the whole of the financial year, whereas change in the tax rate will be applicable w.e.f. 23rd July 2024.
Securities Transaction Tax on sale of futures in securities is proposed to be increased from 0.0125% to 0.02%.
Securities Transaction Tax on sale of options in securities is proposed to be increased from 0.0625% to 0.1%.
Changes in TDS Rates
Budget 2024 aims at reducing the TDS rates on certain payments to facilitate business and improve taxpayer compliance. The effective rate and the applicable from dates are given below:
| TDS Sections | Current TDS Rate | Proposed TDS Rate | Effective from |
| Section 194D – Payment of insurance commission in case of other than company | 5% | 2% | 1st April 2025 |
| Section 194DA – Payment in respect of life insurance policy | 5% | 2% | 1st Oct 2024 |
| Section 194G -Commission on sale of lottery tickets | 5% | 2% | 1st Oct 2024 |
| Section 194H – Payment of commission or brokerage | 5% | 2% | 1st Oct 2024 |
| Section 194-IB – Payment of Rent by certain individuals or HUF | 5% | 2% | 1st Oct 2024 |
| Section 194M – Payment of certain sums by certain individuals or HUFs | 5% | 2% | 1st Oct 2024 |
| Section 194-O – Payment of certain sum by e-commerce operator to e-commerce participants | 1% | 0.10% | 1st Oct 2024 |
| Section 194F – Payment on account of repurchase of units by mutual funds or UTI | Proposed to be Omitted | 1st Oct 2024 | |
Corporate Taxes on Foreign Companies
In the Budget 2024, the Finance Minister has proposed to reduce the corporate tax on foreign companies from 40% to 35% to attract more foreign capital.
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