The Union Budget of 2024-25 has introduced various changes to the different types of taxes – income tax, capital gains, securities transaction tax, angel tax, tax-deducted at source, tax collected at source and others.

This article provides summary of the important changes in the tax structure

1. Changes in Personal Income Tax Slabs: For relief to the honest tax payers; the budget has made changes to the personal income tax slabs under the New Tax Regime.
2. Capital Gains Tax Adjustments: There are changes in the short-term and long-term capital gains taxes with an objective to provide incentives for investments and positively impact the equity market
3. Securities Transaction Tax (STT): An increase in the Securities Transaction Tax (STT) will affect the transactions in the capital market.
4. Elimination of Angel Tax: The budget proposes the elimination of the angel tax for startups and investors.

These changes reflect a move towards encouraging investment and easing the tax burden on individuals and businesses.

Capital Gains:

• Short-term capital gains tax has increased from 15% to 20%
• Long term capital gains tax has been standardized to 12.5% from 20%
• The indexation benefit on property selling has been removed
• The exemption limit for capital gains on certain listed financial assets has been increased from ₹1 lakh to ₹1.25 lakh per year
• There will be only 2 holding periods: 12 and 24 months. For listed equity, debenture/bond it is 12 month and others it is 24 months

Shares buy-back:

• Income from buy-back of shares will be taxed as a dividend for the investor.
• The cost of the shares bought back will be considered a capital loss for the investor.

TDS and TCS:

• TDS on payments made by a firm to its partner will be 10% for aggregate amounts exceeding ₹20,000 in a financial year u/s 194 T
• TCS of 1% on notified luxury goods exceeding 10 lakh.
• TDS on interest exceeding ₹10,000 on Floating Rate Savings (Taxable) Bonds (FRSB) 2020 or other notified securities of the Central or State Government.
• TDS on e-commerce cut to 0.1% from 1%.
• Delay for payment of TDS up to due date of filing statement decriminalized.
• 20% TDS on repurchase of units by mutual fund or UTI withdrawn.
• 5% TDS rate on various payments merged in to 2% TDS rate.

Revised Tax Rate Structure:

New income tax regime slabs resulting in savings of ₹17,500 in income tax:

• ₹0-3 lakh – Nil
• ₹3-7 lakh – 5%
• ₹7-10 lakh – 10%
• ₹10-12 lakh – 15%
• ₹15 lakh and above – 30%
• Income Tax relief for salaried individual to be increased from ₹50,000/- to ₹75,000/-
• Deduction on Family pension for pensioners to be increased from ₹15,000/- to ₹25000/-

Custom Duties:

• Customs duties on gold and silver reduced to 6%, platinum to 6.4%.
• There will be no custom duty on Lithium, copper, cobalt.
• Expanded the list of exempted capital goods for manufacturing solar cells and panels.
• Basic Customs Duty (BCD) on MDI for manufacturing spandex yarn reduced from 7.5% to 5%.
• Exempt customs duty on manufacturing connectors and oxygen-fused copper.

Other Changes

• The tax rate for foreign companies has been reduced from 40% to 35%.
• Deduction of Employer contribution towards NPS proposed to increase from 10% to 14%.
• Opening of reassessment beyond 3 years from the end of assessment year only if escaped income is ₹50 lakh or more, up to a maximum period of 5 years from the end of assessment year.
• Time limit for search cases to be reduced from 10 years to 6 years before year of search.
• Increased STT on sale of options to .1% and on sale of futures in securities to .02%

Hi, I am Nikesh Mehta, owner and writer of this site. I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at nikeshmehta@allonmoney.com.