What’s Important In Union Budget 2024? Here’s What You Should Know

By Author: TaxHelpdesk
Total Articles: 28
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The Hon. Finance Minister Smt. Nirmala Sitharaman presented the Union Budget on July 23, 2024, bringing several significant changes to India's financial landscape. This year's budget focuses on four key sectors: Annadata (Farmers), Garib (Poor), Yuva (Youth), and Mahilayen (Women). In addition to these targeted efforts, the budget introduces important reforms in both Direct and Indirect Taxes, which will impact individuals and businesses alike.
Direct Tax Reforms
Standard Deduction Under the New Tax Regime
One of the notable changes in the Union Budget 2024 is the increase in the Standard Deduction limit under the New Tax Regime. The deduction has been raised from ₹50,000 to ₹75,000, allowing taxpayers to save up to ₹17,500 more in taxes. This modification is a result of continuous efforts to improve the New Tax Regime's usability and appeal to taxpayers.
Changes in Income Tax Slab Rates
Along with the increase in the Standard Deduction limit, the budget also revises the income tax slab rates under the New Tax Regime. The purpose of these modifications is to make it simpler for taxpayers to ...
... understand their tax obligations by streamlining the tax system and giving them greater clarity.
Deduction on Family Pension
The deduction on family pension has been increased from ₹15,000 to ₹25,000, providing additional relief to pensioners. This change is intended to support those who rely on family pensions as a significant source of income.
Simplification of Capital Gains Taxation
The budget introduces a simplified approach to calculating capital gains tax. The classification of long-term and short-term capital gains will now be based on two holding periods: 12 months and 24 months. This simplification eliminates the 36-month period that was previously applied, making it easier for taxpayers to understand their tax liabilities.
For all listed securities, the holding period is now set at 12 months. If the duration of holding is less than 12 months, it will be classified as short-term capital gains; if more than 12 months, it will be considered long-term capital gains. Unlisted bonds and debentures will now be taxed similarly to debt mutual funds and market-linked debentures, with capital gains taxed at applicable slab rates regardless of the holding period.
Changes in Capital Gains Exemption Limit
The budget also raises the capital gains exemption limit under Long-Term Capital Gains from ₹1.5 lakh to ₹1.25 lakh. This means that individuals earning up to ₹1.25 lakh from long-term capital gains will not have to pay any tax, offering significant tax savings.
Removal of Indexation Benefits on Property
Indexation benefits on properties held after 2021 have been removed, and the long-term capital gains tax rate on properties has been reduced from 20% to 12.5%. These changes are likely to impact real estate investors and property sellers, simplifying the tax calculations but also reducing some of the tax benefits previously available.
TDS Rate Reductions
With effect from October 1, 2024, the Union Budget 2024 has lowered TDS rates in a number of areas to make it simpler for businesses to comply with tax laws. For example, the TDS rate under Section 194DA for payments related to life insurance policies has been reduced from 5% to 2%. Similar reductions apply to payments of rent, commissions, and e-commerce transactions, among others.
Indirect Tax Reforms
Reduction in Custom Duty
The budget includes significant reductions in customs duties on various items, aiming to promote domestic manufacturing and make imported goods more affordable. These changes are part of the government's broader strategy to boost economic growth and support local industries.
GST Notices and Compliance
The Union Budget 2024 also addresses GST compliance issues. Taxpayers may receive GST notices for non-payment, underpayment, erroneous refunds, or incorrect utilization of Input Tax Credit. However, no notice will be issued if the amount in question is less than ₹1,000 in a financial year.
The budget also mandates the filing of GSTR-7 for TDS under GST, even if there is no TDS deduction, and restricts GST refunds of unutilized ITC or IGST for goods subject to export duty. Additionally, summoned persons under GST can now authorize another individual to appear on their behalf in compliance matters.
Other Major Reforms
Beyond direct and indirect tax reforms, the Union Budget 2024 introduces several other significant measures:
NPS Vatsalya: A new plan for parents and guardians to contribute to minors' pension plans.
New Pension Scheme (NPS): A new solution to address existing issues, ensure fiscal prudence and protect common citizens.
Internship Opportunities: A new scheme providing internships in 500 top companies for 1 crore youth over 5 years, with an allowance of ₹5,000 per month and a one-time assistance of ₹6,000 through CSR funds.
Mudra Loans: The loan limit under the 'Tarun' category is enhanced to ₹20 lakh from the current ₹10 lakh.
Credit Guarantee Scheme: A new credit guarantee scheme for MSMEs in the manufacturing sector.

What Becomes Cheaper and Costlier?
The budget also outlines changes in the prices of various goods and services, with some becoming more affordable and others more expensive due to the adjustments in tax rates and duties.
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