Analysis of Tax Changes in Union Budget 2024 by Financial Experts

The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, has introduced significant changes in taxes that will have a wide-ranging impact on various segments of the public. The overhaul of capital gains tax is one of the key highlights of the budget, with short-term gains on financial assets now being uniformly taxed at 20%. This change will particularly affect traders who rely on quick turnovers for their investments.

On the other hand, long-term capital gains tax has been reduced to 12.5%, which is good news for long-term investors. The budget also offers an annual exemption of ₹1.25 lakh on profits, benefiting smaller investors. However, the removal of indexation for property, gold, and unlisted shares may increase tax liabilities for individuals holding these assets, potentially deterring investments in these areas.

One of the positive changes in the budget is the reduction of the holding period for bonds, debentures, and gold from 36 to 24 months, making these investments more attractive. The increase in the standard deduction from ₹50,000 to ₹75,000 will provide relief to salaried individuals, boosting their disposable income. Additionally, enhanced family pension deductions and the abolition of angel tax will support pensioners and start-ups respectively.

However, the increase in Securities Transaction Tax (STT) on futures and options to 0.2% may lead to a reduction in trading volumes. The decision to treat buybacks as dividends simplifies the tax process and could potentially reduce tax evasion. Overall, these reforms aim to strike a balance between simplification and growth, creating a stable and investor-friendly environment.

Experts like Chartered Accountant Manoj Jajoo and Riaz Thingna have praised the budget for its focus on inclusivity, employment, agriculture, and MSMEs. They highlight the positive impact of the changes in the Capital Gains regime, the removal of Angel Tax, and the reduction in income tax rates for foreign companies. The budget is seen as a step in the right direction to boost investment and economic growth in India.

Published on: Tuesday, July 23, 2024, 08:32 PM IST