Posted by & filed under Income Tax.

The full-fledged budget for 2024, announced on 23rd July 2024, has introduced significant changes that will impact personal finance. This article explores these changes in detail, highlighting how they will affect various aspects of your financial life.

1. Employment Linked Benefit

For First Timers: A new scheme will provide a one-month wage to all newly entering the workforce in formal sectors. This direct benefit transfer of up to Rs. 15,000 will be given in three installments to first-time employees registered with the EPFO. The eligibility limit is a salary of Rs. 1 lakh per month, aiming to benefit 210 lakh youth.

For the Manufacturing Sector: Employees and employers will receive incentives for their EPFO contributions for the first four years of employment.

Support for Employers: The government will reimburse employers up to Rs. 3,000 per month for two years towards their EPFO contribution for each additional employee earning a salary up to Rs. 1 lakh a month.

Category

Benefit Description

Eligibility Criteria

Duration

First Timers

One-month wage (up to Rs. 15,000) in 3 installments

New workforce entrants, salary up to Rs. 1 lakh

3 installments

Manufacturing Sector

Incentives for EPFO contributions

Employees and employers in manufacturing

First 4 years

Employers

Reimbursement up to Rs. 3,000 per month for EPFO contribution

Employers with additional employees, salary up to Rs. 1 lakh

2 years

2. Discounted Education Loan

Students can now avail of education loans up to Rs. 10,00,000 for higher education in domestic institutions. A 3% discount is available for those who haven’t benefited from any government schemes and policies.

Loan Amount

Interest Rate Discount

Eligibility Criteria

Up to Rs. 10,00,000

3% discount on interest rate

Students not eligible for other government benefits

3. NPS Vatsalya for Your Child

The minimum age limit for entering the NPS has been removed, allowing minors to participate through the NPS-Vatsalya plan. Parents and guardians can contribute, and the plan can seamlessly convert into a regular NPS account when the child reaches adulthood.

Scheme Name

Key Features

Conversion

NPS Vatsalya

Allows minors to participate, contributions by parents/guardians

Converts to regular NPS account at adulthood

4. Gold and Silver Will Be Cheaper

To boost domestic value addition in Jewellery, customs duties on gold and silver have been reduced from 10% to 6%, and on platinum to 6.4%.

Metal

Previous Duty

New Duty

Gold

10%

6%

Silver

10%

6%

Platinum

10%

6.4%

5. Simplification of Income Tax Reassessment

Reassessments can now be reopened beyond three years from the end of the assessment year only if the escaped income is Rs. 50 lakh or more, and up to a maximum period of five years. In search cases, the time limit is reduced to six years before the year of search from the current ten years.

Scenario

Previous Limit

New Limit

General Reassessment

Can reopen up to 10 years if income escaped assessment

Can reopen up to 3 years if income escaped assessment is Rs. 50 lakh or more

Search Cases

Up to 10 years

Up to 6 years

6. Capital Gains Tax Changes

Short-term Capital Gains Tax: Increased from 15% to 20% for specified financial assets for the year 2024-2025.

Long-term Gains Tax: On all financial and non-financial assets will be taxed at 12.5%.

Exemptions on Capital Gains: Increased to Rs. 1.25 lakh per year from the previous Rs. 1 lakh per year.

Type of Gain

Previous Rate

New Rate

Short-term Capital Gains

15%

20%

Long-term Capital Gains

10%

12.5%

Exemption Limit

Rs. 1 lakh

Rs. 1.25 lakh

7. Employer Contribution to NPS Limit Increased

For private sector employees, the employer’s contribution limit to NPS has increased from 10% to 14% of salary (Basic + DA). This change is beneficial for those opting for the new tax regime.

Sector

Previous Contribution Limit

New Contribution Limit

Private Sector

10% of salary

14% of salary

8. ESOP Reporting Limitation Enhanced

Non-reporting of small foreign assets up to Rs. 20 lakh by Indian professionals working in multinationals will now be de-penalized, reducing the burden under the Black Money Act.

Type of Asset

Previous Penalty

New Penalty

Small Foreign Assets

Penal consequences under Black Money Act

De-penalized for non-reporting up to Rs. 20 lakh

9. Standard Deduction Increased for New Tax Regime

The standard deduction for salaried employees has been increased from Rs. 50,000 to Rs. 75,000. For pensioners, the deduction on family pension is enhanced from Rs. 15,000 to Rs. 25,000.

Category

Previous Deduction

New Deduction

Salaried Employees

Rs. 50,000

Rs. 75,000

Pensioners

Rs. 15,000

Rs. 25,000

10. Tax Slab Rates Enhanced for New Tax Regime

While the old tax regime remains unchanged, the new tax regime has revised tax slabs to be more attractive.

Income Slab

Previous Rate

New Rate

Up to Rs. 2.5 lakh

NIL

NIL

Rs. 2.5 lakh – Rs. 5 lakhs

5%

5%

Rs. 5 lakh – Rs. 7.5 lakh

10%

10%

Rs. 7.5 lakh – Rs. 10 lakhs

15%

10%

Rs. 10 lakh – Rs. 12.5 lakh

20%

15%

Rs. 12.5 lakh – Rs. 15 lakhs

25%

20%

Above Rs. 15 lakhs

30%

25%

Conclusion

The Budget 2024 brings a mix of benefits and adjustments to support employment, education, savings, and investment. These changes aim to boost the economy while providing relief and opportunities for individuals and businesses. Stay informed and adapt to these changes to maximize your financial benefits.

Note

This article was written based on the current information available. Updates will be provided as further clarity emerges on these announcements.

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