Budget 2024 Simplified with PensionBox

Eagerness builds every year in India as the Budget approaches, with businesses and the general public eagerly awaiting to learn about the schemes and initiatives that could potentially benefit them. Though the budget was supposed to be announced on February 1, due to elections it was announced quite later.

The Finance Minister of India, Nirmala Sitharaman presented the final budget on July 23, 2024, highlighting its focus on employment, skill development, support for MSMEs, and initiatives aimed at benefiting the middle class.

Continue reading this article to learn the key highlights of Budget 2024. But before we dive into the highlights Budget 2024 has for you, let's know what exactly is a Budget.

What is a Budget?

A budget presented by a Finance Minister of the country is a detailed plan that shows how much money the government expects to collect and spend during a specific time, usually a year. It lays out where the government will get its money from (like taxes) and how it plans to spend it (on things like healthcare, education, roads, defense, and helping people in need). The Finance Minister presents this plan in a formal setting to lawmakers to get approval and set the course for government spending and priorities.

Let's now explore the key updates on the Budget 2024:

Proposals for Direct Taxes

1. Increased Standard Deduction and Family Pension Deduction in the New Regime

In the recent proposal, the standard deduction for salaried individuals has risen to Rs. 75,000 from Rs. 50,000. Likewise, those with pension income under family pension will now benefit from a higher deduction of Rs. 25,000, increased from Rs. 15,000, when filing taxes under the new regime.

2. Revised Tax Structure in the New Regime

Budget 2024 has also revised the tax slab in the New tax regime as:

Please note that, Because of these changes, a salaried employee in the new tax regime can save up to Rs. 17,500 in taxes.

The tax rate on long-term capital gains from both financial and non-financial assets has been lowered from 20% to 12.5%. However, the indexation benefit previously applicable to the sale of long-term assets has been eliminated. This means that any sale of a long-term asset made from July 23, 2024, will now incur a tax rate of 12.5% without the option for indexation benefit.

Changes in TDS Rates

Budget 2024 has lowered the TDS rates on specific payments to enhance business operations and encourage taxpayer compliance. However, these revised TDS rates will come into effect either after October 1, 2024, or April 1, 2025. The table below outlines the payments affected by these changes.

Corporate NPS Tax Updates

Section 80CCD of the Income Tax Act allows a deduction for the employer's contribution to the Corporate Model of the National Pension Scheme (NPS), previously up to 10% of the salary of the employee during the previous year. Budget 2024 has now raised this deduction limit to 14% of the employee's salary from the previous year.

Other Direct Tax Proposals

1. Reopening of Income Tax Returns:

The assessment 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, up to a maximum period of five years from the end of the assessment year. For cases involving searches, the time limit of 10 years has been reduced to six years.

2. Income Tax Appeals:

To reduce the backlog of pending cases, the monetary limits for filing tax dispute appeals in tax tribunals, high courts, and the Supreme Court have been increased to Rs. 60 lakh, Rs. 1 crore, and Rs. 2 crore respectively.

3. Vivaad se Vishwas Scheme:

The reintroduction of this scheme aims to facilitate the settlement of income tax disputes and minimize litigation.

Next Generation Reforms Proposed

The Government of India will start the National Pension Scheme (NPS)- Vatsalya, a plan proposed for the contribution for the children's account by their parents and guardians. The plan would then be operated like a normal NPS Account once the minor turns 18.

To explore everything the budget entails, click below based on your preference.

• 1. Full Budget, 2024
• 2. Budget, 2024 Speech

Keep in touch for regular updates!