The full-fledged budget for 2024 was announced on 23rd July 2024. Here are the 10 big changes impacting your personal finances.
Let us look into all these changes in detail.
Budget 2024 – 10 BIG changes impacting personal finance
# Employment linked benefit
For First Timers –
This scheme will provide a one-month wage to all persons newly entering the workforce in all formal sectors. The direct benefit transfer of one-month salary in 3 installments to first-time employees, as registered in the EPFO, will be up to ` Rs.15,000. The eligibility limit will be a salary of Rs.1 lakh per month. The scheme is expected to benefit 210 lakh youth.
For Manufacturing Sector –
An incentive will be provided at a specified scale directly both to the employee and the employer with respect to their EPFO contribution in the first 4 years of employment.
Support for employers –
The government will reimburse to employers up to Rs.3,000 per month for 2 years towards their EPFO contribution for each additional employee. This will be applicable for those employees whose salary is Rs.1 lakh a month.
# Discounted Education Loan
Students can avail of educational loans for higher education in domestic institutions of up to Rs.10,00,000 for those students who have not been eligible for any benefit under government schemes and policies. The 3% discount is available for such loans.
# NPS Vatsalya for your child
Currently, the minimum age limit to enter into NPS is 18 years. Now with this scheme, even minors can also be part of NPS scheme.
NPS-Vatsalya, a plan for contribution by parents and guardians for minors will be started. On attaining the age of majority, the plan can be converted seamlessly into a normal NPS account.
# Gold and Silver will be cheaper
To enhance domestic value addition in gold and precious metal jewellery in the country, it was proposed to reduce customs duties on gold and silver to 6% (earlier it was 10%) and that on platinum to 6.4%.
# Simplification of Income Tax Reassessment
An assessment hereinafter can 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 5 years from the end of the assessment year. Even in search cases, a time limit of six years before the year of search, as against the existing time limit of ten years, is proposed.
# Capital Gain Taxe Changes
There are three changes done here and they are as below.
- Short-term capital gains tax has been increased to 20% from 15% for specified financial assets for the year 2024-2025. However, what are those specified financial assets is unknown as of now. Hence, let us wait for clarity.
- The long-term gains tax on all financial and non-financial assets will be taxed at 12.5% for the financial year 2024-25.
- The exemptions of capital gains have been increased to Rs.1.25 lakh per year, from the previous value of Rs.1 lakh per year, as per the Budget 2024.
Do remember that all the listed assets exceeding the period of a year in holding will be considered long-term assets. In the case of all unlisted financial and non-financial assets, the holding period will be for at least two years to be classified under the long-term asset category, according to the Budget announcement. Assets like unlisted bonds and debenture, debt mutual funds and market-linked debentures, irrespective of holding period will attract the capital gains tax at the above applicable rates, as per the Budget.
# Employer contribution to NPS limit increased
Earlier, for private sector employees, the maximum contribution an employer can do to employees NPS was 10% of Salary (Basic +DA). However, it is now increased to 14% (Equal to central government employment).
The budget wordings are “To improve social security benefits, deduction of expenditure by employers towards NPS is proposed to be increased from 10% to 14% of the employee’s salary. Similarly, deduction of this expenditure up to 14% of salary from the income of employees in private sector, public sector banks and undertakings, opting for the new tax regime, is proposed to be provided.”
# ESOP Reporting limitation enhanced
Indian professionals working in multinationals get ESOPs and invest in social security schemes and other movable assets abroad. Non-reporting of such small foreign assets has penal consequences under the Black Money Act. Such non-reporting of movable assets up to Rs.20 lakh is proposed to be de-penalised.
# Standard Deduction Increased for New Tax Regime
The standard deduction for salaried employees is proposed to be increased from Rs.50,000/- to Rs.75,000/-. Similarly, the deduction on family pension for pensioners is proposed to be enhanced from Rs.15,000/- to Rs.25,000/-.
# Tax Slab Rates enhanced for New Tax Regime
There is no change in the old tax regime. However, the new tax regime tax slabs were revised and made more attractive. The new tax slab for FY 2024-25 is as below. (Check my latest post on this “July 2024 Budget – New Income Tax Slab Rates FY 2024-25“.
Do remember that this article was written based on current information available. However, I will update as and when the clarity emerges.
