How the Budget affects your salaries, investments and taxes

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₹1.25 lakh for the financial year now. If you have exhausted the ₹1 lakh limit for the financial year, you will get another ₹25,000 from hereon. This applies to stocks as well.

Also, let’s say you have already made long-term capital gains worth ₹2 lakh, then you are eligible to claim an exemption of up to ₹1.25 lakh vis-a-vis the earlier limit of ₹1 lakh. It is important to note that capital gains tax for equities will now occur at a higher rate. For stocks and equity mutual funds held for more than a year, the long-term capital gains tax is now 12.5%, up from 10%.

If held for less than 12 months, the taxation is now 20% as compared to 15% earlier. Inputs from Nitesh Buddhadev, chartered accountant and founder of Nimit Consultancy Read: Budget 2024: What changes in capital gains taxes mean for investors | Mint (livemint.com) Let’s take a hypothetical example. Assuming somebody’s salary who opted for the new tax regime (introduced in 2020) is ₹9 lakh annually and his total tax liability is ₹46,800 under the current slab rate.

Now, after the lower proposed rate, let’s say the tax liability reduces to ₹33,800. Considering a uniform TDS is deducted for the entire financial year every month, ₹3,900 TDS would have been deducted for April, May, and June. This means ₹15,600 would have been deducted to date.

Going forward, since the yearly liability has been reduced, the employer will have to revise the monthly TDS such that it meets the yearly tax liability. In this case, it will be ₹2,275 per month for the remaining nine months of the financial year. This is a hypothetical example for illustrative purposes.