Understanding impact of Budget on personal finance
With the unveiling of Union Budget 2024-25, personal finance is set for a transformation that promises both simplification and strategic shifts. Although the anticipated increase in the tax-free threshold didn't materialize, the proposed changes signal a move towards a more streamlined tax system. Finance minister Nirmala Sitharaman is recalibrating the tax landscape, favouring reduced rates, broader slabs, and fewer deductions to make the new regime more appealing.
Here’s a closer look at the key proposals shaping personal finance.
For salaried individuals earning above ₹15,75,000, the expanded tax slabs and increased standard deduction from ₹50,000 to ₹75,000 could potentially save ₹17,500, excluding surcharge and cess. The Budget also proposes raising the employer’s contribution to the New Pension Scheme (NPS) from 10% to 14% of salary for those opting for the new tax regime. This change offers employees a chance to negotiate a higher NPS contribution from their employers.
However, it’s important to note that contributions exceeding ₹750,000 to the NPS, Employee Provident Fund (EPF), and superannuation fund will remain taxable under current laws.
Read this | How the Budget affects your salaries, investments and taxes
The Budget has proposed substantial changes to capital gains taxation. Holding periods for determining short-term versus long-term assets are simplified: 12 months for listed securities, equity-oriented mutual funds, and REIT/InVIT units, and 24 months for assets like real estate, gold, and unlisted shares. The proposed long-term capital gains tax rate of 12.5% will apply uniformly across all asset classes, while short-term capital gains rates will increase from 15% to 20%.
Additionally, the removal of
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