Wider income tax slabs, higher standard deduction make the new tax regime more attractive. Has Budget 2024 made you richer?
deductions under Section 80 or giving more exemptions have been sorely disappointed. The Budget has not made any change in the old tax regime, but proposed some tweaks in the new tax regime to make it more attractive. The Budget may have also increased the tax outgo for many taxpayers by hiking the tax on capital gains and removing the indexation benefit that applied to property,hybrid mutual funds and gold.
Changes in new tax regime
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The tax on long-term gains from stocks and equity-oriented mutual funds has been raised from 10% to 12.5% and the tax on short-term gains raised from 15% to 20%. “The increase in tax on long-term capital gains is a big negative. Given the low penetration of financial assets, consistency of taxes always helps in the long run,” says Swarup Mohanty, Vice-Chairman & CEO, Mirae Asset Investment Managers. “The proposal to increase LTCG tax on equities is a dampener. Instead of increasing LTCG tax on equities, the government could have increased the holding period for LTCG tax from one year to three years to incentivise long-term investments,” says Naveen Kukreja, Co-Founder and CEO, Paisabazaar.
Some experts say the proposed change should not worry long-term investors because the 2.5 percentage point hike in LTCG tax will not amount to much. “There is some disappointment over the increase in capital gains tax rates for equities, but there is equalisation of rates across asset classes, which brings a sense of clarity,” says Deepak Shenoy, Founder & CEO, Capitalmind.
