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Tata Capital > Blog > Budget 2024: Changes in Capital Gains and Income Tax

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Budget 2024: Changes in Capital Gains and Income Tax

Budget 2024: Changes in Capital Gains and Income Tax

The Union Budget 2024-25, presented by Finance Minister Nirmala Sitharaman on July 23, has captured the attention of investors and taxpayers alike, sparking discussions and anticipation across financial circles. Amongst the changes, the changes to Long Term Capital Gains (LTCG) and tax slabs have been key takeaways.

Whether you’re an experienced investor or just someone looking to make informed financial decisions, the latest budget brings opportunities that could shape your financial future.

Here, we’ll break down the key updates, providing you with clear insights to help you navigate the changes with confidence and make the most of your wealth-building strategies. Let’s dive in.

Simplified Holding Period

According to the Budget 2024, listed securities such as shares listed on the stock exchange, including listed business trusts, listed bonds held for more than 12 months will be considered long-term holdings.

All other assets, such as real estate, international funds , gold, , and unlisted shares held for more than 24 months, will be considered long term holdings.

Change in Tax Rate

The tax rate for Short Term Capital Gains (STCG) on investments related to equity, such as listed stocks, equity mutual funds, etc., has increased to 20% from 15%. This will apply to assets held for less than 12 months. LTCG (Long Term Capital Gains) tax rate is increased from 10% to 12.5%.

On assets other than listed equity-related investments, there is no change in STCGtax rate of slab rate. .

As per revised taxation proposed in Budget 2024, the tax rate for LTCG on investments is now 12.5% regardless of asset class.

Removal of Indexation

The method of indexation is used to adjust the purchase prices of an asset, such as gold or property, for inflation over the years. The new adjusted price is then used to calculate capital gains. The benefit of adjusting inflation with the purchase price has been removed for all assets in the Union Budget 2024.

New Tax Slabs

The Union Budget has introduced a new tax regime rate structure that will provide employees with significant benefits offering income tax savings of up to Rs 17,500. While the tax rate remains unchanged, the size of tax slabs, excluding the first slab (Rs 0 to Rs 3 lakhs), has been revised. Here’s a breakdown:

  • Rs 3 lakh to Rs 6 Lakh is now increased to Rs 3 lakh to Rs 7 lakh.
  • Rs 6 lakh to Rs 9 Lakh has now increased to Rs 7 lakh to Rs 10 lakh.
  • Rs 9 lakh to Rs 12 Lakh has now increased to Rs 10 lakh to Rs 12 lakh, and thereby beyond.

Tax Deductions and Exemptions

The changes introduced by the Union Budget 2024 have been favourable to salaried employees and pensioners. The standard deduction for salaried employees has been increased from Rs 50,000 to Rs 75,000 for those employees choosing the new tax regime. Further, the deduction on family pension for pensioners has been increased to Rs 15,000 form Rs 25,000.

To Sum Up

As we’ve explored, the changes in capital gains and income tax introduced in Budget 2024 present both challenges and opportunities for savvy investors. Navigating these shifts requires a keen understanding of the new landscape and a proactive approach to wealth management. Whether it’s optimising your tax strategy or reassessing your investment portfolio, staying informed is critical to making decisions that align with your financial goals.

At Tata Capital Wealth, we’re committed to guiding you through these changes with personalised strategies and expert insights tailored to your unique needs. Our team of seasoned professionals is here to help you maximise your wealth potential while ensuring your financial journey remains on track. To learn more about our services, visit the Tata Capital Wealth website today!

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