Income Tax Exemptions and Changes: Budget 2024 Announcement.
Tax-Free Income.
- Tax-Free Limit: Twenty-five thousand is not taxed.
- Family Pension: Family pensions due to the death of a family member are taxed. Earlier, the maximum exemption was fifteen thousand, now increased to twenty-five thousand, benefiting parents.
Long Term Capital Gains.
- Increased Rates: The rate for long-term capital gains has increased from ten percent to twelve point thirty percent.
- Example:
- Bought a share for one hundred rupees.
- Sold it after one year for one hundred fifty rupees.
- Previously, ten percent tax on fifty rupees gain.
- Now, twelve point thirty percent tax on the gain.
| Aspect | Previous Rate | New Rate |
|---|---|---|
| Tax-Free Income | 15,000 | 25,000 |
| Long-Term Capital Gains | 10% | 12.30% |
Stock Market Announcements.
- Budget Announcements: Two major changes have been announced affecting the stock market.
- Long Term Capital Generation: Increase in tax rates.
- Security Transaction Tax (STT): Increased STT rates despite expectations of a reduction to support brokers and market growth.
Impact on Stock Market.
Security Transaction Tax (STT)
- Current Scenario: Increased STT impacts frequent traders significantly.
- Example: If you buy and sell one share of ITC worth one hundred rupees multiple times, you pay STT each time, now at an increased rate.
| Aspect | Previous Rate | New Rate |
|---|---|---|
| STT Rate | 0.1% | 0.2% |
| Impact on Market | Significant drop in Nifty and other indices due to increased tax burden. |
Income Tax Slabs.
Changes in Income Tax Slabs.
- Old vs New Slabs:
- Zero to Three Lakhs: No tax (unchanged).
- Three to Seven Lakhs: Five percent.
- Seven to Ten Lakhs: Increased to ten percent.
- Ten to Twelve Lakhs: Fifteen percent.
- Above Fifteen Lakhs: Thirty percent (unchanged).
| Income Range (INR) | Previous Rate | New Rate |
|---|---|---|
| 0 – 3 Lakhs | 0% | 0% |
| 3 – 7 Lakhs | 5% | 5% |
| 7 – 10 Lakhs | 10% | 10% |
| 10 – 12 Lakhs | 15% | 15% |
| Above 15 Lakhs | 30% | 30% |
General Impact.
- Lower Middle Class: Slight relief up to three lakhs, increased burden for income above seven lakhs.
- General Public: Increased indirect tax burden even for those not paying income tax directly.