The Union Budget 2024 was presented by FM Nirmala Sitharaman on 23rd July 2024. Traces of unhappiness from the budget were seen immediately on the Indian Share Market. The NSE Nifty 50 and S&P BSE Sensex started declining significantly and rested after dropping 1 %. The main reason behind this fall was, increase in Capital gain taxesand the increase in Securities Transaction Tax (STT) of Future and Options. Internationally, Indian rupee also was dropped to a record low against the US dollar to ₹ 83.69
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Let’s understand the proposed changes in Union Budget
- Changes in Capital Gain Taxes Following are the changes proposed in the union budget with immediate effect.
- Short Term Capital Gain
- Short term capital gains on specified financial assets like shares of listed companies, shall charge tax rate of 20 % instead of 15 %.
- Listed financial assets held for less than a year are classified as short term.
- Unlisted financial assets and all non-financial assets held for less than two years are classified as short-term.
- Long Term Capital Gain
- Long term gains on all financial and non-financial assets will attract a tax rate of 12.5 % instead of 10 %.
- The limit of exemption on certain listed financial assets has increased from ₹ 1 lakh to ₹ 1.25 lakh per year.
- Listed financial assets held for more than a year will be classified as long term, while unlisted financial assets and all non-financial assets will have to be held for at least two years to be classified as long-term.
- Changes in Capital Gain Taxes Following are the changes proposed in the Union budget with immediate effect.
- Short Term Capital Gain Short term capital gains on specified financial assets like shares of listed companies, shall charge tax rate of 20 % instead of 15 % . Listed financial assets held for less than a year are classified as short term. Unlisted financial assets and all non-financial assets held for less than two years are classified as short-term.
- Long Term Capital Gain Long term gains on all financial and non-financial assets will attract a tax rate of 12.5 % instead of 10 %. The limit of exemption on certain listed financial assets is increased from ₹ 1 lakh to ₹ 1.25 lakh per year . Listed financial assets held for more than a year will be classified as long term, while unlisted financial assets and all non-financial assets will have to be held for at least two years to be classified as long-term.
- Securities Transaction Tax (STT) rates It is proposed to increase the rates of STT on sale of an Option in securities from 0.0625 % to 0.1 % of the option premium, and on sale of a futures in securities from 0.0125 % to 0.02 % of the price at which such futures are traded.
- Buy-back of shares It is proposed that the income from buy-back of shares by companies be chargeable in the hands of recipient investor as dividend , instead of the current regime of additional income-tax in the hands of the company. Further, the cost of such shares shall be treated as a capital loss to the investor
References
- Union Budget 2024 Speech Union Budget 2024 Fine Print
- Income Tax Calculator Income Tax Calculator
Legal Disclaimer: The information provided is based on the current laws for FY 2024-25, FY 2023-24 and FY 2022-23and readers should verify details with relevant authorities. Keep in mind that the process and options might vary slightly based on updates to the Income Tax e-Filing portal or changes in procedures, so it is a good idea to refer to the latest guidance available on the portal.