Union Budget 2024: Standard deduction increased to Rs 75,000 in new tax regime

Union Budget 2024: Under Prime Minister Narendra Modi's third term, Finance Minister Nirmala Sitharaman announced a few changes to the income tax regime in the Union Budget 2024.

The standard deduction for taxpayers opting for this new regime has been increased from Rs 50,000 to Rs 75,000, further easing the financial burden on individual taxpayers.

Capital gains tax overhaul

Changes to the capital gains tax regime were also unveiled, with the long-term capital gains tax rate being increased from 10 per cent to 12.5 per cent. However, to provide relief to small investors, long-term capital gains income up to Rs 1.25 lakh will now be exempt from tax.

Furthermore, the holding period for capital gains tax has been streamlined: all listed financial assets held for more than a year will be classified as long-term, while unlisted financial and non-financial assets will need to be held for over two years to be considered long-term.

NPS Vaatsalya & boosted deductions

A new introduction in this budget is the NPS Vaatsalya scheme, designed specifically for minor children. Under this scheme, parents can invest in the National Pension System (NPS) on behalf of their children.

Upon reaching adulthood, these investments can be seamlessly converted into regular NPS accounts, ensuring long-term financial security for the younger generation.

For private sector employees, the deduction on employers' contributions to the NPS has been raised from 10 per cent to 14 per cent, but this enhanced benefit is available only under the new income-tax regime.

This move is expected to encourage higher savings and investment amongst private sector employees, boosting their retirement funds.

(Source: Republicbiz)