The much-awaited Budget 2024 was presented on July 23, 2024, bringing with it several significant changes that will directly impact personal finance, particularly for salaried individuals. Whether you're a first-time employee or a seasoned professional, these changes are set to affect how you manage your finances for the fiscal year 2024-25.
Therefore, In this article, we'll break down the 10 big changes from Budget 2024 that will influence your financial planning. From employment benefits to tax reforms, and even the introduction of a new automatic income tax calculator, we’ve covered everything you need to know.
Therefore, Let’s dive into the details.
Table of Contents
| Sr# | Headings |
| 1. | Employment-linked Benefits for First-timers |
| 2. | Incentives for the Manufacturing Sector |
| 3. | Discounted Education Loans |
| 4. | NPS Vatsalya for Minors |
| 5. | Gold and Silver Become Cheaper |
| 6. | Simplification of Income Tax Reassessment |
| 7. | Capital Gains Tax Changes |
| 8. | Employer Contribution to NPS Increased |
| 9. | ESOP Reporting Limitation Relaxed |
| 10. | Standard Deduction Boost in the New Tax Regime |
| 11. | Enhanced Tax Slab Rates for the New Regime |
| 12. | Automatic Income Tax Calculator for Salaried Persons |
1. Employment-linked Benefits for First-timers
In other words, The government has introduced an exciting scheme for individuals entering the formal workforce for the first time. As part of this initiative, new employees registered with the Employees' Provident Fund Organisation (EPFO) will receive a one-month wage in three instalments, up to Rs. 15,000, as a direct benefit transfer. Above all, This is expected to benefit over 210 lakh youth across various sectors.
2. In other words, Incentives for the Manufacturing Sector
However, In an effort to boost employment in the manufacturing sector, Budget 2024 offers special incentives. Employers and employees in the manufacturing sector will receive support for their EPFO contributions during the first four years of employment. Additionally, employers will be reimbursed up to Rs. 3,000 per month for two years for each additional employee with a salary up to Rs. 1 lakh.
3. In addition, Discounted Education Loans
However, Budget 2024 offers relief through discounted education loans for students aiming to pursue higher education in India. Students who have not qualified for any other government schemes can now avail of educational loans up to Rs. 10 lakhs with a 3% discount on interest rates. This step is expected to ease the financial burden for many students, especially those from middle-income families.
4. After that, NPS Vatsalya for Minors
In addition, A new initiative under the National Pension Scheme (NPS), called NPS Vatsalya, allows minors to be part of the NPS system. Parents and guardians can contribute to an NPS account for their child, which can then be seamlessly converted into a regular NPS account once the child reaches adulthood. Above all, This new development offers a valuable tool for long-term financial planning, making it easier for families to secure their children’s future.
5. Similarly, Gold and Silver Become Cheaper
In addition, Budget 2024 proposes a reduction in customs duties on precious metals, with gold and silver duties lowered from 10% to 6%, and platinum duties reduced to 6.4%. This change aims to increase domestic value addition in jewellery manufacturing, making these metals more affordable and boosting the jewellery industry.
6. Simplification of Income Tax Reassessment
In an attempt to make tax reassessment less cumbersome, Budget 2024 introduced several simplifications. Similarly, Now, tax reassessment can only be reopened beyond three years if the escaped income exceeds Rs. 50 lakh. In addition, The maximum period for reopening reassessments is set at five years, reduced from the previous ten years in cases of search assessments. This is good news for taxpayers as it reduces the uncertainty around prolonged tax inquiries.
7. Similarly, Capital Gains Tax Changes
In addition, Budget 2024 brings about some significant changes in capital gains tax:
- Short-term capital gains tax on specified financial assets has been increased from 15% to 20%. The exact list of assets affected is yet to be clarified.
- Long-term capital gains will now be taxed at 12.5%, down from previous rates, providing some relief for long-term investors.
- The annual capital gains exemption has also been increased to Rs. 1.25 lakh, up from Rs. 1 lakh.
This is a crucial change for investors in stocks, bonds, and other financial instruments.
8. In addition, Employer Contribution to NPS Increased
Private-sector employees will now benefit from an increased employer contribution to their National Pension Scheme (NPS) accounts. The contribution limit has been raised from 10% to 14% of the basic salary plus dearness allowance (DA). This is aligned with the contributions made by the government for its employees, improving the social security benefits for private sector workers.
9. In addition, ESOP Reporting Limitation Relaxed
Professionals working with multinational companies often face penalties for failing to report small foreign assets under the Black Money Act. The Budget has now de-penalized the non-reporting of foreign assets up to Rs. 20 lakh, reducing the risk of penalties for minor oversights. This is a welcome change for employees with Employee Stock Ownership Plans (ESOPs) abroad.
10. Standard Deduction Boost in the New Tax Regime
In a move to make the new tax regime more attractive, the standard deduction for salaried employees has been increased from Rs. 50,000 to Rs. 75,000. Additionally, for pensioners, the deduction on family pensions has been increased from Rs. 15,000 to Rs. 25,000. This enhancement is only available under the new tax regime, encouraging more taxpayers to switch.
11. Enhanced Tax Slab Rates for the New Regime
While the old tax regime remains unchanged, Budget 2024 has made the new tax regime more favourable with revised tax slabs. This move aims to provide better options for taxpayers, giving them a clearer choice between the old and new systems.
For detailed breakdowns of the new tax slabs, check out our latest post on the revised income tax structure for FY 2024-25.
12. Automatic Income Tax Calculator for Salaried Persons
To simplify tax calculations for salaried employees, Budget 2024 introduces an Automatic Income Tax Calculator. This Excel-based tool will help individuals determine their taxes under both the old and new tax regimes, offering a hassle-free way to manage finances. It includes features such as automated Form 16 preparation and updated tax slabs.
Conclusion
The Budget 2024 introduces several changes aimed at boosting employment, simplifying taxes, and providing financial benefits across various sectors. These reforms, particularly the capital gains tax updates and the enhanced NPS contribution, will significantly affect personal financial planning. It's important to stay updated and use tools like the automatic tax calculator to optimize your tax management.
FAQs
1. How does the new employment benefit scheme work for first-time employees?
- First-time employees registered with the EPFO will receive a one-month salary in three instalments, capped at Rs. 15,000, as a direct benefit.
2. What are the changes in the capital gains tax under Budget 2024?
- Short-term capital gains tax has been increased to 20%, while long-term capital gains are now taxed at 12.5%. The annual exemption limit has also been raised to Rs. 1.25 lakh.
3. Who benefits from the increased employer NPS contribution?
- Private-sector employees will now receive an employer contribution of up to 14% of their salary towards their NPS accounts, an increase from the previous 10%.
4. What is the NPS Vatsalya scheme?
- NPS Vatsalya allows minors to participate in the National Pension Scheme through contributions from parents or guardians, transitioning into a regular NPS account once they reach adulthood.
5. How can salaried persons calculate their income tax after Budget 2024?
- The automatic income tax calculator introduced in Budget 2024 allows salaried individuals to calculate their taxes under both old and new tax regimes with ease.
- individuals to calculate their taxes under both old and new tax regimes with ease.
Download the Auto Calculate Income Tax Preparation Software (All-in-One) in Excel for salaried employees for the Financial Year 2024-25, as per Budget 2024.
Key features of this Excel utility:
It automatically prepares and calculates your income tax according to the New Section 115 BAC (both New and Old Tax Regime) with the updated tax slabs from Budget 2024.
The tool offers an option to select either the New or Old Tax Regime based on your preference.
It includes a unique salary structure specifically designed for all salaried employees.
For instance, The utility automates the generation of Revised Form 16 (Part A & B) for the financial year 2024-25.
It also provides an automated Revised Form 16 Part B for the financial year 2024-25.
