Key Features of New Tax regime

The 2024 budget has introduced several significant tax reforms:

New Tax Slabs 📊

• 0-3 lakh: Nil
• 3-7 lakh: 5%
• 7-10 lakh: 10%
• 10-12 lakh: 15%
• 12-15 lakh: 20%
• Above 15 lakh: 30%

Standard Deduction for Salaried Employees 💼

While the standard deduction has been raised from ₹50,000 to ₹75,000, critics argue that this modest increase falls short of addressing the rising cost of living. The adjustment may not be sufficient to significantly alleviate the financial pressures faced by salaried individuals.

Family Pension Deduction 📈

The budget has also increased the limit for employer contributions to pension schemes under Section 80CCD(2) from 10% to 14% of salary plus Dearness Allowance (DA). Critics argue that while this increase appears beneficial on the surface, it may not fully address the broader concerns of retirement planning and pension adequacy.

Short-Term Capital Gains Tax Rate 🧾

The decision to tax short-term capital gains at 20% is drawing criticism from investors. This higher rate could potentially discourage investment in financial markets and impact liquidity, contrary to the goal of fostering economic growth.

Long-Term Capital Gains Tax Exemption Limit 📉

With long-term capital gains taxed at 12.5% and an exemption limit of ₹1.25 lakh for financial assets, there are concerns that this change may not provide adequate relief to long-term investors. Critics argue that the exemption limit is too low to make a meaningful difference in reducing tax liabilities.

Abolition of Angel Tax 🚫

The Income Tax Act of 1961's Section 56(2) discusses the concept of angel tax. According to the Finance Act, 2012, in the IT Act, every startup (i.e., unlisted companies whose shares are not available for buying on the stock market) that receives funding from an angel investor must pay a certain angel tax to the government.

The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, proposed to abolish the ‘angel tax’ for all classes of investors while presenting the Union Budget 2024-25 in Parliament.

The abolition of Angel Tax for all investors has been met with mixed reactions. While intended to encourage investment, some argue that this move could lead to regulatory challenges and an increase in speculative investments, potentially destabilizing the investment world.

Foreign Corporate Tax Rate 🌍

The reduction of the foreign corporate tax rate from 40% to 35% raises concerns about the impact on domestic tax revenues. Critics worry that this cut could erode the tax base and disadvantage local businesses competing with foreign corporations.

Overall, while the 2024 budget aims to introduce tax reforms, these changes have sparked debate and raised concerns about their efficacy and impact on various segments of the economy.

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