The Union Budget 2024, presented by the Finance Minister on July 23, 2024, introduced significant tax reforms focused on employment generation, MSME support, and simplification of the tax structure. Key highlights include a revised tax regime with an enhanced standard deduction of Rs.75,000, restructured capital gains taxation with a flat 12.5% LTCG rate across all assets, removal of the indexation benefit, increased LTCG exemption to Rs. 1.25 lakh, and rationalised TDS rates. The budget also addressed GST simplification and compliance reforms.
Direct Tax Reforms
New Tax Regime Changes (Section 115BAC)
The budget restructured the tax slabs under the new regime to provide relief to middle-income taxpayers.
| Income Slab | Previous Rate | Revised Rate (From FY 2024-25) |
| Up to Rs. 3,00,000 | Nil | Nil |
| Rs. 3,00,001 to Rs. 7,00,000 | 5% | 5% |
| Rs. 7,00,001 to Rs. 10,00,000 | 10% | 10% |
| Rs. 10,00,001 to Rs. 12,00,000 | 15% | 15% |
| Rs. 12,00,001 to Rs. 15,00,000 | 20% | 20% |
| Above Rs. 15,00,000 | 30% | 30% |
The standard deduction for salaried employees was increased from Rs. 50,000 to Rs. 75,000 under the new regime. Family pension deduction increased from Rs. 15,000 to Rs. 25,000. These changes result in a maximum tax saving of approximately Rs. 17,500 per year for salaried taxpayers under the new regime.
Capital Gains Tax Overhaul
The budget implemented the most significant capital gains reform since GST, unifying the taxation structure across all asset classes.
| Asset Type | Previous STCG Rate | New STCG Rate | Previous LTCG Rate | New LTCG Rate | Indexation |
| Listed equity shares | 15% | 20% | 10% (above Rs. 1 lakh) | 12.5% (above Rs. 1.25 lakh) | Never available |
| Equity mutual funds | 15% | 20% | 10% (above Rs. 1 lakh) | 12.5% (above Rs. 1.25 lakh) | Never available |
| Debt mutual funds | Slab rate | Slab rate | Slab rate | Slab rate | Removed from FY 2023-24 |
| Immovable property | Slab rate | Slab rate | 20% with indexation | 12.5% without indexation | Removed |
| Gold and jewellery | Slab rate | Slab rate | 20% with indexation | 12.5% without indexation | Removed |
| Unlisted shares | Slab rate | Slab rate | 20% with indexation | 12.5% without indexation | Removed |
The removal of indexation for property is a significant change. Previously, taxpayers could adjust the purchase cost using the Cost Inflation Index (CII), reducing the taxable gain. From July 23, 2024, the actual purchase cost is used without inflation adjustment, but the lower 12.5% rate partially compensates.
Other Direct Tax Changes
Angel tax abolished. Section 56(2)(viib), which imposed tax on share premium received by startups from investors at a value exceeding fair market value, has been abolished for all investor categories. This removes a major compliance burden for the startup ecosystem.
TDS rationalisation. Several TDS rates were reduced or simplified. The TDS rate for e-commerce operators under Section 194-O has been reduced from 1% to 0.1%. TDS on insurance commission under Section 194D has been reduced from 5% to 2%. TDS on rent under Section 194-IB threshold increased from Rs. 50,000 to Rs. 50,000 per month.
Vivad Se Vishwas Scheme 2.0. A new direct tax dispute resolution scheme was announced for settling pending litigation. Taxpayers can settle disputed tax demands by paying the disputed tax amount (with reduced penalties and interest).
Simplified reassessment provisions. The time limit for reopening assessments was streamlined. Beyond 3 years, reassessment can be initiated only with specific approval and when the escaped income is Rs. 50 lakh or more.
Indirect Tax and GST Reforms
| Change | Details | Impact |
| ISD mechanism has been made mandatory | Amendments to Sections 2(61) and 20 of CGST Act | All common input service credits must be routed through ISD from April 2025 |
| GSTR-1A reintroduced | Rule 59 amended to allow GSTR-1 amendments before GSTR-3B | Suppliers can correct invoice errors before they impact GSTR-3B |
| Rule 21(f) amendment | Registration cancellation/suspension trigger | GSTR-1 sales exceeding GSTR-3B declarations may trigger suspension |
| Section 34 amendment | Mandatory ITC reversal on credit notes | Recipients must reverse ITC when suppliers issue credit notes |
| Section 38(1) amendment | GSTR-2B may not be fully auto-generated | “Auto-generated” term removed; IMS integration planned |
Infrastructure and Economic Priorities
The budget allocated Rs. 11.11 lakh crore for capital expenditure (3.4% of GDP), focused on roads, railways, urban development, and defence infrastructure. Key economic priorities included employment-linked incentive schemes (3 new schemes targeting 4.1 crore youth), an MSME credit guarantee scheme (up to Rs. 100 crore in term loans without collateral), skilling programmes targeting 20 lakh youth over 5 years, and agricultural productivity enhancement through digital initiatives and natural farming.
Budget Impact Summary by Taxpayer Category
| Taxpayer | Key Impact | Net Effect |
| Salaried individuals (new regime) | Rs. 75,000 standard deduction; revised slabs | Tax saving up to Rs. 17,500/year |
| Salaried individuals (old regime) | No change in deductions or slabs | Neutral |
| Equity investors | STCG increased to 20%; LTCG exemption raised to Rs. 1.25 lakh | Mixed (higher STCG, but higher exemption) |
| Property sellers | Indexation removed; LTCG at 12.5% flat | Varies (may be positive or negative depending on holding period) |
| Startups | Angel tax abolished | Positive |
| MSMEs | Enhanced credit access; Mudra loan limit increased to Rs.20 lakh | Positive |
| GST taxpayers | ISD mandatory; GSTR-1A reintroduced; IMS planned | Compliance changes required from April 2025 |
Key Terms
• Section 115BAC: The new tax regime provision with lower rates and limited deductions, now featuring an enhanced standard deduction of Rs. 75,000
• Capital Gains Reform: The 2024 budget change unifies LTCG at 12.5% across all assets and removes indexation for non-equity assets
• Angel Tax: The previously levied tax under Section 56(2)(viib) on share premium exceeding fair market value, now abolished for all categories
• Vivad Se Vishwas 2.0: The direct tax dispute resolution scheme announced in Budget 2024 for settling pending litigation with reduced penalties
• Cost Inflation Index (CII): The inflation adjustment index previously used for LTCG computation on property and other assets, no longer applicable from FY 2024-25
Understanding Budget 2024 Impact on Your Taxes?
Evaluate whether the new tax regime changes benefit you and plan your capital gains strategy under the revised rates. Use WFYI tools for tax comparison and compliance planning.
| Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Consult a qualified tax professional for advice specific to your situation. |
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Frequently Asked Questions
Q1: What is the new standard deduction under the 2024 Budget?
The standard deduction for salaried individuals under the new tax regime (Section 115BAC) increased from Rs. 50,000 to Rs. 75,000 from FY 2024-25. The old regime standard deduction remains at Rs. 50,000.
Q2: Has indexation been removed for all assets?
Indexation benefit has been removed for all asset classes from July 23, 2024. LTCG on all assets (including property, gold, and unlisted shares) is now taxed at a flat 12.5% on actual gains without inflation adjustment.
Q3: What is the new STCG rate on listed equity?
STCG on listed equity shares and equity-oriented mutual funds increased from 15% to 20% from July 23, 2024. This applies to shares held for 12 months or less.
Q4: Has angel tax been completely abolished?
Yes. Section 56(2)(viib), which imposed tax on share premium exceeding fair market value, has been abolished for all investor categories, including angel investors, venture capital funds, and other non-resident investors.
Q5: When do the GST changes from Budget 2024 take effect?
The ISD mechanism becomes mandatory from April 1, 2025. GSTR-1A was reintroduced from July 2024. The Invoice Management System (IMS) launched on October 1, 2024.
