Key Income Tax Reforms of 2024: Transforming Personal Finance in India

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Indiaemploymentnews
Sun Dec 22 11:25:42 IST 2024
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The Union Budget 2024-25 introduced significant changes to India’s personal income tax system, focusing on tax simplification, enhancing compliance, and promoting long-term financial planning. These reforms aim to benefit salaried individuals, pensioners, and investors while aligning taxation with India’s evolving economic needs.

Major Income Tax Changes in 2024 1. Revised Tax Slabs
  • Salaried individuals can save up to Rs 17,500 under the new regime, designed to favor middle-income groups.
  • Enhanced disposable income improves financial well-being and consumer spending.
2. Higher Deductions for Salaried and Pensioners
  • Standard deduction under the new regime increased from Rs 50,000 to Rs 75,000.
  • Family pension deduction increased from Rs 15,000 to Rs 25,000
, reducing tax burdens on pensioners. 3. Capital Gains Taxation Reforms
  • Short-Term Capital Gains (STCG): Increased to 20% for specified financial assets, up from 15%.
  • Long-Term Capital Gains (LTCG):
    • Uniform tax rate of 12.5% (without indexation) applied to all financial and non-financial assets.
    • Exemption limit for certain financial assets raised from Rs 1 lakh to Rs 1.25 lakh
annually.
  • Assets held for over 1 year are now classified as long-term, simplifying compliance.
    • 4. Simplified Reassessments
    • Reassessments beyond three years (up to five years) require a minimum escaped income of Rs 50 lakh.
    • In search cases, the reassessment limit reduced from 10 years to 6 years, streamlining the process.
    Unified Pension Scheme: Balancing Flexibility and Security

    The proposed Unified Pension Scheme (UPS)

    combines benefits of the Old Pension Scheme (OPS) and the National Pension System (NPS). This hybrid model ensures financial stability for retirees while managing fiscal responsibilities.

    Changing Role of Insurance and Investments
    • Insurance: No longer just a tax-saving tool, insurance is now promoted as a core risk management strategy.
    • Strategic Investments
    : Greater emphasis on portfolio diversification and sustainable investments to ensure long-term financial security. The Role of Technology in Financial Planning

    Digital tools for budgeting, goal-setting, and investment tracking are gaining traction. However, experts stress the irreplaceable role of human judgment in financial decision-making.

    Summary of Reforms

    The reforms in 2024 focus on:

    • Simplification: Easier compliance for taxpayers.
    • Equity: Fair taxation for all income groups.
    • Long-Term Planning: Incentivizing sustainable financial decisions.

    These measures reflect a transformative shift in India's financial landscape, empowering individuals to prioritize financial security

    and economic growth.

    Disclaimer: Always consult certified tax professionals for personalized advice.

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