Vinod, who is deeply passionate about painting, has created and gifted portraits to actors.

There is no decision yet on when the old tax regime will be scrapped, Finance Minister Nirmala Sitharaman said Tuesday afternoon, after presenting the 2024 Union Budget in Parliament.

“Can’t take a call on whether the old tax regime will be done away with… can only say the intention is to make the tax regime simpler,” she said. “Can’t say if there will be a sunset on the old regime.”

#BudgetWithNDTV | “Our intention is – simpler tax regime. Cannot say whether there will be a sunset on the Old Tax Regime. Decision after a review”: Finance Minister #NirmalaSitharaman on #Budget2024 pic.twitter.com/jlA6VkGiWt

— NDTV (@ndtv) July 23, 2024

Earlier today the Finance Minister announced tweaks to the new regime, including raising standard deduction from Rs 50,000 to Rs 75,000, and widening the slabs (without changing the tax rates).

#BudgetWithNDTV: New Tax Regime Slabs Changed, Standard Deduction Up From ₹50,000 To ₹75,000 https://t.co/vNNovXN942#BudgetSession #Budget2024 #NirmalaSitharaman #IncomeTax pic.twitter.com/qtNvNJp7zT

— NDTV (@ndtv) July 23, 2024

These revisions, she said, would allow salaried taxpayers to save as much as Rs 17,500 annually.

READ | New Tax Regime Slabs Changed, Standard Deduction At Rs 75,000

There were no changes announced for the old regime.

The new regime was introduced in 2020 and was made the default in last year’s budget.

The old regime provides several deductions and exemptions for individuals, including house rent and leave travel allowances, as well as deductions under Sections 80C, 80D, 80CCD(1b) and 80CCD(2).

However, these exemptions and deductions are not available in the new tax regime.

Essentially, the new regime has lower tax rates but fewer deductions and exemptions.

The older one has higher tax rates but allows various deductions to reduce taxable income.

The older one provide several basic income exemption limits depending on the taxpayer’s age.

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Finance minister has announved latest updates on New Tax regime and extended exemption limit by 1.25 lac. People have opted for New Tax regime in their company as default option if they have not explicitly made choice for old tax regime(PPF and HRA exemptions allowed). Above image only compares new tax regimes with and without updates and not to be confused as comparison with “old tax regime” which has many exemptions.

New Tax Regime Update:
Therefore people who have opted for New tax regim already will get additional tax exemption. Standard deducation has been raised from 50k to 75k and tax slabs has been adjusted such that upto 7 lacs no tax.

Cause of Confusion:
Many online sources are comparing new tax regime update as old vs new tax regime but in reality there is separate old tax regim that exists where PF and HRA and House loan interest are considered.

Additional Key Changes :
a) Indexation Benefits has been removed completely on sales of residential property or agricultural property.
b) Long term capital gains has been made flat at 12.5% from 20%
c) Short term capital gains in any stocks or derivatives holding less than 12 months are increased to 20% from 15%
d) Profit Realizaion of Long term cpaital gains without tax has been increased from 1 lac to 1.25 lac per year.
e) F&O Traders are penalized further with doubling STT tax, increased by 100% to discourage F&O activities which has multi folded in last five years.
f) Tax on gold imports adjusted such that gold price has been dropped by 3% across oline and offline

Observation:
Govt could not strike the feel good factor of first budget and now it will face sharp criticism from all the corners. In reality they brought feel good factor for actual middle class tax payers but that was completely eroded by F&O traders disappointment who are largely middle class. Tinkering to Indexation rules will further create disappointment among middle class who are about to sell property for non investment purpose.

Author : Sumanth