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
