Yesterday, Finance Minister Nirmala Sitharaman presented the actual budget of India for FY 2024-25.
Unless you kept your internet off the entire day, I don't need to tell you that there were many hits and misses. This article aims to lay out all the changes made to various taxes and some schemes aimed at reviving employment in the country. (Not the freebies!)
First up, The Good (lots of points, little benefit):
1. The capital gain limit has been increased from INR 1 lakh to INR 1.25 lakh.
2. Angel tax has been abolished. This means there will be no tax on funding received by startups from angel investors.
3. Customs duty on silver and platinum has been reduced to 6% and 6.4%, respectively.
4. The government also announced that one month's salary for new employees earning between INR 1 lakh and INR 15,000 will be deposited directly into their PF account.
5. There is another scheme where 1 crore youths will receive paid internships over the next five years with a stipend of INR 5,000.
6. Corporate tax for foreign companies has been reduced from 40% to 35%.
7. A massive investment of INR 10 lakh crore will be made to support housing, aimed at helping 1 crore urban poor and middle-class families.
8. The standard deduction for the new tax regime is raised from INR 50,000 to INR 75,000, along with some changes to tax rates and slabs, which according to the Finance Minister, will help an average salaried individual save a whopping INR 17,500. (Already thinking about what I am going to do with this kind of money!)
Now onto The Bad (this is going to be interesting!):
1. Changes in the capital gains tax:
- The short-term capital gains tax has increased from 15% to 20%.
- The long-term capital gains tax has increased from 10% to 12.5%.
2. The security transaction tax (STT) on options has increased from 0.062% to 0.1%, and on futures from 0.0125% to 0.02%.
3. Buyback tax is now levied on the recipients. This means that when you sell your shares to the company in a buyback offer, the value you receive in exchange for those shares is now taxable according to your tax slab. Earlier, shareholders used to save as much as 12% compared to dividends.
Conclusion
In the introduction of the budget, there are nine themes laid out, namely:
1. Productivity and resilience in Agriculture
2. Employment & Skilling
3. Inclusive Human Resource Development and Social Justice
4. Manufacturing & Services
5. Urban Development
6. Energy Security
7. Infrastructure
8. Innovation, Research & Development
9. Next Generation Reforms
It also mentioned how the global economy is performing better than expected but is still in the grip of policy uncertainties.
In this context, India’s inflation continues to be low, stable, and moving towards the 4% target. Core inflation (non-food, non-fuel) is currently 3.1%.
And hey, I get that India's economy is growing, which is a good thing for all of us, but at what cost?
Sure, farmers are now able to feed their families due to various schemes, and there has been infrastructure development in the northeastern states, which will uplift the entire region due to its connectivity with the rest of India, and I am all for it. In fact, that is wonderful, but...
The cost of all this is being borne by commoners like you and me. I know the Finance Minister tried to provide some relief by increasing the standard deduction to INR 75,000, but is that enough?
Just look at this statement by political analyst Amitabh Tiwari, a former investment banker, who told IndiaToday.in, "Tax on income, which is paid by 2% of India's population, is more than corporate tax."
And that is not even considering the indirect tax (GST) paid on consumption.
All in all, if this goes on, there will be a tipping point where personal tax won't be sufficient to fuel the country's growth, and the outlook of that is not looking good.
What do you think?
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