Budget 2024, announced by Finance Minister Nirmala Sitharaman on 23 July 2024, brings several changes aimed at boosting the economy and providing relief to taxpayers. Among the various announcements, the most crucial attraction is the revamped New Tax Regime (NTR). Designed to simplify taxation, the NTR introduces higher standard deductions and revised tax slabs, which may allow individuals to save income tax and get financial benefits.

Specifically, the adjustments in Budget 2024 are expected to allow taxpayers to save up to ₹17,500 under the new tax regime. But how? Let’s find out.

Key Changes in the New Tax Regime

Increased Standard Deduction: For employees opting for the new tax regime, the standard deduction has been increased from ₹50,000 to ₹75,000 (under Section 115BAC).

Revised Tax Slabs: The income slabs have been structured as follows to promote tax saving in the new regime:

How the Changes in New Tax Regime Could Save You ₹17,500 Annually?

Suppose a taxpayer earns a little over ₹15,00,000 annually and falls in the 30% tax bracket. Here’s how they can save ₹17,500 every year.

₹3-7 Lakh Income

• Under the previous regime, the tax liability for ₹3 to 6 lakh was ₹15,000
• Now, with the slab extending to ₹7 lakh, the tax liability increases to ₹20,000
• This results in an additional tax of ₹5,000 (5% of ₹1,00,000)

Savings in the ₹10-12 Lakh Income Bracket

• Previously, the tax liability for ₹9 to 12 lakh would come around ₹45,000
• With the new slabs, the tax liability for income between ₹10 to 12 lakh remains at 15%, bringing it to ₹30,000
• The savings here amount to ₹15,000 (₹45,000 – ₹30,000)

Considering both I and II, the overall savings till now are ₹10,000 (₹15,000 – ₹5,000).

Additional Standard Deduction

• The standard deduction increase from ₹50,000 to ₹75,000 means additional savings of ₹25,000
• For someone in the 30% tax bracket, this equates to ₹7,500 saved (30% of ₹25,000)

When you combine the savings from tax slab changes and increased standard deduction, you get ₹10,000 + ₹7,500 = ₹17, 750.

Making the Most of Your Tax Savings with IndusInd Bank Fixed Deposits

As you can see, Budget 2024 has made it possible to save an extra ₹17,500 that you would otherwise have paid as tax. Consider investing this additional cash wisely. IndusInd Bank Fixed Deposits offer a safe avenue to place your savings and earn a high interest rate. Besides predictable and risk-free returns, enjoy additional features like:

• Open a fixed deposit account quickly from anywhere
• A 100% digital process means only your Aadhaar and PAN card details are required
• Save on taxes by booking a five-year tax-saving FD
• Complete video KYC and effortlessly book an FD with a flexible amount
• Decide how often you want to get interest payments (monthly, quarterly, every six months, yearly, etc.)

Also Read: Navigating the Benefits of Auto-Renewal Fixed Deposits

Key Takeaways

Budget 2024 brings substantial relief to taxpayers through revised tax slabs and increased standard deductions under the new tax regime. These changes ensure that taxpayers, especially those in the middle and higher income brackets, can save up to ₹17,500 annually.

As you navigate these changes, adding stable investment options like IndusInd Bank Fixed Deposits could further solidify your financial stability and growth. Benefit from best-in-class interest rates, hassle-free online booking, flexible tenure, and multiple interest payout options. Give your hard-earned money the financial boost it deserves.

Book NOW!

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.

Budget 2024, presented by Finance Minister Nirmala Sitharaman, introduces significant revisions to the capital gains tax structure. Capital gains, which refer to any profit or gain arising from the sale of a ‘capital asset,’ play a crucial role in an investor’s financial planning. The tax adjustments proposed in Budget 2024 could have far-reaching implications for investors across various asset classes. 

Here’s an in-depth look at the new capital gains tax policies, their implications, and the options available to you as an investor.

Budget 2024 | Key Capital Gains Tax Changes Explained

A Uniform Long-Term Capital Gains Tax Rate

One of the most notable changes is the introduction of a uniform Long-Term Capital Gains (LTCGs) tax rate for all financial and non-financial assets. Before Budget 2024, LTCGs on listed shares were taxed at 10%, while other assets like real estate were taxed at 20% (with indexation benefit).

Now, a 12.5% rate will be applied universally, and the indexation benefit for real estate will no longer be available.

Short-Term Capital Gains Tax Hike

Budget 2024 also increases the Short-Term Capital Gains (STCGs) tax rate on the sale of listed equity shares and equity-oriented mutual funds from 15% to 20%.

Adjustments in Holding Periods

Unlisted financial and non-financial assets now require a 24-month holding period to be considered long-term. Listed assets must be held for 12 months to qualify as long-term capital gains. This will apply to:

• Listed stocks
• Listed bonds
• Equity ETFs
• Gold ETFs
• Bond ETFs
• Real estate investment trusts (REITs)
• Infrastructure investment trusts (InvITs)

Share Buyback Taxation

Another important update is the treatment of share buybacks as dividends. Now, the entire buyback proceeds will be taxed as dividends in the hands of shareholders. The cost incurred by the shareholder on shares shall be available as a capital loss for set-off and carry-forward purposes.

Implications of New Tax Norms for Investors

Positive Impacts

Negative Impacts

Want a Low-Risk Investment with Assured Returns and Tax Benefits? Book an FD Now

Budget 2024 changes do not impact Fixed Deposit (FDs). Hence, you can confidently invest in FDs, knowing the returns will be taxed as usual and will remain stable despite any stock market fluctuations. Simply apply for a fixed deposit online, deposit an amount, and choose a tenure. At maturity, get back the principal plus the accrued interest.

Make sure to consider IndusInd Bank Fixed Deposits to enjoy best-in-class interest rates and exclusive features, such as:

• Hassle-free instant FD booking from any location, as the process is 100% digital
• Just your Aadhaar and PAN card details are needed
• Complete video KYC and conveniently book an FD with a flexible amount
• Minimise your tax liabilities by opting for a five-year tax saver fixed deposit
• Decide how you want to receive the interest payouts (monthly, quarterly, half-yearly, annually, etc.)

Also Read: Different Types of Fixed Deposits

Key Takeaways

Budget 2024 introduces crucial changes to India’s capital gains tax structure, with an aim to simplify and rationalise the tax regime. While these changes bring both opportunities and challenges, a well-thought-out investment strategy focusing on long-term gains and diversified assets can help you navigate the new tax norms effectively.

IndusInd Bank Fixed Deposits offer an alternative for those who want a balance of safety, stability, and attractive returns in an evolving tax scenario. With hassle-free online booking, high returns, flexible tenures, and multiple interest payout options, this investment option can be a valuable component of your investment portfolio. Book NOW!

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.

The Indian government has announced the new income tax slabs for the financial year 2024-25 in the recent budget. This update has introduced several changes aimed at simplifying the tax structure and providing relief to taxpayers. Let’s delve into the details of the new tax regime and its implications.

What is an Income Tax Slab?

Income tax slabs in India categorize taxpayers based on their annual income, applying different tax rates to various income levels in a progressive manner. The slabs are defined by the government and are subject to annual revisions in the Union Budget, reflecting economic conditions and policy objectives.

In India, income tax slabs are categorized based on the taxpayer’s age and residential status. There are different slabs for individuals below 60 years, senior citizens (aged 60 to 80 years), and super senior citizens (above 80 years).

Income Tax Slabs under the new regime for FY 2024-25 are as below:

Changes Announced in the New Tax Regime in Budget 2024

The aim of the Union Budget 2024 is the pursuit of ‘Viksit Bharat’. The theme of the Union Budget 2024 is particularly focussed on employment, skilling, MSMEs and middle class.

• The slab rates in the new tax regime have been revised.
• Salaried employees (under the new tax regime) can now save up to ₹17,500 annually in taxes.
• The standard deduction for salaried employees under the new regime is increased from ₹50,000 to ₹75,000.
• The deduction on family pensions for pensioners is increased from ₹15,000 to ₹25,000.
• The government has raised the deduction limit for employers’ contributions to the National Pension System (NPS) from 10% to 14%.
• NPS Vatsalya is a plan for contributions by parents and guardians for minors. Once the minor attains the age of majority, the plan can be converted into a regular NPS account.

Income Tax Regime for FY 2024-25 (AY 2025-26) – Which Option to Choose?

For the fiscal year 2024-25 (Assessment Year 2025-26), the government offers taxpayers the flexibility to choose between two taxation regimes – the new regime and the old regime. This choice is designed to cater to diverse financial situations and preferences, allowing individuals to optimize their tax liabilities.

Under the new tax regime, taxpayers can benefit from lower tax rates. However, this comes with the stipulation that they forgo certain exemptions and deductions traditionally available under the income tax laws. This regime is straightforward and can be advantageous for those who do not have significant investments or expenditures that qualify for tax deductions.

Alternatively, taxpayers can opt to continue with the existing tax regime. This option allows them to claim a variety of exemptions and rebates, albeit at higher tax rates. This traditional approach can be beneficial for those with substantial eligible deductions, such as investments in tax saving FDs, home loan interest, PPF contributions, and other permissible expenses.

In addition to the unveiling of the new income tax slabs for 2024-25 in the Budget 2024, taxpayers can benefit from exploring fixed deposit options offered by IndusInd Bank. With the revised income tax slabs, individuals may seek opportunities to optimize their savings and investments. IndusInd Bank’s Fixed deposit provides customers with an avenue to grow their savings through attractive interest rates and flexible tenure options. Customers can take advantage of the certainty and stability offered by fixed deposits, which can serve as an essential component of their financial planning and wealth management.

Furthermore, the tax implications associated with fixed deposits make them an attractive investment option, especially with the revised income tax slabs. Interest income from fixed deposit is subject to tax, but customers can benefit from utilizing the new tax slabs to potentially minimize their tax liability and maximize their after-tax returns.

Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information. 

Long-Term Capital Gains (LTCG) and Short-Term Capital Gains (STCG) are terms used to describe the profits earned from the sale of assets, such as equities, properties, or other investments. The classification into LTCG vs STCG depends on the holding period of the assets. For equities, if you hold an asset for over a year, the gains you receive on it classy as LTCG. Conversely, if you hold an asset for one year or less, the gains you receive on it fall under STCG.

In the Union Budget 2024, Finance Minister Nirmala Sitharaman announced significant changes in the tax rates for both LTCG and STCG. The tax rate for LTCG has increased from 10% to 12.5% and the tax rate for STCG has increased from 15% to 20%.

Also, the exemption limit on the sale of equity investments has been raised to ₹1.25 lakh from ₹1 lakh for the LTCG. This is a positive change, meaning that up to ₹1.25 lakh long-term capital gains on equity-linked instruments will fetch tax-free returns. However, gains over this limit will attract the LTCG tax of 12.5%.

As an outcome, investors’ strategies might change, potentially leading to a shift towards alternative investment options. Continue reading to understand the potential implications of the rise in capital gains tax.

Impact of the Rise in Capital Gains Tax

The budget has increased the capital gains tax, which may discourage retail investors. This shift is expected to have several implications. Major ones include:

1)       Enhanced Tax Burden

The budget has introduced higher tax rates on both LTCG and STCG. This change means that retail investors will now have to pay more in taxes on the profits they earn from their equity investments, effectively lowering their net returns. This increased tax burden could be especially challenging for investors who depend on their investment gains as a source of income or for future financial planning.

2)       Investment Strategy Shift

Higher capital gains tax may propel investors to reevaluate and potentially alter their investment strategies. They may seek to minimise their tax liabilities by holding onto investments for longer periods to gain the exemption benefit of ₹1.25 lakh or consider diversifying their investment portfolios to include tax-advantaged investment options.

3)       Impact on Investment Volumes

Higher taxes on capital gains may lead to a reduction in investment volumes in the market. Investors may become more cautious and hesitant to engage in frequent market investments, knowing that their gains will be considerably taxed. This fall in market investment activity could affect market liquidity and potentially enhance volatility, as fewer participants may actively buy and sell securities.

4)       Preference for Safe Investments

In response to the higher capital gains tax, retail investors may shift towards more stable and safer investment products like Fixed Deposits (FDs), which offer guaranteed returns and are not subject to capital gains taxes. This shift in preference could lead to a reduced appetite for riskier investments like equities, which offer higher potential returns but come with higher volatility.

While returns from FDs are taxed as per your income tax slab, this might still result in a lower tax burden compared to capital gains tax on equity investments. Also, if you consider tax-saver FDs, then you can reduce your taxable income up to ₹1.5 lakh under Section 80C.

Reasons for Retail Investors to Move to FDs to Save Tax

Retail investors are likely to move to FDs to save on taxes. Here’s why:

1)       Stable Returns

FDs offer assured returns, making them an enticing option amidst market volatility.

2)       Tax Advantages

Five-year tax-saver FDs offer tax-saving benefits under Section 80C of up to ₹1.5 lakh.

3)       Safety

FDs are considered one of the safest investment products with minimal risk because of the backing from Deposit Insurance and Credit Guarantee Corporation (DICGC) up to ₹5 lakh.

4)       Easy to Manage

FDs are easy to open and manage thanks to the digital banking services. For instance, you can book an IndusInd Bank Fixed Deposit 100% digitally. Check out the other benefits offered:

To save taxes under Section 80C, you can also consider availing IndusInd Bank Tax-Saver FDs.

Also Read: Planning for the Future: Achieving Financial Goals with Fixed Deposits

Ending Note

The Union Budget 2024 has introduced significant changes to the capital gains tax structure, impacting both long-term and short-term equity investments. While this may discourage investors, it presents an opportunity to leverage safer investments, like FDs.

IndusInd Bank offers FDs with attractive interest rates, flexible payouts, and straightforward account opening processes, making it a prudent choice for investors seeking financial growth and stability. To save taxes under Section 80C, you can opt for the tax saving fixed deposit that comes with a lock-in period of five years.

Open an IndusInd Bank FD for the utmost security and safety of your investments. Book now!

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.

Budget 2024 has introduced three major changes that make the new, simplified income-tax regime more appealing. Do you know what they are? Finance Minister Nirmala Sitharaman has revised the income tax slabs, increased the family pension deduction to ₹25,000 from ₹15,000, and increased the standard deduction to ₹75,000 from ₹50,000 in the new tax regime.

Salaried individuals may now find the new tax regime more advantageous unless they qualify for deductions up to ₹2 lakh on home loans, up to ₹75,000 on health insurance premiums, up to ₹1.5 lakh under Section 80C investment products, or receive considerable House Rent Allowance (HRA). Without these tax deductions, the old tax regime offers fewer benefits.

In simpler words, the old tax regime may be beneficial to you only if you make certain investments, pay premiums, or pay Equated Monthly Instalments (EMIs) of specific loans like home loans or education loans.

So, to save income tax, you have two routes: either make investments to claim deductions through the old tax regime or make no investments and simply claim the direct standard deductions and other benefits offered by the new tax regime. Continue reading to learn about six prudent ways to save income tax for FY 2024-25.

Go for the Old Tax Regime if You Can Claim Multiple Tax Deductions

The old tax regime is best for individuals who can take benefit of various tax deductions available. These deductions are in the form of investments in the Equity-Linked Savings Scheme (ELSS), Public Provident Fund (PPF), National Pension Scheme (NPS) under Section 80C, HRA, medical expenses under Section 80D, interest on home repayment, leave travel allowances (LTA), education loans (Section 80E), an additional ₹50,000 deduction in NPS under Section 80CCD (1b), and more. Such deductions effectively lower your taxable income, resulting in lower tax outgo.

Go for the New Tax Regime if You have a Lower Income with No Investment Claims

For those who earn less than ₹7 lakh, the new simplified regime offers a rebate, bringing down their tax outgo to zero. Salaried individuals earning up to ₹7.75 lakh will not have to pay any tax under the new regime, thanks to the higher standard deduction of ₹75,000.

In contrast, the tax rebate limit under the old tax regime is lower at ₹5 lakh and the standard deduction is unchanged at ₹50,000.

What are the Ways to Save Income Tax Through Deductions Available in the Old Tax Regime?

Saving income tax can considerably enhance your disposable income and help you invest in your future. Here are some effective strategies to lower your tax liability –

Maximise Section 80C Deductions

Under the old tax regime, you can invest up to ₹1.5 lakh in various instruments like National Savings Certificate (NSC), PPF, ELSS, Tax saver Fixed Deposit (FDs), and term insurance policies to save on taxes.

In case you are looking to invest in five-year tax-saver FDs to avail section 80C benefits, you may consider IndusInd Bank Tax-Saver FDs, which offer enticing interest rates. Other benefits include the option to open an account with a minimum investment of just ₹5,000, an instant and paperless booking process, and high financial stability and safety.

Home Loan Interest Deduction

In the old tax regime, you can avail up to ₹2 lakh on home loan interest as per Section 24 (b). This tax deduction is not available under the new regime, making the old regime beneficial for homeowners.

Health Insurance Premiums

Premiums paid on health insurance for self and family can save you tax as per Section 80D. You can claim up to ₹75,000 deduction on health insurance premium payment. For self, spouse, and dependent children, a deduction of up to ₹25,000 per year is allowed.

For parents (senior citizens – aged 60 and above), an additional ₹25,000 per year deduction can be claimed (₹50,000 in total), for parents (below 60 years of age), up to ₹25,000 per year (covered under your policy).

National Pension Scheme (NPS)

NPS is an excellent way to save for your retirement days while availing tax benefits. NPS allows you to claim an additional deduction of up to ₹50,000 under Section 80 CCD (1B). This benefit is over and above the deduction of ₹1.5 lakh available under Section 80C. By investing in NPS, you can avail extra tax-saving opportunities.

Education Loan Interest Deduction

The interest component paid on education loans can be claimed as a deduction under Section 80E. This deduction has no maximum limit and is available for up to eight years or until the interest is completely repaid, whichever is earlier. This can considerably lower the financial stress of higher education expenses.

Interest Earned on Savings Account

Under Section 80TTA, an interest component of up to ₹10,000 earned from all savings accounts is not taxable. To keep your savings and avail deductions and other benefits, you may consider opting for the Indus Multiplier Max Savings Account by the IndusInd Bank. This account comes with a smart-sweep feature that automatically converts balances over ₹20,000 into FDs, ensuring higher returns. Additional benefits include a 25% locker discount for the first year.

Also Read: Here’s All You Need to Know About the Auto Sweep Facility in Banks

Ending Note

Both the new and old tax regimes offer unique ways to reduce income tax. The choice depends on individual financial standing, and the deductions one can claim. Those looking for good, stable returns and a way to save tax under Section 80C and Section 80TTA through the old tax regime can consider opting for IndusInd Bank tax-saver FD and Indus Multiplier Max Savings Account, respectively.

Parking funds in both financial products may not just reduce tax liability but also help you grow your savings. So, do not wait – open your tax saver FD and savings account with IndusInd Bank and start saving on taxes.

Apply now!

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.