Union Budget 2024: The new Finance Bill, presented in Parliament on Tuesday, brings significant changes to the taxation of long-term capital gains on property, gold, and other unlisted assets. The indexation benefit, which previously allowed taxpayers to adjust prices for inflation when calculating capital gains, is now proposed to be removed. This will ease computation of capital gains for the taxpayer and the tax administration, the bill stated. However, this means that holders of real estate and gold over longer periods, who were entitled to higher indexation benefits, may have to pay more in taxes.Earlier, long-term capital gains on non-financial assets were taxed at 20% with the indexation benefit. Now, from July 23, taxes on long-term capital gains for all financial and non-financial assets will be increased to 12.5%, up from the current 10%.Increased exemption limitsDespite the increase in taxes, the Finance Minister announced that the exemption limit for capital gains on some financial assets will be raised from Rs 1 lakh to Rs 1.25 lakh per year. This adjustment aims to provide some relief to the middle and upper-middle classes.Streamlining customs dutiesIn her seventh consecutive Union Budget, Union Finance Minister Nirmala Sitharaman announced substantial reductions in customs duties on various items, including gold, silver, and platinum. She emphasised the governments ongoing efforts to streamline customs duties. In 2022-23, we reduced the number of customs duty rates. I propose to further rationalize them after a review over the next six months, Sitharaman stated.Sitharaman also reaffirmed the governments commitment to simplifying and rationalizing the GST tax structure to enhance efficiency. As part of this effort, for those choosing the new tax regime, the standard deduction for salaried employees will be increased from Rs 50,000 to Rs 75,000.The proposed changes aim to simplify tax computations and provide some financial relief. The increase in the capital gains exemption limit to Rs 1.25 lakh per year is a notable move to benefit the middle and upper-middle classes. These changes reflect the governments focus on making tax policies more straightforward and beneficial for a broader section of the population.
