Income tax changes in 2024: Key reforms that will redefine personal finance in India – News18

Income Tax Changes in 2024: Budget 2024 also introduced several measures to benefit salaried employees and pensioners.

Tax changes in 2024: As the year draws to a close, there are significant changes in India’s financial landscape, particularly in income tax reforms and personal finance strategies. Changes have been seen. The Union Budget 2024-25 has also introduced effective changes in the Personal Income Tax framework, aimed at simplifying the tax system, improving compliance. To create and promote economic development. Highlights include updated tax slabs, higher deductions for salaried individuals and pensioners, and significant reforms in capital gains taxation. are

Krishna Mishra, CEO, Financial Planning Standards Board, India (FPSB India) highlighted some highlights. Changes in 2024 Contributes to creating a more responsible and informed approach to financial planning among Indians.

Unified Pension Scheme: Balancing Security and Flexibility

One of the prominent debates this year is the Unified Pension Scheme (UPS), an innovative model that combines the security of the Old Pension Scheme (OPS) with the flexibility of the National Pension System (NPS). This hybrid solution aims to provide financial stability to retirees while reducing financial pressure on the government. However, its success depends on meeting the logistical and political challenges that accompany such ambitious reforms.

Tax reform: Simplicity and long-term focus

The 2024 tax reforms introduced significant changes, particularly in capital gains taxation. The long-term capital gains (LTCG) tax rate has been increased from 10% to 12.5%, and the short-term capital gains (STCG) tax has been adjusted to 20% for selected financial assets. While these increases have raised concerns, a significant reclassification—assets held for more than a year as long-term—encourages continued investment.

“These measures not only facilitate compliance but also promote long-term financial planning, which is critical for individual wealth growth and the economy at large,” Mishra said.

The Evolving Role of Insurance and Strategic Investments

Another major reform is the changing perception of insurance. No longer viewed simply as a tax saving tool, insurance is increasingly recognized as a fundamental risk management tool. This change discourages unethical tax avoidance practices and promotes more responsible financial decisions.

Additionally, the government has emphasized the importance of strategic investments and portfolio diversification, which guide individuals towards a secure financial future. This approach is consistent with the growing demand for sustainable financial planning that balances profitability with social and environmental considerations.

The role of technology in financial planning

Technology continues to revolutionize personal finance in 2024, with tools for budgeting, investment tracking and goal setting becoming more accessible. Yet, as Mishra notes, human understanding and emotional intelligence remain immutable.

“Technology serves as an enabler, not a substitute, for financial advice and decision-making. Learning to adapt to these tools is key to staying relevant in an evolving financial landscape,” asserts Mishra.

A year of fiscal responsibility and innovation

2024 reforms and trends lay a strong foundation for personal finance, combining innovation with a renewed focus on responsibility. Indians are now better equipped to make informed financial choices, prioritizing long-term security over short-term gains.

Union Budget 2024-25

Personal Income Tax: Key Highlights of Income Tax Changes in Union Budget 2024

Revised Tax Slabs

The new tax regime now offers substantial benefits to salaried employees, saving up to Rs 17,500 in income tax. These changes are aimed at making the tax system more favorable to middle-income earners, reducing financial burdens and encouraging compliance.

Additionally, the revised structure increases disposable income for salaried individuals and pensioners, contributing to overall economic well-being.

Ease of reassessment

To reduce tax disputes, the government has simplified the rules for revaluation:

• Assessments can now be reopened after three years (up to five years) only if the escaped income exceeds Rs 50 lakh.
• In cases of search, the reassessment period has been reduced to six years from 10 years prior to the year of search.

Better discounts and rebates

The budget introduced several measures to benefit salaried employees and pensioners:

• Under the new tax regime, the standard deduction has increased from Rs 50,000 to Rs 75,000.
• Pensioners can now claim a higher deduction on family pension, which has been increased from Rs 15,000 to Rs 25,000.

Capital Gains Taxation Reforms

Short term capital gains

• Short-term capital gains on certain financial assets are now taxed at 20% instead of the earlier rate of 15%.
• Other financial and non-financial assets will continue to be taxed at their applicable rates, ensuring consistency.

Long term capital gains

• A uniform tax rate of 12.5% ​​(without indexation) has been introduced for long-term capital gains on all financial and non-financial assets, replacing the earlier rate of 20% with indexation (Section 112). is
• The exemption limit for capital gains on certain financial assets has been increased from Rs 1 lakh to Rs 1.25 lakh per annum, which will benefit low and middle income taxpayers.

gave Income tax Act, 1961, the cornerstone of India’s direct tax system, was also reviewed by the government as part of efforts to modernize tax laws and bring them in line with the country’s changing economic landscape. is going The review seeks to simplify compliance, remove ambiguity, and ensure a more transparent taxation framework.

As the nation looks ahead to 2025, the spotlight will be on sustainable financial planning, responsible investing, and insurance as a risk management tool. These developments mark a shift towards a financially secure future for individuals and the economy.