There have been a lot of positive expectations from this Budget. But, while the overall Budget might be positive for the Nation’s growth and prosperity, it has left investors in a mental agony.
This budget didn’t only increase the tax on the Short Term Capital Gains but also on the Long Term Capital Gains (LTCG) from 10% to 12.5%.
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Here are some first reactions from some of the money managers who handle finances of affluent families.
Prashant Mishra, Founder, Agnam Advisors
Union Budget 2024 presents a balanced approach that focuses on simplifying the tax structure. While the tax percentage is increased, standardising the holding period for STCG to 24 months for non-listed equity assets will help investors plan their long-term strategic investments and aid in better investment planning.
A predictable tax environment is crucial for sustaining long-term growth and maximising returns. The abolition of the Angel Tax is a welcome move towards start-up growth and innovation. It will provide new opportunities for venture and PE investments.
Rahul Jain, President and Head, Nuvama Wealth
The Union Budget for 2024 has been presented. Two notable positive changes have been made to the personal income tax in the new regime. Firstly, the standard deduction has been increased by 50% to ₹75,000. Secondly, three income slabs have been revised as follows:
Current Slabs |
Rate |
Revised Slabs |
Rate |
Upto ₹3 lakh |
Nil |
Up to ₹3 lakh |
Nil |
₹3 lakh – ₹6 lakh |
5% |
₹3 lakh – ₹7 lakh |
5% |
₹6 lakh – ₹9 lakh |
10% |
₹7 lakh – ₹10 lakh |
10% |
₹9 lakh – ₹12 lakh |
15% |
₹10 lakh – ₹12 lakh |
15% |
₹12 lakh to ₹15 lakh |
20% |
₹12 lakh to ₹15 lakh |
20% |
Above ₹15 lakh |
30% |
Above ₹15 lakh |
30% |
Both changes will reduce the tax liability for those who choose the new regime, with savings potentially reaching up to ₹17,500, as mentioned in the budget speech. More money in the hands of individuals will help boost personal consumption, which has slowed down.
However, the tax liability will be higher on the capital gains side. The short-term capital gain tax on listed financial assets has increased from 15% to 20%. Similarly, the long-term capital gain tax on listed financial assets has been raised from 10% to 12.50%.
At the same time, the exemption limit on long-term capital gains has been raised from ₹1 lakh to ₹1.25 lakh. While this change may impact the sentiments negatively in the short term, it will encourage investors to take a long-term view of investments, especially in equity.
Dr Mukesh Jindal, Alpha Capital
The Union Budget 2024 has been a mix of fiscal prudence and strategic spending, with the government tightening its purse strings on capital gain taxes while boosting capital expenditure for infrastructure.
Despite this, the unchanged allocations for critical sectors like education and healthcare have left many hoping for more, as these are key to the nation’s long-term growth and well-being. Essentially, the budget has been cautious with its resources, aiming for economic stability but at the cost of potential investments in the social fabric of India.
Swetha Kochar, Founder & Partner, PKC Management Consulting
Budget 2024 has focused on simplification – a big relief on reassessment and reopening of returns filed for earlier years which has been reduced to 6 years as opposed to 10 years earlier, including in search cases. Although LTCG on shares has been increased from 10% to 12.5%, the period for non-financial assets to qualify as LTCG is brought down to 2 years.
Similarly, lowering of LTCG rate on sale of land/gold & some other assets to 12.5% in place of 20% is beneficial even though indexation is removed – overall will benefit most taxpayers. Sunset clauses for 15% manufacturing companies have not been extended. Overall, big push on agriculture and employment.
Alekh Yadav, Head of Investment Products, Sanctum Wealth
The Union Budget of 2024 addresses key concerns evident in this year’s general elections. It focuses on employment, skilling, MSMEs, and the middle class. The government introduces measures to incentivize job creation and enhance skilling programs. Additionally, it implements incremental personal income tax rationalisation and urban development initiatives aimed at benefiting the middle class.
Fiscal prudence is maintained with lower fiscal deficit and gross borrowing compared to the interim budget, which is viewed positively in fixed income markets.
Capital expenditure (capex) remains unchanged from the interim budget.
As anticipated, the budget includes incentives for coalition partners, with specific measures for Bihar and Andhra Pradesh.
Rationalising capital gains tax is another key theme, affecting different asset classes differently. If the indexation benefits for real estate investments have been removed it could significantly impact home sellers.
The increase in capital gains tax for equity markets and increase in STT on F&O has been met with negative market reactions.
Padmaja Choudhury is a freelance financial content writer. With around six years of total experience, mutual funds and personal finance are her focus areas.
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