Business News: Budget 2024: Tax Changes, EPFO Incentives, and Investment Policy Updates

The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman before the Parliament, provides a huge tax relief to the working class by altering income tax slabs, thus lessening the burden on people earning between Rs 10 lakh and Rs 50 lakh. Taxpayers in this slab could save up to Rs 18,200 annually with adjustments in standard deductions and reduced cess. Higher incomes are also notable for savings: Rs 20,020 for Rs 50 lakh to Rs 1 crore, Rs 20,930 for Rs 1 crore to Rs 2 crore, and Rs 22,750 for Rs 2 crore to Rs 5 crore. Now, income up to Rs 7.75 lakh is tax-exempt.

In Budget 2024-25, Finance Minister Nirmala Sitharaman has proposed to bring down the LTCG tax rate in case of sale of property to 12.5 per cent from 20 per cent but removed the indexation benefit available till now. While recent purchasers, or those who acquired at low acquisition costs, will benefit from the lower tax liability, the long-term owners may end up paying more in taxes now, as the alleviation by adjusting the acquisition price for its inflation gets cancelled. Again, how much gain one makes differs from person to person. While those recent purchasers would benefit greatly, others with older properties could quite lose out at the removal of indexation.

On July 23, the government announced three schemes under the Employment Linked Incentive, with a total allocation of Rs 1.07 lakh crore through the EPFO. The three schemes were for boosting formal sector employment and assisting employers and employees. Scheme-A provides for one-month wages up to Rs 15,000 for first-time employees. Scheme-B gives incentives on additional jobs in the manufacturing sector, while Scheme-C would reimburse up to Rs 3,000 per month to employers for every new employee. These initiatives, it is expected, would benefit millions of job seekers and employers, thereby incentivizing formal hiring.

It's now time that India is reportedly ready to relax restrictions on Chinese investments into non-sensitive sectors of the economy, including industries manufacturing solar panels and making batteries—sectors crucial to domestic production but so far hindered by a lack of expertise. Such a step will be instrumental in easing the economic tensions between India and China that have been strained by the military tensions since 2020. The relaxation of rules is not likely to allow investments in such areas as electronics and telecommunication, but this will definitely become a big step toward more amicable economic relations. The office of the prime minister and the relevant ministries remained tight-lipped over the matter.

Bihar Chief Minister Nitish Kumar's pre-Budget 2024 hints about forthcoming developments have been proved correct with major announcements in the budget. Giving major projects to Bihar, Finance Minister Nirmala Sitharaman announced expressways—Patna-Purnia and Buxar-Bhagalpur—the Pirpainti Rs 21,400 crore power project, and investments in tourism and cultural infrastructure. Provisions crossed Rs 58,000 crore; money has been provided for roads, power, management of floods, and much else. This strong allocation is a strategic investment for Bihar, does hint at special status, reflecting Kumar's great foresight.

IDBI Bank shares surged over 11% on reports that vetting by RBI on probable bidders was getting complete, according to Tuhin Kanta Pandey, Secretary of DIPAM. The Centre and LIC, who own 45.48% and 49.24%, respectively, are going to sell a combined 60.7% of their holding. Bidders would have to meet the Reserve Bank of India's threshold of 'fit and proper,' besides having a net worth of ₹ 22,500 crore and net profits in at least three of the past five years. The IDBI stake sale forms part of the Centre's ₹ 51,000 crore monetisation target for 2023-24.

According to a study by Sebi, 70% of individual intraday traders in the cash segment suffered losses in FY 2022-23. The number of such traders rose 300% from FY 2019 to FY 2023; young traders below 30 comprised 48% of the total, though 76% of them suffered losses. The loss-making traders spent 57% of their losses on trading costs, while the profitmakers spent 19%. The study was based on data from top-10 stock brokers, underlining significant trading losses and costing.

The Union Budget 2024-25 raised taxes on short-term and long-term capital gains for equity-oriented funds. STCG tax on equity mutual funds will rise from the prevailing 15 per cent to 20 per cent, and LTCG tax goes up from 10 per cent to 12.5 per cent. But the exemption limit of LTCG will go up to Rs 1.25 lakh now. Therefore, on a Rs 50,000 SIP for 60 months, now, the capital gains tax is Rs 94,095 as against Rs 77,456 earlier. Though taxes are more, it would seem equity funds remain attractive with SIP investments crossing Rs 20,000 crore in Apr 2024.