income tax slabs india Archives

Finance Minister Smt. Nirmala Sitharaman presented the Union Budget for the financial year 2024-25 in Parliament on July 23, 2024. Let us take a look at some of the key highlights from the Budget presentation.

The 9 priorities of the budget are:

1. Agriculture Transformation:

The Indian govt aims to transform agricultural research and productivity. It will support the public and private sectors by introducing 109 high-yielding crop varieties and 32 new releases of horticulture. One crore farmers will be encouraged to take up natural farming based on certification and branding. There’s a proposal to establish 10,000 bio-input centers to create a national-level micro-fertilizer and pesticide manufacturing network. There will also be efforts to increase the production, storage, and marketing of oilseeds like mustard, sesame, soybean, and sunflower.

Besides this, 400 districts and six crore farmers will be added to land registries, while Kisan Credit Cards will be enabled in five states. Shrimp production and exports will be increased under NABARD’s national cooperation policy.

The Centre will allocate ₹1.52 lakh crore to the agriculture and allied sectors.

Do look out for the stocks in the agriculture sector: UPL, Coromandel International, Rallis India, Avanti Feeds, Kaveri Seed Co, PI Industries, and Bayer CropScience.

2. Employment and Skilling

To meet the challenges on the employment front, the government has introduced three schemes:

1. All first-time entries into jobs in every formal sector will be paid one month’s wages in advance— up to ₹ 15,000, subject to a total of 2.1 crore youth (Scheme A).

2. Incentives will be provided directly to both employees and employers on a specified scale for their EPFO contribution in the first 4 years of employment. (Scheme B).

3. The government will reimburse EPFO contributions of employers up to ₹3000 per month for 2 years for all new hires. – Expected to generate 50 lakh jobs (Scheme C).

Measures that attempt to increase female workforce participation include the establishment of women’s hostels and specific programs for skilling. Over the next five years, 20 lakh youth will be skilled, with 1,000 training institutes upgraded. New courses will cater to emerging sectors, and loans up to ₹7.5 lakh will support 25,000 students annually.

3. Human Justice and Regional Development

Development initiatives have been planned under the Purvodiya program, with a focused attention on the eastern states like Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh. An investment of ₹26,000 crore in roadways and ₹21,400 crore in power projects will provide better connectivity through infrastructure projects. New airports and medical colleges will be established in Bihar. The govt will support the Polavaram irrigation project in Andhra Pradesh to ensure food security.

4. Manufacturing and Services

The govt has proposed to give special attention to Micro, Small & Medium Enterprises (MSMEs) through a ₹100 crore credit guarantee scheme, a new way of judging credit, and enhanced Mudra loans of up to ₹20 lakhs for those having repaid their loans earlier. An internship scheme associated with the PM package will offer one crore youth the opportunity to work in top companies for five years, with a stipend amount of ₹5,000 per month.

Under the PPP (Public-Private Partnership) mode, rental housing schemes shall be developed for industrial workers. The shipping industry will benefit from the Critical Mineral Mission aligned with technology and skill in manpower development.

5. Urban Development

Growth in urban areas will be driven by developing cities as hubs with transit-oriented plans in 14 large cities. Housing needs for one crore members will be addressed with a ₹10 lakh crore investment. This is accompanied by initiatives for transparent rental markets and improved water supply & sanitation across 100 cities through bankable projects.

6. Energy Security

The PM Surya Ghar Muft Bijli Yojana will promote rooftop solar installations for one crore households. The govt has proposed to speed up policy implementation for pumped storage, nuclear R&D, and advanced thermal power plants. The govt will scale up energy audits in industrial clusters. A joint venture between NTPC and BHEL will set up a full-scale 800-megawatt (MW) commercial plant.

Top energy-related stocks may include NTPC, SJVN, NHPC, Tata Power, Adani Green Energy, Adani Power, Bharat Petroleum, Indian Oil Corporation, ONGC, and JSW Energy.

7. Infrastructure

The Centre will spend ₹11.11 lakh crore on infrastructure in the next five years (which accounts for 3.4% of our GDP.) The state resource support for infra allocation is coming to a total of ₹1.5 lakh crore, including the 4th phase of Gram Sadak Yojana to improve rural connectivity. The Centre will launch Phase IV of Pradhan Mantri Gram Sadak Yojana (PMGSY) to provide all-weather connectivity to 25,000 rural habitations.

Projects at Vishnupad and Mahabodhi temples in Bihar and Nalanda will boost tourism. Financial support for projects with an estimated cost of ₹11,500 crore such as the Kosi-Mechi intra-state link and 20 other ongoing and new schemes will be provided. The govt will provide assistance for flood management and related projects in Assam, Sikkim & Uttarakhand and reconstruction and rehabilitation in Himachal Pradesh.

These are a few stocks to look out for in the Infrastructure sector: NBCC, HFCL, IRB Infra, PNC Infra, KNR Construction, PNC Infratech, RITES, Ahluwalia Contracts, and Larsen & Toubro Ltd.

8. Innovation and R&D

This priority includes a National Research Fund with a funding pool of ₹1 lakh crore to incentivize innovation and a Space Economy Venture Capital Fund of ₹1,000 crore. The Central Govt will operationalise the Anusandhan National Research Fund to support basic research and prototype development.

9. Reforms for the Next Generation

The govt aims to introduce a new Economic Policy Framework to guide reforms focused on improving employment opportunities and sustaining high growth. This framework will boost productivity across land, labour, capital, and entrepreneurship by leveraging technology and collaboration between the Centre and states. The Centre will work on land-related reforms such as assigning Unique Land Parcel Identification Numbers (ULPIN) and digitising maps for rural areas. Urban areas will see digitisation of land records with GIS mapping. Meanwhile, the Jan Vishvas Bill 2.0 will emphasise digitisation and ease of doing business.

What are the Updates on GST?

Medicine and Medical Equipment: GST rate cut for three more cancer medicines.
X-Ray Tubes: Revision in Basic Customs Duty (BCD) on certain items to help ‘Healthcare’.
Critical Minerals Reduction in Customs Duty on 25 minerals to make them more easily available for Medical use.
Marine Products, Leather and Textile BCD on real down filling materials from duck or goose reduced to aid these industries.
Precious Metals BCD on gold and silver reduced to 6% and platinum to 6.4% making them cheaper
Oxygen-Free Copper Abolition of BCD on Oxygen-Free Copper used in the manufacture of resistors and connectors to increase capacity.
Ammonium Nitrate: Hiked from 7.5% to 10% to control usage.
Plastics and PVC: Increased BCD to control environmental pollution.
Telecom Equipments: Increased BCD from 10% to 15% on certain items to encourage domestic manufacturing.

Direct Tax Reforms in Union Budget 2024-25 & Other Updates

Standard Deduction for salaried employees: Increased from ₹50,000 to ₹75,000.
[Standard deduction is a fixed amount of money that salaried individuals can subtract from their total income before calculating their taxes.]
Family Pension Deduction: Increased from ₹15,000 to ₹25,000.
Mutual Funds and Unit Trust of India (UTI): Abolished tax deducted at source (TDS) to attract investors.
Angel Tax: Abolished for all classes of investors to foster the growth of startups.
The Centre has proposed to remove the indexation benefit available for calculating any long-term capital gains (LTCG) presently available for property, gold and other unlisted assets (this will severely impact people who have invested in such assets as to sell during retirement). Meanwhile, the LTCG tax on immovable properties will fall from 20% to 12.5%. – Effective from July 23, 2024.

[Indexation adjusts the purchase price of an asset to adjust for inflation, thus reducing the gains and ultimately tax liability.]

Revised Tax Slabs – New Tax Regime

Income Range	Rate of Tax
Up to ₹3 lakh per annum	Nil
₹3 lakh to ₹7 lakh per annum	5%
₹7 lakh to ₹10 lakh per annum	10%
₹10 lakh to ₹12 lakh per annum	15%
₹12 lakh to ₹15 lakh per annum	20%
Above ₹15 lakh	30%

With the new tax slabs, salaried taxpayers can now save up to ₹17,500.

Revised Tax Rates for Stock Market Participants

1. Capital Gains Tax

Short-Term Capital Gains (STCG): The tax rate has been increased from 15% to 20%.
Long-Term Capital Gains (LTCG): The tax rate has been revised from 10% to 12.5%. The exemption limit of LTCG now stands at ₹1.25 lakh per annum.

2. Securities Transaction Tax (STT)

With effect from Oct 1, STT on the sale of options will be increased from 0.0625% to 0.01% of the option premium.
STT on sale of futures futures will go up from 0.0125% to 0.02% of the price at which such futures are traded.

The Way Ahead

The Union Budget 2024-25 outlines strategies to boost India’s economic growth across key sectors. It focuses on agriculture, employment, infrastructure, and innovation to create a resilient and inclusive economy. Key initiatives include agricultural transformation, employment schemes, regional development (especially in eastern states), MSME support, urban development, and energy security measures. These efforts, along with investments in skilling and innovation, reinforce the ‘Make in India’ initiative and promote sustainable growth.

Tax reforms, GST updates, and new policies aim to improve the business environment. While the plans are ambitious, their effective implementation will be crucial in shaping India’s economic future, driving growth, creating jobs, and enhancing societal well-being in the coming years.

Now let’s look forward to seeing how these strategic plans are implemented!

Disclaimer: The stocks mentioned in the article are solely for educational purposes. Please do your own research before investing.

Updated: Feb 3, 2025

Before investing or trading in stock markets, we must clearly understand the risks involved and be aware of the charges or expenses we may incur. Many of you would still be unaware of how income or profits received from the sale of shares are taxed. Let us learn in-depth about the income tax structure that is applicable to stock market investors and traders in India.

When you buy and hold shares of a listed company, you become a part-owner of the firm (even though it is a very tiny fraction). These stocks will be referred to as your capital asset. When you hold these shares for more than a year, it is known as a long-term capital asset. If you purchase shares and sell them within 12 months, it is known as a short-term capital asset.

When equity shares are sold within 12 months of purchasing, the seller may obtain a short-term capital gain or incur a short-term capital loss. Similarly, when equity shares listed on a stock exchange are sold after a year of purchasing, the seller may obtain a long-term capital gain or incur a long-term capital loss.

How are Gains from Equity Shares Taxed?

Long-term capital gain (LTCG) on the sale of equity shares is not taxable up to a limit of Rs 1 lakh. If the long-term capital gain received on selling shares or units of mutual funds exceeds Rs 1 lakh, you will attract a flat tax rate of 12.5%.

Short-term capital gains (STCG) that you receive from selling shares are taxable at a flat rate of 20%. This is a special tax rate that is levied irrespective of your tax slab. [This may be applicable to swing traders, who buy and hold shares for a few weeks or months]

Taxation on Intraday Traders

According to rules specified by the Income Tax Department, the profit or gain received from intraday trading is considered speculative income. While filing your income tax return, intraday income comes under ‘business income’ that you have received during the year.

Now, imagine that you own a business. At the end of a particular financial year, you have received a total income of Rs 15 lakh from it. You have also received a profit of Rs 5 lakh from intraday trading during the same period. Thus, the total business income for that financial year will be Rs 20 lakh, and income tax will be levied based on the applicable income tax slab. Since intraday profit is considered as a business income, you can claim expenses while filing income tax return. These expenses could be brokerage charges, broadband charges, purchase of personal computers or laptops for trading, etc. Claiming such expenses will help lower the amount on which you need to pay income tax.

Taxation on Derivative Traders

Let us look at how income tax is levied on profits obtained from Futures and Options (F&O) trading. The profits received from F&O trading are also classified as business income (known as non-speculative income). The taxation on derivative traders is similar to that of intraday traders. Thus, you will have to pay tax on income received from such trades based on the applicable tax slab/bracket.

Loss Incurred on Sale of Equity Shares

As investors or traders in the stock market, we are all bound to make losses. However, even if you do not belong to any tax slabs and have incurred losses while investing or trading during a particular financial year, it is always recommended to file your Income Tax Return. This is because such losses can be adjusted and carried forward to upcoming financial years. [Those individuals who receive an annual income of less than Rs 12 lakh are exempt from paying taxes] Let us understand this concept with an example.

Suppose you incurred a long-term capital loss of Rs 2 lakh in the financial year 2019-2020 (FY20). In the next financial year (FY21), you have obtained a long-term capital gain of Rs 5 lakh. Thus, the loss that you incurred in FY20 can be carried forward (or set off) with the profit made in FY21. Thus, you need to only pay tax on Rs 3 lakh during the financial year ended March 31, 2021.

The long-term and short-term capital losses that an investor incurs can be carried forward for up to 8 years. A long-term capital loss can only be set off against long-term capital gains. However, a short-term capital loss can be set off against both LTCG and STCG. Similarly, intraday losses can be carried forward up to 4 years, and losses from F&O trades can be carried forward up to 8 years.

Current Income Tax Slab Rates (Updated)

Tax Slab – New Regime	Tax Rate	Tax Slab – Old Regime	Tax Rate
₹0 – ₹4 lakh	Nil	₹0 – ₹3 lakh	Nil
₹4 lakh – ₹8 lakh	5%	₹3 lakh – ₹7 lakh	5%
₹8 lakh – ₹12 lakh	10%	₹7 lakh – ₹10 lakh	10%
₹12 lakh – ₹16 lakh	15%	₹10 lakh – ₹12 lakh	15%
₹16 lakh – ₹20 lakh	20%	₹12 lakh – ₹15 lakh	20%
₹20 lakh – ₹24 lakh	25%	Above ₹15 lakh	30%
Above ₹24 lakh	30%	–	–