Tax Changes In 2024: As the year comes to an end, India’s financial landscape has witnessed notable transformations, particularly in income tax reforms and personal finance strategies. The Union Budget 2024-25 also brought impactful changes to the personal income tax framework, aiming to simplify the tax system, improve compliance, and drive economic growth. Highlights include updated tax slabs, higher deductions for salaried individuals and pensioners, and major reforms in capital gains taxation.
Krishan Mishra, CEO of the Financial Planning Standards Board, India (FPSB India), highlighted certain changes in 2024 as pivotal in shaping a more responsible and informed approach to financial planning among Indians.Unified Pension Scheme: Balancing Security and Flexibility
One of the standout discussions of the year has been the Unified Pension Scheme (UPS), an innovative model combining the security of the Old Pension Scheme (OPS) with the flexibility of the National Pension System (NPS). This hybrid solution aims to provide retirees with financial stability while alleviating the fiscal strain on the government. However, its success hinges on addressing the logistical and political challenges that accompany such an ambitious reform.
Tax Reforms: Simplification and Long-Term Focus
The 2024 tax reforms introduced notable changes, particularly in capital gains taxation. The long-term capital gains (LTCG) tax rate was increased from 10% to 12.5%, and short-term capital gains (STCG) taxation was adjusted to 20% for select financial assets. While these hikes have raised concerns, a significant reclassification—defining assets held for over a year as long-term—encourages sustained investment.
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