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Changes in Income Tax Rules from 1 April 2024 for individuals

• The Budget for FY 2024- 25 has increased the standard deduction for salaried employees from ₹50,000 to ₹75,000 for those opting for new tax regime.
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• The deduction on family pension for pensioners has been enhanced from ₹15,000 to ₹25,000.
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• Deduction on employer's contribution u/s 80CCD(2) has been increased from 10% to 14% of salary and dearness allowance.

• Tax on equity shares, units of business trust and units of equity-oriented funds listed in India increased to 20% from the present rate of 15%. Other short-term gains will remain subject to taxation according to slab rates. 

• The thresholds for classifying assets as long-term have changed. For listed securities, such as equity shares, equity-oriented mutual funds, units of business trust listed in India, it is 12 months and for all the other assets, such as units of unlisted business trust, debt mutual funds (other than Specified Mutual Fund) and gold, it is 24 months instead of 36 months.
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• In the case of shares listed outside India, the period of holding is at 24 months for it to qualify as long-term asset. Bonds and debentures not listed in India, units of specified mutual funds and market-linked debentures will continue to be taxed at applicable slab rates irrespective of the holding period.
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• All long-term capital gains for all categories of assets will now be taxed at a flat rate of 12.5% without indexation, except for land and/or building acquired before 23 July 2024 by resident individual or Hindu Undivided Family (HUF). Previously, the tax rate was 10% for certain securities such as listed equity shares, units of business trust, units of equity-oriented mutual funds and listed bonds subject to satisfaction of certain conditions and 20% with indexation for other assets.
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• Immovable property: The indexation benefit which adjusted the cost of assets for inflation has now been withdrawn except for land and/or building acquired before 23 July 2024, by an individual resident or HUF. On transfer of land and / or building on or after 23 July 2024 and acquired before 23 July 2024, taxpayers shall have an option to pay tax at the lower of (i) 20% on capital gains with indexation, or (ii) 12.5% on capital gains without indexation. 
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• The capital gains on transfer of equity shares and units of equity-oriented mutual funds listed in India will now be exempt up to INR 125,000 as against the earlier limit of INR 100,000.

• Buyback proceeds will be considered dividend income and taxed in the hands of shareholders at the respective slab rates from 1 October 2024 in contrast to the existing provisions where Indian companies are taxed.
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• Non-residents need to evaluate the benefits under the respective Double Taxation Avoidance Agreement (treaty).