Karma knowledge archive
The Union Budget 2024 - Karma Global
Karma Global’s Union Budget 2024 advisory summarises key taxation reforms under the new regime, TDS updates, employment and skilling schemes, direct tax and customs duty changes, and the compliance implications for businesses, including MSMEs, in the evolving labour and social security landscape.
Original publication: 2024-07-25 12:47:12
Budget 2024: key taxation changes, compliance direction, and workforce measures
As a leading compliance consultancy, Karma Management Global Consulting Solutions Pvt. Ltd. is dedicated to providing our clients with the latest insights and professional guidance on regulatory and compliance matters. The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, introduces significant changes impacting taxation, labour-related compliance and digitised governance. This advisory highlights key aspects of the budget, focusing on implications for compliance, the upcoming labour codes, and related statutory ecosystems including Provident Fund and Employees’ State Insurance.
Taxation highlights
The Union Budget 2024 introduced pivotal changes in the income tax regime. The new tax regime is positioned as the default option with an exemption limit of ₹3 lakhs and an increased standard deduction of ₹75,000 for salaried employees. The revised slabs are structured to provide relief across income levels and encourage adoption of a simplified tax structure.
TDS announcements
- Five per cent TDS rate on many payments merged into two per cent TDS rate.
- Twenty per cent TDS rate on repurchase of units by mutual funds or UTI withdrawn.
- TDS rate on e-commerce operators reduced from one to 0.1 per cent.
- Delay for payment of TDS up to due date of filing statement decriminalised.
PM’s five schemes for employment and skilling
Implications for compliance
The budget emphasises ease of doing business through digitisation of compliance processes. This aims to reduce bureaucratic hurdles, streamline regulatory procedures and enhance transparency. For businesses, especially MSMEs, this simplification is expected to lower compliance costs and improve operational efficiency.
- Integration of e-Shram portal with other portals to facilitate a one-stop solution.
- Open architecture databases for changing labour markets, skill requirements and job roles.
- Mechanism to connect job-aspirants with employers and skill providers.
Reforms in employment and investment
- Angel tax abolished for all classes of investors to strengthen the start-up ecosystem.
- Simpler tax regime introduced for foreign shipping companies operating domestic cruises to boost cruise tourism.
- Corporate tax rate for foreign companies reduced from 40% to 35%.
Direct taxes changes
- Two holding periods for classifying assets: 12 months and 24 months. The 36-month period removed.
- Holding period for all listed securities is 12 months. Listed securities beyond 12 months are considered long-term.
- Holding period for all other assets is 24 months.
- Taxation of short-term capital gain for listed equity shares, equity-oriented funds and business trusts increased to 20% from 15%.
- Other short-term financial and non-financial assets continue to attract tax at slab rates.
- Long-term capital gains exemption limit for listed equity shares, equity-oriented units and business trusts increased from ₹1 lakh to ₹1.25 lakh per year; tax rate increased from 10% to 12.5%.
Custom duty changes
Conclusion
In conclusion, the Union Budget 2024 introduces transformative measures to bolster compliance, streamline labour-related ecosystems and foster economic growth through enhanced skilling and employment initiatives. These changes present opportunities for businesses to thrive in a simplified regulatory environment while empowering the workforce with improved social security and job prospects.