How Budget 2024 will change your investment and borrowings

The 2024 Union Budget, presented by Finance Minister Nirmala Sitharaman, has unveiled a series of transformative measures set to significantly impact investments across various sectors, including real estate, jewellery and stock market. These initiatives encompass affordable housing, infrastructure development, and urban planning, providing a crucial boost to the industry.

Housing for poor & middle-class families

The Modi 3.0 government has proposed a substantial budgetary allocation of Rs 10 lakh crore under the Pradhan Mantri Awas Yojana (PMAY) to bolster the housing sector, focusing on providing housing for poor and middle-class families in urban areas. This initiative includes central assistance of Rs 2.2 lakh crore over the next five years.

The revamped PMAY 2.0 is expected to benefit one crore poor and middle-class families in urban areas. Additionally, Finance Minister Nirmala Sitharaman has introduced an interest subsidy to facilitate affordable housing loans. The government also plans to expand the PMAY by including provisions for an additional three crore houses under the scheme.

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To promote investment and foster employment, the budget has boosted the entrepreneurial spirit and start-up ecosystem by abolishing the angel tax for all classes of investors. Furthermore, a simpler tax regime for foreign shipping companies operating domestic cruises is proposed, given the tremendous potential of cruise tourism. Foreign mining companies selling raw diamonds in the country can now benefit from safe harbor rates, which will benefit the diamond industry. Additionally, the corporate tax rate on foreign companies has been reduced from 40% to 35% to attract foreign capital.

On capital gains, short-term gains will now attract a rate of 20% on certain financial assets, while long-term gains on all financial and non-financial assets will attract a 12.5% rate. The limit of exemption of capital gains has been increased to ₹1.25 lakh per year to benefit lower and middle-income classes.

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Listed financial assets held for more than a year and unlisted assets (financial and non-financial) held for more than two years will be classified as long-term assets. Unlisted bonds and debentures, debt mutual funds, and market-linked debentures will continue to attract applicable capital gains tax.

Will a cut in customs duty reduce gold & silver prices in India?

Union Budget 2024-2025 has proposed a cut in the custom duty on gold and silver to 6 per cent from 15 per cent. Finance Minister Nirmala Sitharaman also informed that customs duty on platinum has been slashed to 6.4 per cent.

With the announcement, the government has addressed the long-pending demand for gems and jewellery industry.

Experts and analysts say that the decision is also expected to reduce domestic prices of gold and silver and even increase the demand for precious metals in the country.

How Budget made selling property more taxing

Finance Minister Nirmala Sitharaman, in her Union Budget 2024 speech, announced the removal of the indexation benefits for property sales. This is considered to be bad news for the industry, at least in the short-term.

What is the indexation benefit?

When you buy an asset, say a property, and sell it years later, its value usually increases because of inflation (the general rise in prices over time). Indexation helps to adjust the purchase price of the asset to reflect this inflation.

The removal of the indexation benefit means that you would be paying taxes on higher amount than earlier. In the example above, after this rule comes into effect, you would pay tax on Rs 15,00,000 instead of on Rs 7,69,462.

However, this downside is partially offset by the fact that the government has reduced LTCG tax rate from 20 per cent to 12.5 per cent. Additionally, while this might be bad news for property sellers, it is good for the government’s coffers.