The stock market experienced a sharp decline following the Union Budget 2024 announcements. The Sensex dropped by 1000 points as the government introduced several changes affecting financial markets and taxation.
Sensex and Nifty Drop Over 1% After Budget Tax Hikes
Benchmark indices Sensex and Nifty fell more than 1% on July 23 afternoon following Finance Minister Nirmala Sitharaman’s announcement of higher capital gains tax and increased securities transaction tax (STT) on futures and options (F&O) trading in the 2024 Budget.
Key Budget Highlights:
– New Tax Regime: The revised tax structure will have the following rates:
– Income up to ₹3 lakh: 0%
– Income between ₹3 lakh and ₹7 lakh: 5%
– Income between ₹7 lakh and ₹10 lakh: 10%
– Income between ₹10 lakh and ₹12 lakh: 15%
– Income between ₹12 lakh and ₹15 lakh: 20%
– Income above ₹15 lakh: 30%
Salaried employees could save up to ₹17,500 in income tax under this new regime. The standard deduction is also set to increase from ₹50,000 to ₹75,000.
– Securities Transaction Tax (STT): The government proposed an increase in STT on futures and options (F&Os) to 0.02% and 0.1%, respectively. This change has contributed to the market’s recent downturn.
– Angel Tax: The budget includes the abolition of angel tax, a move welcomed by startups. This tax, which affected investments in new businesses, will no longer be levied, addressing a significant concern among entrepreneurs.
– Long-Term Capital Gains: Long-term capital gains on financial and non-financial assets will now be taxed at 12.5%. The exemption limit for these gains is set at ₹1.25 lakh per year.
