Daily GK and Current Affair
24th July 2024
The Union Budget 2024-25 introduces significant changes to the tax treatment of immovable properties, particularly focusing on the removal of the indexation benefit for properties bought after 2001. Here’s a detailed overview:
Key Highlights:
1.Property Sellers Categorized by Purchase Date:
Before 2001: Sellers who purchased or inherited properties before 2001 will retain the indexation benefit. This benefit adjusts the purchase price of the property for inflation, reducing the taxable capital gain.
After 2001: Sellers who bought properties in 2001 or later will lose the indexation benefit.
2.Long-Term Capital Gains (LTCG) Tax:
The LTCG tax on real estate is proposed to be reduced from 20% to 12.5%. This change aims to simplify tax calculations and reduce the tax burden on property sellers.
Implications for Property Sellers:
1.Indexation Benefit:
Retained for Pre-2001 Properties: Sellers of properties bought before 2001 can still adjust their property’s purchase price for inflation, potentially resulting in lower taxable gains.
Removed for Post-2001 Properties: Without indexation, sellers will pay tax on the entire gain without inflation adjustment, potentially increasing their tax liability.
2.LTCG Tax Rate Reduction:
The reduced LTCG tax rate to 12.5% mitigates the impact of removing the indexation benefit. Sellers of post-2001 properties will benefit from a lower tax rate, which might offset the lack of indexation.
Broader Budget Highlights:
1.Fiscal Discipline:
The fiscal deficit is maintained at 4.9% for the current year, targeting a reduction to 4.5% next year. This balanced approach is expected to attract liquidity and reduce capital costs, fostering economic growth.
2.Infrastructure and Manufacturing:
A significant allocation of Rs 11.11 lakh crore for infrastructure capital expenditure (3.4% of GDP) underscores the government’s commitment to boosting the manufacturing sector and creating employment opportunities.
3.Support for MSMEs:
Credit guarantees for MSME loans up to Rs 100 crores and Mudra Loans aim to bolster small and medium-sized enterprises, providing them with the necessary financial support to grow and innovate.
4.Customs Duties Reduction:
Reductions in customs duties on mobile phones, gold, and silver will make consumer electronics and jewellery more affordable, encouraging spending.
5.Tax Relief for Salaried Employees:
Potential income tax savings of up to Rs 17,500 for salaried employees are expected to boost small-ticket consumption, driving demand and supporting economic growth.
6.Abolition of Angel Tax:
The removal of the angel tax aims to foster a vibrant startup culture in India, encouraging investment in startups and promoting innovation and entrepreneurship.
7.Social Welfare:
Rs 3 lakh crore allocated for schemes benefiting women and girls, emphasizing increasing female workforce participation and empowering women with skills and opportunities.
8.Education Loans:
Education loans up to Rs 10 lakh for students in domestic institutions, along with a 3% interest subvention e-voucher, aim to make higher education more accessible and boost talent creation.
Impact on Financial Markets:
Capital Gains Taxes:
An increase in LTCG tax by 2.5% to 12.5% and short-term capital gains (STCG) tax by 5% to 20%.
Securities Transaction Tax (STT) on futures increased from 0.0125% to 0.02%.
Despite these changes, the overall positive measures in the budget are expected to maintain market sentiment.
Conclusion:
The Union Budget 2024 lays a strong foundation for India’s growth, aligning with the vision of “Viksit Bharat 2047.” With significant investments in infrastructure, support for MSMEs, and initiatives to boost consumption and entrepreneurship, the budget aims to foster a conducive environment for economic growth and development.
1.What significant change was introduced in the Union Budget 2024-25 for properties bought after 2001?
A) Increased indexation benefit
B) Removal of indexation benefit
C) Reduced stamp duty
D) Enhanced property tax
Answer: B) Removal of indexation benefit
2.What is the proposed reduction in the Long-Term Capital Gains (LTCG) tax on real estate in the Union Budget 2024-25?
A) From 25% to 15%
B) From 20% to 12.5%
C) From 30% to 18%
D) From 20% to 10%
Answer: B) From 20% to 12.5%
3.Which sellers will retain the indexation benefit under the new budget provisions?
A) Sellers who bought properties after 2001
B) Sellers who inherited properties after 2001
C) Sellers who bought or inherited properties before 2001
D) All property sellers
Answer: C) Sellers who bought or inherited properties before 2001
4.What is the main objective behind reducing the LTCG tax rate to 12.5%?
A) To increase government revenue
B) To simplify tax calculations and reduce the tax burden on property sellers
C) To encourage foreign investment
D) To increase property prices
Answer: B) To simplify tax calculations and reduce the tax burden on property sellers
5. What fiscal deficit target has been set for the next year in the Union Budget 2024-25?
A) 4.9%
B) 5.5%
C) 4.5%
D) 3.9%
Answer: C) 4.5%
6.How much has been allocated for infrastructure capital expenditure in the Union Budget 2024-25?
A) Rs 10.5 lakh crore
B) Rs 12 lakh crore
C) Rs 11.11 lakh crore
D) Rs 9 lakh crore
Answer: C) Rs 11.11 lakh crore
7.What percentage of GDP does the infrastructure capital expenditure allocation represent?
A) 3.2%
B) 3.4%
C) 3.6%
D) 3.8%
Answer: B) 3.4%
8.What is the purpose of credit guarantees for MSME loans up to Rs 100 crores and Mudra Loans?
A) To reduce taxes for MSMEs
B) To provide financial support for growth and innovation
C) To increase export subsidies
D) To enhance import duties
Answer: B) To provide financial support for growth and innovation
9.Which items will see reduced customs duties under the Union Budget 2024-25?
A) Automobiles and textiles
B) Mobile phones, gold, and silver
C) Pharmaceuticals and steel
D) Electronics and machinery
Answer: B) Mobile phones, gold, and silver
What potential income tax savings are expected for salaried employees under the new budget?
A) Rs 15,000
B) Rs 20,000
C) Rs 17,500
D) Rs 25,000
Answer: C) Rs 17,500
What is the main objective of abolishing the angel tax?
A) To increase tax revenue
B) To foster a vibrant startup culture
C) To regulate startup funding
D) To reduce government expenditure
Answer: B) To foster a vibrant startup culture
12.How much has been allocated for schemes benefiting women and girls in the Union Budget 2024-25?
A) Rs 2 lakh crore
B) Rs 3 lakh crore
C) Rs 4 lakh crore
D) Rs 1.5 lakh crore
Answer: B) Rs 3 lakh crore
13.What financial support is provided for education loans in the new budget?
A) Loans up to Rs 5 lakh with no interest
B) Loans up to Rs 10 lakh with a 3% interest subvention e-voucher
C) Loans up to Rs 15 lakh with a 5% interest subvention e-voucher
D) Loans up to Rs 20 lakh with no interest
Answer: B) Loans up to Rs 10 lakh with a 3% interest subvention e-voucher
14.What is the increase in the LTCG tax for financial markets according to the budget?
A) From 10% to 12.5%
B) From 12.5% to 15%
C) From 15% to 20%
D) From 10% to 18%
Answer: A) From 10% to 12.5%
15.What is the new rate for the Securities Transaction Tax (STT) on futures as per the budget?
A) 0.015%
B) 0.018%
C) 0.02%
D) 0.025%
Answer: C) 0.02%
16.Which sectors are expected to benefit from the reduced customs duties?
A) Manufacturing and pharmaceuticals
B) Consumer electronics and jewelry
C) Textiles and steel
D) Agriculture and fisheries
Answer: B) Consumer electronics and jewelry
17.What is the purpose of maintaining the fiscal deficit at 4.9% for the current year?
A) To reduce inflation
B) To attract liquidity and reduce capital costs
C) To increase government spending
D) To decrease foreign investment
Answer: B) To attract liquidity and reduce capital costs
18.How will the reduction in the LTCG tax rate to 12.5% impact sellers of post-2001 properties?
A) It will increase their tax liability
B) It will mitigate the impact of the removed indexation benefit
C) It will have no impact
D) It will increase property prices
Answer: B) It will mitigate the impact of the removed indexation benefit
19.What is the broader vision of the Union Budget 2024?
A) Viksit Bharat 2025
B) Viksit Bharat 2030
C) Viksit Bharat 2040
D) Viksit Bharat 2047
Answer: D) Viksit Bharat 2047
20.What social welfare initiative is highlighted in the Union Budget 2024-25?
A) Free healthcare for all
B) Schemes benefiting women and girls
C) Increased subsidies for farmers
D) Free education for all
Answer: B) Schemes benefiting women and girls
Union Budget 2024 Highlights
Finance Minister Nirmala Sitharaman presented the Union Budget 2024-25 with a focus on aiding the underprivileged, women, youth, and farmers through enhanced spending, job creation, and tax relief for the middle class. Here are the key points:
Tax Announcements:
- Income Tax Slabs:
- New Tax Regime:
- Rs 7-10 lakh: 10%
- Rs 10-12 lakh: 15%
- Rs 12-15 lakh: 20%
- Above Rs 15 lakh: 30%
- Standard Deduction:
- Increased from Rs 30,000 to Rs 75,000, resulting in savings of Rs 17,500.
- Deduction on family pension for pensioners raised from Rs 15,000 to Rs 25,000.
- New Tax Regime:
- Capital Gains Taxes:
Long-Term Capital Gains (LTCG):
LTCG tax on real estate reduced from 20% to 12.5%.
Elimination of the indexation benefit for immovable assets such as real estate. Property sellers can no longer adjust the purchase price for inflation to lower their capital gains tax liability.
Short-Term Capital Gains (STCG):
Increased by 5% to 20%.
- Securities Transaction Tax (STT):
STT on the sale of an option raised from 0.0625% to 0.1%.
STT on futures increased by 0.02%.
STT on futures and options (F&O) securities increased by 0.1%.
- Angel Tax:
Abolished to foster a vibrant startup culture and encourage investment in startups.
Spending and Investment:
- Infrastructure and Capital Expenditure:
Rs 11.11 lakh crore allocated for infrastructure capital expenditure, accounting for 3.4% of GDP.
Focus on building infrastructure to boost the manufacturing sector and generate employment opportunities.
- Support for MSMEs:
Credit guarantees for MSME loans up to Rs 100 crores and Mudra Loans to bolster small and medium-sized enterprises, providing necessary financial support for growth and innovation.
- Social Welfare:
Rs 3 lakh crore allocated for schemes benefiting women and girls, emphasizing increasing female workforce participation and empowering women with skills and opportunities.
Education loans up to Rs 10 lakh for students in domestic institutions, with a 3% interest subvention e-voucher to reduce the overall loan cost.
Job Creation and Economic Growth:
- Job Creation:
Enhanced spending on job creation, focusing on sectors such as manufacturing, infrastructure, MSME/mortgage credit, and consumption.
Various schemes and initiatives to support youth skilling and employment generation.
- Economic Stability:
Fiscal deficit maintained at 4.9% for the current year, with a target to reduce it to 4.5% next year. This balanced approach is expected to attract liquidity and reduce capital costs, fostering economic growth.
- Consumption Boost:
Income tax relief for salaried employees, leading to potential savings and boosting small-ticket consumption.
Reductions in customs duties on mobile phones, gold, and silver to make consumer electronics and jewellery more affordable, encouraging spending.
Conclusion
The Union Budget 2024 lays a strong foundation for India’s growth trajectory, aligning with the vision of “Viksit Bharat 2047.” With significant investments in infrastructure, support for MSMEs, and initiatives to boost consumption and entrepreneurship, the budget aims to foster a conducive environment for economic growth and development.
1.What is the new income tax rate for the Rs 7-10 lakh bracket in the Union Budget 2024-25?
A) 5%
B) 10%
C) 15%
D) 20%
Answer: B) 10%
2.What is the standard deduction increased to in the Union Budget 2024-25?
A) Rs 30,000
B) Rs 50,000
C) Rs 75,000
D) Rs 90,000
Answer: C) Rs 75,000
3.What is the new deduction on family pension for pensioners as per the budget?
A) Rs 10,000
B) Rs 15,000
C) Rs 20,000
D) Rs 25,000
Answer: D) Rs 25,000
What is the reduced LTCG tax rate on real estate in the Union Budget 2024-25?
A) 15%
B) 18%
C) 12.5%
D) 10%
Answer: C) 12.5%
5.What major benefit has been eliminated for immovable assets in the budget?
A) Reduced stamp duty
B) Capital gains exemption
C) Indexation benefit
D) Property tax deduction
Answer: C) Indexation benefit
6.What is the new STCG tax rate after the budget increase?
A) 15%
B) 18%
C) 20%
D) 25%
Answer: C) 20%
7.What is the new STT rate on the sale of an option?
A) 0.0625%
B) 0.08%
C) 0.1%
D) 0.12%
Answer: C) 0.1%
8.By how much has the STT on futures increased?
A) 0.01%
B) 0.02%
C) 0.05%
D) 0.07%
Answer: B) 0.02%
9.What key tax has been abolished to support startups?
A) Corporate tax
B) Dividend tax
C) Angel tax
D) Wealth tax
Answer: C) Angel tax
10.How much has been allocated for infrastructure capital expenditure?
A) Rs 10 lakh crore
B) Rs 11.11 lakh crore
C) Rs 12 lakh crore
D) Rs 15 lakh crore
Answer: B) Rs 11.11 lakh crore
11. What percentage of GDP does the infrastructure capital expenditure represent?
A) 3.1%
B) 3.2%
C) 3.4%
D) 3.5%
Answer: C) 3.4%
12.What financial support is provided for MSMEs in the budget?
A) Reduced interest rates
B) Credit guarantees for loans up to Rs 100 crores and Mudra Loans
C) Tax holidays
D) Export subsidies
Answer: B) Credit guarantees for loans up to Rs 100 crores and Mudra Loans
13.How much is allocated for schemes benefiting women and girls?
A) Rs 2 lakh crore
B) Rs 3 lakh crore
C) Rs 4 lakh crore
D) Rs 5 lakh crore
Answer: B) Rs 3 lakh crore
14.What is the interest subvention for education loans provided in the budget?
A) 2%
B) 2.5%
C) 3%
D) 3.5%
Answer: C) 3%
15.What is the target fiscal deficit for next year as per the budget?
A) 4.5%
B) 4.7%
C) 4.9%
D) 5.0%
Answer: A) 4.5%
16.What sectors are focused on for job creation in the budget?
A) IT and pharmaceuticals
B) Agriculture and textiles
C) Manufacturing, infrastructure, MSME/mortgage credit, and consumption
D) Finance and real estate
Answer: C) Manufacturing, infrastructure, MSME/mortgage credit, and consumption
17.What reduction in customs duties is proposed in the budget?
A) Mobile phones, gold, and silver
B) Automobiles and textiles
C) Electronics and machinery
D) Pharmaceuticals and steel
Answer: A) Mobile phones, gold, and silver
18.What is the potential income tax savings for salaried employees under the new budget?
A) Rs 15,000
B) Rs 17,500
C) Rs 20,000
D) Rs 25,000
Answer: B) Rs 17,500
19.How is the budget expected to impact economic stability?
A) Increase inflation
B) Attract liquidity and reduce capital costs
C) Decrease foreign investment
D) Increase government debt
Answer: B) Attract liquidity and reduce capital costs
20.What is the broader vision of the Union Budget 2024?
A) Viksit Bharat 2025
B) Viksit Bharat 2030
C) Viksit Bharat 2040
D) Viksit Bharat 2047
Answer: D) Viksit Bharat 2047
