Budget 2024 Highlights: In the Union Budget 2024-25, Finance Minister Nirmala Sitharaman announced a significant increase in the long-term capital gains (LTCG) tax on equities, raising it from 10% to 12.5%. Additionally, the short-term capital gains (STCG) tax has been increased from 15% to 20%. The tax exemption limit for LTCG has been adjusted to Rs.1.25 lakh, up from the previous Rs.1 lakh.

Sitharaman also revealed that the 20% tax applicable on repurchased mutual fund units will be withdrawn. This change reverses a provision introduced in the 2020 Budget under Section 194K of the Finance Act, which required a 10% TDS on income from mutual fund units exceeding Rs.5,000.

Currently, short-term capital gains on equities are taxed at 15%, while long-term capital gains over Rs.1 lakh are taxed at 10%. The government also imposes a 0.1% Securities Transaction Tax (STT) on equity transactions. For other assets, short-term gains are taxed according to the individual's income tax slab, and long-term gains are taxed at 20% with indexation benefits.

Market Impact:

The announcement led to a sharp decline in the stock market. The Sensex dropped by 814 points,  at 79,688. The Nifty fell by 350 points at 24,159

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