The trend is shifting towards encouraging individuals to opt for the new tax regime, says Hemal Zobalia, a Partner at Deloitte India. Reflecting on the tax rates for capital gains, Zobalia mentions that the move towards rationalization was expected for some time. Comparing it globally, he notes that many countries do not have such complex tax rate structures.
In terms of the effective tax rates for short-term and long-term investments, Zobalia explains that currently, the long-term rate stands at 12.5%. Additionally, the basic exemption has been increased to 1.25 lakhs, while the short-term tax rate remains at 20%. However, if you fall into the normal tax rate category, it can go up to 39%.
Zobalia emphasizes the need for simplification in taxation, pointing out the various changes highlighted in the budget speech. He discusses the tax implications for foreign companies operating in India, highlighting the reduction in tax rates to attract more overseas businesses.
Apart from capital gains, Zobalia mentions a focus on simplifying tax processes, such as the proposed Direct Tax Act and GST amendments. He also praises the incentives introduced for new employees, such as the PM scheme offering financial support to those joining the pension provident fund. Zobalia believes that these incentives will not only boost employment but also provide more accurate data on job creation.