Interim Budget 2024: Today is the D-day. The big budget day is just before the announcement of the general elections in which the Modi govt will seek a mandate for a third straight term from the voters. After taking oath as Prime Minister for the second time on 30 May 2019, Nirmala Sitharaman presented her first budget on 5th July 2019. Many such announcements were made in that budget, which were strongly opposed. However, later the government also withdrew many announcements.
In Budget 2019, Nirmala Sitharaman significantly increased the surcharge on the tax of super-rich people due to which foreign investors and rich businessmen of the country were unhappy. After the situation deteriorated, the government withdrew that decision.
The surcharge had increased so much that in that budget, the surcharge on the taxable income of the super-rich whose income was between Rs 2-5 crore was increased from 15 per cent to 25 per cent, due to which their total income tax increased to about 37 per cent. For those with income above Rs 5 crore, the surcharge was increased to 37 per cent, due to which their total tax reached about 42.74 per cent. Surcharge and cess are levied on taxable income.
After the budget announcement, foreign investors started withdrawing money from the Indian stock market very rapidly. Within two months, FPI had withdrawn about 2 billion dollars (14000 thousand crores), due to which at the end of August, Nirmala Sitharaman announced the withdrawal of super-rich tax.
However, on September 20, 2019, the Finance Minister said that no new surcharge would have to be paid on the earnings from selling equity shares and selling equity-based mutual fund units, which brought relief to investors.
After the announcement of the July 2019 budget, the tax rates on Long Term Capital Gains and Short Term Capital Gains increased significantly. After this announcement, the tax rate on LTCG increased from 11.96 per cent to 14.25 per cent and the tax rate on STCG increased from 17.94 per cent to 21.37 per cent. Tax on short-term capital gains on derivatives and debt securities was about 42.74 per cent.