Yearender: From NPS Vatsalya to Higher Standard Deduction, 5 money rules that changed in 2024

In 2024, several significant changes in financial regulations affected the average Indian's savings and money management strategies. Here’s a breakdown of the five key money rule changes that took place this year.

1. Changes to the National Pension System (NPS)

Early Withdrawals: From February 1, NPS members can now withdraw up to 25% of their contributions after three years of account opening.

Introduction of NPS Vatsalya: Announced in the Union Budget 2024-25, this new scheme is tailored for minors. Guardians can contribute a minimum of Rs 1,000 annually with no maximum limit. The scheme, which requires an initial deposit of Rs 1,000, falls under the Pension Fund Regulatory and Development Authority Act, 2013.

Voluntary Retirement for Government Employees: Central government employees under NPS can now opt for voluntary retirement after completing 20 years of service, with a three-month written notice.

2. Revised Income Tax Slabs and Standard Deduction

The Union Budget 2024-25 introduced simplified income tax slabs under the New Tax Regime, reducing the number of slabs and offering potential savings of up to Rs 17,500 annually. Additionally, the standard deduction for salaried individuals increased from Rs 50,000 to Rs 75,000, increasing disposable income.

3. Overhaul of Capital Gains Taxation Structure

Short-Term Capital Gains (STCG): Gains on equity and equity-oriented mutual funds are now taxed at 20%, up from 15%. STCG on other assets is taxed as per applicable income tax slabs.

Long-Term Capital Gains (LTCG): A flat tax rate of 12.5% was introduced for all assets, eliminating asset-specific variations. The tax exemption on LTCG from equity and equity-oriented mutual funds increased to Rs 1.25 lakh per year.

Partial Withdrawal of Indexation Benefit: The indexation benefit on LTCG from house property sales was partially rolled back.

4. Tightened TDS on Property Sales

The scope of Tax Deducted at Source (TDS) on property transactions was expanded. A 1% TDS now applies to property purchases exceeding Rs 50 lakh, based on the higher of the sale price or stamp duty value, regardless of individual buyer or seller contributions.

5. Increased IMPS Money Transfer Limit

The Immediate Payment Service (IMPS) limit was raised to Rs 5 lakh per transaction from February 1. This adjustment simplifies fund transfers, allowing users to send money using only the recipient’s mobile number and account name.