Relief for salaried class, pensioners

New Delhi, July 23: The Union Budget 2024-25 has brought significant relief to 4 crore salaried individuals and pensioners while proposing a comprehensive review of direct and indirect taxes over the next six months.

Revised tax slabs offer relief to taxpayers

Finance Minister Nirmala Sitharaman has introduced changes to the personal income tax slabs, providing some relief to taxpayers.

The revised tax structure maintains a nil tax rate for incomes up to Rs 3 lakh, similar to the previous year.

Breakdown of new
tax rates

Income up to Rs 3 lakh: No tax

Income between Rs 3-7 lakh:     5% tax

Income between Rs 7-10 lakh:   10% tax

Income between Rs 10-12 lakh: 15% tax

Income between Rs 12-15 lakh: 20% tax

Income above Rs 15 lakh:    30% tax

Previous tax rates

Income between Rs 3-6 lakh: 5% tax

Income between Rs 6-9 lakh: 10% tax

Income between Rs 9-12 lakh: 15% tax

Income between Rs 12-15 lakh: 20% tax

Income above Rs 15 lakh: 30% tax

No changes have been announced for the old income tax regime.

The adjustments in the new tax regime aim to provide more equitable tax burdens and offer relief to a broader range of income groups.

This review aims to simplify tax structures, reduce tax burdens and compliance complexities, and broaden the tax base.

The key highlights include the rationalisation of the GST structure and a review of customs duty rates to enhance the tax base and support domestic manufacturing.

DIRECT TAX REFORMS

Standard Deductions: The standard deduction for salaried employees under the new tax regime has been increased from Rs 50,000 to Rs 75,000.

For pensioners, the family pension deduction has been raised from Rs 15,000 to Rs 25,000.

Revised Assessment Periods: Assessments can now be reopened up to 5 years (previously 3) if the escaped income exceeds Rs 50 lakh.

New Tax Regime Benefits: The new tax regime has been revised to provide benefits up to Rs 17,500 in income tax for salaried employees.

Corporate Taxation: The corporate tax rate for foreign companies has been reduced from 40 percent to 35 percent to attract foreign capital.

Angel tax has been abolished for all classes of investors, fostering entrepreneurship and the startup ecosystem.

Tax Simplifications: The budget proposes merging two tax exemption regimes for charities into one, simplifying the TDS rate structure, and rationalising capital gains taxation.

The TDS rate on e-commerce operators has been reduced from 1% to 0.1%, and TDS on mutual fund repurchases has been withdrawn.

INDIRECT TAX REFORMS

GST and Customs Duties: The budget proposes rationalising the GST structure to further simplify and expand its coverage.

Customs duties have been revised to ease trade and reduce disputes.

Notably, three more cancer-treating medicines have been fully exempted from customs duties, and reductions in basic customs duties on various electronic components and raw materials aim to boost domestic manufacturing.

Capital Goods Exemptions: Capital goods for manufacturing solar panels have been exempted from customs duties.

Reduction in duties on seafood-related imports and various raw materials will support the seafood and textile industries.

CAPITAL GAINS AND LONG-TERM ASSETS

Capital Gains Taxation: Short-term gains on certain financial assets would now attract a 20 percent tax rate, while long-term gains on all assets will attract a 12.5 percent rate.

The exemption limit for capital gains has been increased to Rs 1.25 lakh per year, benefiting the lower and middle-income classes.

Asset Classification: Listed financial assets held for over a year and unlisted assets held for over two years will be classified as long-term assets.

Specific financial instruments would continue to attract applicable capital gains tax.

DISPUTE RESOLUTION

The budget introduces the Vivad Se Vishwas Scheme 2024 to resolve pending income tax disputes.

The monetary limits for filing appeals related to direct taxes, excise, and service tax in various courts and tribunals have been increased to Rs 60 lakh, Rs 2 crore, and Rs 5 crore.

Safe harbour rules would be expanded, and transfer pricing assessment procedures streamlined to reduce litigation and provide certainty in international taxation.

ECONOMIC GROWTH INITIATIVES

Investment and Employment: The budget promotes investment and employment through tax incentives, including a simpler tax regime for foreign shipping companies operating domestic cruises and safe harbour rates for foreign mining companies selling raw diamonds in India.

Digitalisation and Simplification: The government aims to digitalise and make paperless the remaining services of Customs and Income Tax, including rectifications and appellate orders, over the next 2 years.

The Union Budget 2024-25 reflects a balanced approach to easing tax burdens, promoting economic growth, and simplifying the tax system to benefit both individuals and businesses.