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Budget 2024 Highlights: Personal Income Tax Changes
Standard Deduction Increase The government proposes increasing the standard deduction for salaried employees from ₹50,000 to ₹75,000. Additionally, the deduction on family pensions for pensioners is proposed to be raised from ₹15,000 to ₹25,000. These changes aim to benefit around 4 crore salaried individuals and pensioners.
Revised Tax Rates The new tax regime will have revised tax rates:
- Up to ₹3 lakh: Nil
- ₹3 to ₹7 lakh: 5%
- ₹7 to ₹10 lakh: 10%
- ₹10 to ₹12 lakh: 15%
- ₹12 to ₹15 lakh: 20%
- Above ₹15 lakh: 30%
These changes could result in a tax saving of up to ₹17,500 for salaried employees.
Revenue Implications The tax changes will result in a revenue loss of approximately ₹37,000 crore, which includes ₹9,000 crore from direct taxes and ₹8,000 crore from indirect taxes. However, the government expects to mobilize an additional ₹30,000 crore, leading to a net revenue loss of about ₹7,000 crore annually.
Simplification for Charities and TDS
Charities The government plans to merge two tax exemption regimes for charities into one. Additionally, the 5% TDS rate on various payments will be merged into the 2% TDS rate, and the 20% TDS rate on the repurchase of mutual fund units will be withdrawn. The TDS rate on e-commerce operators will be reduced from 1% to 0.1%. Furthermore, credit of TCS will be allowed in the TDS deducted on salary.
Decriminalization and Simplification The government proposes to decriminalize delays up to the due date of filing statements and to provide a standard operating procedure for TDS defaults. Simplified reassessment provisions include reopening assessments only beyond three years from the end of the assessment year if the escaped income exceeds ₹50 lakh, with a maximum period of five years.
Capital Gains Taxation
Simplified Taxation Short-term gains on specific financial assets will be taxed at 20%, while other financial and non-financial assets will retain their current tax rates. Long-term gains on all assets will be taxed at 12.5%. The exemption limit for capital financial assets will increase to ₹1.25 lakh per year.
Tourism Development
Bihar Tourism Initiatives The government plans to support the development of Vishnupad Temple Corridor and Mahabodhi Temple Corridor in Bihar, modeled on the Kashi Vishwanath Temple Corridor. A comprehensive development initiative for Rajgir will also be undertaken, along with support for Nalanda’s development as a tourist center and the revival of Nalanda University.
Employment and Skilling
Three New Employment Schemes
- First Timers Scheme: Provides one month’s wage to new formal sector workers, with a direct benefit transfer of up to ₹15,000 in three installments.
- Job Creation in Manufacturing: Incentivizes additional employment in manufacturing, benefiting both employees and employers with respect to EPFO contributions.
- Support to Employers: Covers additional employment in all sectors, reimbursing employers up to ₹3,000 per month for two years for each additional employee.
Women’s Workforce Participation The government will facilitate higher participation of women in the workforce by setting up working women hostels, establishing crèches, organizing women-specific skilling programs, and promoting market access for women SHG enterprises.
Urban Development
Cities as Growth Hubs The government aims to develop cities as growth hubs through economic and transit planning, town planning schemes, and creative redevelopment. Under PMAY Urban 2.0, housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of ₹10 lakh crore, including central assistance of ₹2.2 lakh crore over the next five years.
Water Supply and Sanitation The government, in partnership with state governments and multilateral development banks, will promote water supply, sewage treatments, and solid waste management projects for 100 large cities through bankable projects.
Stamp Duty Reform States with high stamp duties will be encouraged to moderate rates, with a focus on reducing duties for properties purchased by women.
New Pension Scheme
Committee Review A committee reviewing the New Pension Scheme (NPS) has made significant progress, and a solution addressing relevant issues while maintaining fiscal prudence is expected.
Litigation and Appeals
Reducing Backlog Efforts to reduce the backlog of appeals at various appellate fora will continue, with more officers deployed to hear and decide appeals. The Vivad Se Vishwas Scheme 2024 is proposed to resolve certain income tax disputes pending appeal.
Investment Promotion
Boosting Investment and Employment
- Angel Tax Abolition: The government proposes to abolish the Angel tax for all classes of investors to support the startup ecosystem.
- Cruise Tourism: A simpler tax regime for foreign shipping companies is proposed to boost cruise tourism.
- Diamond Industry: Safe harbor rates for foreign mining companies selling raw diamonds in India will be provided.
- Corporate Tax Reduction: The corporate tax rate on foreign companies will be reduced from 40% to 35%.
Deepening the Tax Base
Securities Transaction Tax The securities transaction tax on futures and options is proposed to be increased to 0.02% and 0.1%, respectively. Additionally, income received on the buyback of shares will be taxed in the hands of recipients.
These measures aim to simplify the tax system, promote investment, support employment, and enhance the overall economic environment in the country.
