Budget 2024: FM announces changes in income tax slabs
Finance Minister Nirmala Sitharaman announced a review of the Income Tax Act, 1961 in Budget proposals for 2024-25.
These changes included new income tax slabs for FY 2024-25 and a hike in the standard deduction. The standard deduction was hiked from Rs.50,000 to Rs.75,000.
Also, the tax slab limit for a 5% tax rate was changed from Rs.5 lakh to Rs.7 lakh. The capital gains tax regime was completely revamped with tax rates being increased. On expected lines, no changes were announced in the old income tax regime since the government wants to incentivize the new regime.
“I am now announcing a comprehensive review of the Income-tax Act, 1961. The purpose is to make the Act concise, lucid, and easy to read and understand. This will reduce disputes and litigation, thereby providing taxpayers with tax certainty. It will also bring down the demand embroiled in litigation. It is proposed to be completed in six months,” she said in her Budget speech.
New tax regime
- Up to Rs.3 lakh – No Tax
- 5% tax on income up to Rs.3-7 lakh
- 10% tax on income up to Rs.7-10 lakh
- 15% tax on income up to Rs.10-12 lakh
- 20% tax on income up to Rs.12-15 lakh
- 30% tax on income above Rs.15 lakh
“Coming to Personal Income Tax Rates, I have two announcements to make for those opting for the new tax regime. First, the standard deduction for salaried employees is proposed to be increased from Rs.50,000/- to R.75,000/-. Similarly, the deduction on family pension for pensioners is proposed to be enhanced from Rs.15,000/- to Rs.25,000/-. This will provide relief to about four crore salaried individuals and pensioners,” the FM said in her budget speech.
“A beginning is being made in the Finance Bill by simplifying the tax regime for charities, TDS rate structure, provisions for reassessment and search provisions, and capital gains taxation,” she said.
As per the proposal, the two tax exemption regimes for charities are proposed to be merged into one. The 5 percent TDS rate on many payments is being merged into the 2 percent TDS rate and the 20 percent TDS rate on repurchase of units by mutual funds or UTI is being withdrawn. The TDS rate on e-commerce operators is proposed to be reduced from one to 0.1 percent.
“Moreover, credit of TCS is proposed to be given in the TDS to be deducted from salary. Further, I propose to decriminalize delay for payment of TDS up to the due date of filing statement for the same. I also plan to provide a standard operating procedure for TDS defaults and simplify and rationalize the compounding guidelines for such defaults,” the finance minister said.
Sitharaman announced that an assessment hereinafter can be reopened beyond three years from the end of the assessment year only if the escaped income is Rs.50 lakh or more, up to a maximum period of five years from the end of the assessment year.
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