Income Tax Slabs 2024-25 Budget 2024 Key Highlights: Standard Deduction Hiked, Tax Slabs Changed – Taxpayers Will Save Rs 17,500

The Union Budget 2024-25 has introduced significant changes in the Income Tax Slabs 2024-25, aiming to provide relief to taxpayers and boost the economy. The revised tax slabs increased standard deductions, and other modifications in the tax regime promise considerable savings for taxpayers. This article provides a comprehensive overview of the new Indian tax structure in the budget for the Assessment Year (AY) 2024-25.

Direct Tax Proposals

Enhanced Limit of Standard Deduction and Family Pension Deduction Under New Regime

In the new tax regime, the standard deduction for salaried individuals has been increased to Rs. 75,000 from Rs. 50,000. Similarly, the deduction on family pension for persons with pension income has been increased to Rs. 25,000 from Rs. 15,000, provided they file taxes under the new regime.

Changes in Tax Structure Under the New Regime

The revised tax structure under the new regime is as follows:

As a result of these changes, a salaried employee in the new tax regime can save up to Rs. 17,500 in taxes.

Simplification of Taxation of Capital Gains

To simplify the taxation of capital gains, the holding periods have been adjusted:

• 12 months and 24 months: The 36-month holding period has been removed.
• Listed securities: A holding period exceeding 12 months is considered long-term.
• Other assets: A holding period exceeding 24 months is considered long-term.

Taxation changes include:

• Unlisted bonds and debentures: Now attract tax on capital gains at applicable slab rates.
• Short-term capital gains: Tax on listed equity shares, units of an equity-oriented fund, and units of a business trust has increased to 20% from 15%.
• Long-term capital gains exemption: Increased from Rs. 1 lakh to Rs. 1.25 lakh per year, with a tax rate increase from 10% to 12.5%.

Changes in TDS Rates

The budget has reduced TDS rates on specified payments to facilitate business and improve taxpayer compliance, effective from either 1st October 2024 or 1st April 2025:

Introduction of TDS on Payments Made to Partners by Firms (Section 194T)

A new TDS provision for payments made by firms to partners has been introduced. Payments exceeding Rs. 20,000 shall be subjected to TDS at 10% u/s 194T.

Abolishment of Angel Tax

The Angel tax provisions of Section 56(2)(viib) have been proposed for removal. This tax was levied on companies issuing shares above the company’s Fair Market Value, taxing the excess issue price. The removal will benefit the startup ecosystem by easing fund-raising compliance and costs.

Corporate Taxes on Foreign Companies

Corporate taxes on foreign companies have been reduced from 40% to 35%.

Increased Deduction on Employer’s Contribution to Pension Scheme

Section 80CCD now provides a deduction for the employer’s contribution to the Pension scheme up to 14% of the employee’s salary during the previous year.

Other Direct Tax Updates

• Reopening of ITR: Only if the escaped income is Rs. 50 lakh or more can an assessment be reopened beyond three years, up to five years from the end of the assessment year. In search cases, the time limit is reduced from 10 years to six years.
• Income Tax Appeals: Monetary limits for filing tax dispute appeals in tribunals, high courts, and supreme courts have been raised to Rs. 60 lakh, Rs. 1 crore, and Rs. 2 crore respectively.
• Vivaad se Vishwas Scheme: Reintroduced to settle income tax disputes and eliminate litigation.

Indirect Tax Proposals

Customs Duties Reductions and Exemptions

The budget has proposed several customs duty reductions and exemptions for critical goods to promote domestic manufacturing and reduce costs:

Major GST Reforms and Amendments

The budget has introduced significant GST reforms:

• Un-denatured Extra Neutral Alcohol: Excluded from GST.
• New Section 74A: Defines tax not paid or short paid and sets procedures for addressing such cases.
• Extended limitation period: For issuing demand notices and orders.
• Updated penalty conditions: Allows for reduced penalties under specific conditions.
• Revocation of GST registration: New conditions and restrictions for revocation.
• GSTR-7 filing: Required whether or not TDS is deducted.
• GST refund restrictions: For unutilized ITC or IGST on goods subject to export duty.
• Representation in summons: New provision allows authorizing another person.
• Transitional credit: Allowed for CENVAT credit for input services.
• Anti-profiteering authority replaced: By the appellate authority.

Conclusion

The Union Budget 2024-25 brings substantial changes in the income tax regime, providing relief to taxpayers and simplifying tax processes. The enhanced standard deductions, revised tax slabs, and other direct and indirect tax reforms aim to stimulate economic growth while ensuring better compliance. Taxpayers stand to benefit significantly from the new tax regime, with potential savings and streamlined tax structures.

New Income Tax Slabs for AY 2024-25

The comprehensive analysis and changes discussed in this article reflect the new Indian tax structure as proposed in the Budget 2024-25. Taxpayers are encouraged to review these changes and plan their finances accordingly to maximize their savings and compliance benefits.