As anticipated, Finance Minister Nirmala Sitharaman did not introduce any income tax rebates. The Indian middle class has no cause for celebration, as no tax incentives were revealed in the Interim Budget 2024. Sitharaman adhered to tradition, stating, “I do not propose any alterations to taxation and intend to maintain the existing tax rates for both direct and indirect taxes, including import duties,” during the presentation of a vote on account for the interim Budget for 2024-25.
New Tax Slabs
- No tax will be imposed on income up to ₹3 lakh.
- Income ranging from ₹3-6 lakh will incur a 5% tax rate (with tax rebate available under Section 87A).
- Income falling between ₹6-9 lakh will be taxed at 10% (with tax rebate under Section 87A applicable on income up to ₹7 lakh).
- Income in the range of ₹9-12 lakh will face a 15% tax rate.
- Income between ₹12-15 lakh will be taxed at 20%.
- Income of ₹15 lakh and above will be subject to a 30% tax rate.
Old Tax Slabs
- Income up to ₹2.5 is not subject to taxation in the old tax regime.
- Income ranging from ₹2.5 to ₹5 lakh incurs a 5% tax rate under the old tax regime.
- Personal income between ₹5 lakh to ₹10 lakh faces a 20% tax rate in the old regime.
- In the old regime, personal income exceeding ₹10 lakh is taxed at a rate of 30%.
Furthermore, the interim budget has centered on direct tax proposals, along with addressing indirect tax and other provisions in GST and taxation.
Direct Tax Proposals
- The finance minister (FM) announced the retention of the same tax rates for direct taxes in FY 2024-25. Taxpayers with an income of up to Rs. 7 lakhs, under the new tax regime, will have no tax liability.
- The 22% tax rate for corporate taxes will be applicable to existing domestic companies, and a 15% rate for certain new manufacturing companies.
- The FM highlighted that direct tax collections have witnessed a more than threefold increase over the past ten years, with the number of return filers growing by 2.4 times.
- Conversely, the average processing time for tax returns has decreased from 93 days in 2013-14 to 10 days in 2023-24.
- The FM proposed an extension of the time limit for specific tax benefits for start-ups and investments made by sovereign wealth funds/pension funds. Additionally, there is a proposed tax exemption extension for specific IFSC units expiring on 31st March 2024, now extended up to 31st March 2025.
Indirect Taxes
- The finance minister proposes to maintain the existing tax rates for both indirect taxes and import duties.
- GST successfully unified the previously fragmented indirect tax regime in India.
- This year, the average monthly gross GST collection has doubled, reaching Rs 1.66 lakh crore.
- The GST tax base has experienced a twofold increase.
- The revenue buoyancy of State SGST, including compensation released to states, has risen to 1.22 in the post-GST period (2017-18 to 2022-23) from 0.72 in the pre-GST period (2012-13 to 2015-16).
- A substantial 94% of industry leaders view the transition to GST as largely positive.
- GST has led to optimization in the supply chain.
- Compliance burden on trade and industry has been significantly reduced by GST.
- Lower logistics costs and taxes have contributed to a reduction in the prices of goods and services, benefiting consumers.
Goods and Services Tax
- The finance minister stated that the monthly average gross GST collection has seen a twofold increase, reaching Rs. 1.66 lakh crore in FY24.
- There has been an uptick in the tax buoyancy of state revenue, rising from 0.72 in the period of 2012-16 to 1.22 in the post-GST period of 2017-23.
- The finance minister announced the retention of the same customs rates, including import duties, for FY 2024-25.
Tax Rationalization Efforts Over the Years
- No tax liability for income up to Rs 7 lakh, a notable increase from Rs 2.2 lakh in FY 2013-14.
- The presumptive taxation threshold for retail businesses has been raised to Rs 3 crore from Rs 2 crore.
- The presumptive taxation threshold for professionals has been elevated to Rs 75 lakh from Rs 50 lakh.
- Corporate income tax has been reduced to 22% from 30% for existing domestic companies.
- A corporate income tax rate of 15% has been established for new manufacturing companies.
Achievements in Tax-Payer Services
- The average processing time for tax returns has decreased to 10 days from the previous 93 days in 2013-14.
- Introduction of Faceless Assessment and Appeal for enhanced efficiency.
- Updated income tax returns, the introduction of new Form 26AS, and prefilled tax returns aim to simplify the return filing process.
- Customs reforms have resulted in a reduction of import release time.
- Inland Container Depots have witnessed a reduction by 47%, now at 71 hours.
- Air Cargo complexes have experienced a reduction by 28%, now at 44 hours.
- Sea Ports have seen a reduction by 27%, now at 85 hours.
(Source – PIB and Live mint for New Taxation and Old Taxation)
