Budget 2024 Highlights on Direct & Indirect Taxes

Highlights of Interim Budget 2024: Income Tax & GST

Finance Minister Nirmala Sitharaman unveiled the Interim Budget 2024 on February 1, 2024, outlining the financial landscape for the upcoming fiscal year starting April 1, 2024. As widely anticipated, there were no alterations to the existing income tax slabs and structure in the budget, maintaining continuity in both the old and new tax regimes. Similarly, indirect taxes, including import tax rates, also remained unchanged.

In the context of this being a Vote-on-account budget, significant shifts were not expected during the session. However, there is keen anticipation for potential changes post-election when the full budget is revealed.

While the core tax structure saw no major adjustments, the budget 2024 introduced some minor changes in both direct and indirect tax components. In this discussion, we’ll delve into these nuances and explore the slight modifications incorporated in this budget. Additionally, we’ll address key expectations that have been persevered unchanged.

Income Tax

Let us discover below some of the important Income Tax related pronouncements in the Interim Budget 2024 which are applicable for FY 2024-25.

Standard Deduction

Individuals are set to retain the advantage of a Rs 50,000 standard deduction from salary or pension income in the upcoming financial year 2024-25, with no changes announced in this respect.

Section 80C Deductions

There is no alteration in the Section 80C limit. The maximum investment limit to claim a tax deduction remains Rs 1.5 lakh, aligning with the current fiscal year 2023-24.

Tax Rebate under Section 87A

There has been no change in the tax rebate under Section 87A. Individuals with taxable income below the specified level can avail themselves of this rebate. Presently, Section 87A offers a rebate of Rs 12,500 under the old tax regime and Rs 25,000 under the new tax regime and the same structure remain unchanged for the FY 2024-25.

Corporate Tax Rate

There is no change in the corporate tax rate of 22% for existing domestic companies or 15% for specific new manufacturing companies.

Tax Rebate under New Tax Regime

There is no change in the nil tax liability for taxpayers with income up to 7 lakhs under the new tax regime.

Financial Services Sector Support

The finance minister emphasizes the government’s unwavering support for the financial services sector. Tax exemptions for the International Financial Service Centre (IFSC) have been extended until 31 March 2025, ensuring continued financial stability.

Startup Incorporation Deadline Extension

The last date for incorporating companies/LLPs to qualify as eligible startups for tax exemption under Section 80-IAC has been extended until 31 March 2025, providing a conducive environment for startup growth.

Resolution for Old Tax Disputes

Government initiatives bring relief as old disputed direct tax demands up to Rs 25,000 till FY2009 and Rs 10,000 for 2010-11 to 2014-15 are set to be withdrawn. This move is poised to benefit a substantial 1 crore taxpayers.

Income Tax Slab & Rate

There is no change in the income tax slab or rate for FY 2024-25 under any of the tax regime. The income tax slab & rate applicable for FY 2023-24 (AY 2024-25) will continue for FY 2024-25 (AY 2025-26). The Income Tax Slabs & Rates applicable for FY 2024-25 is given below:

(i) New Regime Tax Slabs:

• No tax would be levied for income up to ₹3 lakh
• Income between ₹3-6 lakh would be taxed at 5 per cent (tax rebate under Section 87A is available)
• Income between ₹6-9 lakh would be taxed at 10 per cent (tax rebate under Section 87A on income up to ₹7 lakh is available)
• Income between ₹9-12 lakh at 15 per cent
• Income between ₹12-15 lakh at 20 per cent
• Income of ₹15 lakh and above will be taxed at 30 per cent.

(ii) Old Regime Tax Slabs:

• Income up to ₹2.5 is exempt from taxation under the old tax regime.
• Income between ₹2.5 to ₹5 lakh is taxed at the rate of 5 per cent under the old tax regime.
• Personal income from ₹5 lakh to ₹10 lakh is taxed at a rate of 20 per cent in the old regime
• Under the old regime personal income above ₹10 lakh is taxed at a rate of 30 per cent.

Goods & Services Tax

There has been no change in the GST rate or structure in the finance bill 2024, except the following:

(i) Amendments in section 20 relating to distribution of credit by Input tax Distributor; and

(ii) Insertion of new section 122A relating to penalty, seizure and confiscation of machines for failure to register the machines as per special procedures prescribed under section 148.

To Download the Finance Bill 2024 CLICK HERE

To Access the Income Tax slabs and rates of FY 2023-24 CLICK HERE

Read More

Key Income Tax Exemptions Applicable to Salaried Individuals in FY 2023-24

Major Income Tax Deductions for Individuals Available in FY 2023-24 under Old Tax Regime