UNION BUDGET 2024: KEY HIGHLIGHTS ON INCOME TAX

The Union Finance Minister, Smt. Nirmala Sitharaman on Tuesday, presented her Seventh consecutive budget speech. The budget focuses on four major castes namely, ‘Garib’ (Poor), Mahilayein (Women), ‘Yuva’ (Youth), and ‘Annadata’ (Farmer).

Key announcements include a thorough review of the Income-tax Act, 1961 within six months, plans to digitize all major taxpayer services under GST, Customs, and Income Tax within two years, and the launch of the Vivad se Vishwas Scheme, 2024 to settle pending income-tax disputes. The Minister also emphasized measures to streamline tax assessments and minimize litigation, as well as proposals to broaden the tax base by revising Security Transactions Tax rates and taxing income from share buybacks.

KEY HIGHLIGHTS:-

• Comprehensive Review of the Income-tax Act, 1961:- To make the Income-Tax Act concise, easy to read, and understand.

• Simplification for Charities and of TDS: 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merged into the 2 percent TDS rate and the 20 percent TDS rate on repurchase of units by mutual funds or UTI is being withdrawn. 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 on salary.
• Simplification of Reassessment:-

1. Simplification provisions for reopening and reassessment
2. An assessment hereinafter can be reopened beyond three years from the end of the assessment year only if the escaped income is ₹ 50 lakh or more, up to a maximum period of five years from the end of the assessment year. Even in search cases, a time limit of six years before the year of search, as against the existing time limit of ten years, is proposed.

• Simplification and Rationalisation of Capital Gains

1. Short term gains on certain financial assets to be taxed at 20 percent, while that on all other financial assets and all non-financial assets shall continue to attract the applicable tax rate.
2. Long term gains on all financial and non-financial assets, on the other hand, will attract a tax rate of 12.5 per cent.
3. For the benefit of the lower and middle-income classes, the limit of exemption of capital gains on certain financial assets increases up to ₹ 1.25 lakh per year.
4. Listed financial assets held for more than a year will be classified as long term, while unlisted financial assets and all non-financial assets will have to be held for at least two years to be classified as long-term.

• OTHERS:-

1. All major taxpayer services under GST, Income tax and Customs have been digitalized and made paperless over the next two years.
2. Reduce the pendency of appeals at various appellate forums. Planned to deploy more officers to hear and decide appeals to reduce the backlog of first appeals.
3. Proposing the ‘Vivad Se Vishwas Scheme’ 2024 for resolution of certain income tax matters pending appeal.
4. Increased Monetary limits for Filing appeals related to direct taxes, excise, and service tax:-

• PERSONAL INCOME TAX SLAB:-

1. Standard deduction for salaried employees to be increased to Rs. 75000/-
2. Deduction on Family Pension for pensioners is proposed to be Rs. 25,000/-.
3. Revised Tax Rate Structure

• No GST on Penalties, Late Fees/Panel Interest, fine levied or collected by RBI: GST AAR MAHARASHTRA
• FINANCE BILL 2024: INSERTION OF NEW SECTION 128A IN CGST ACT 2017
• FINANCE BILL 2024: INSERTION OF SECTION 74 A IN CGST ACT, 2017
• Finance Bill 2024: Amendment to Section 16 of CGST Act, 2017
• UNION BUDGET 2024: KEY HIGHLIGHTS ON INCOME TAX