India's Budget 2024: A Comprehensive Overview

India's Budget 2024: A Comprehensive Overview

India's Budget 2024, presented by Finance Minister Nirmala Sitharaman, aims to stimulate economic growth and provide substantial relief to taxpayers. This article will break down the key elements of the budget, highlighting how it improves upon previous years.

1. Direct Tax Proposals

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

The standard deduction for salaried individuals has been increased to Rs. 75,000 from Rs. 50,000 under the new tax regime. Similarly, the family pension deduction for pensioners has increased to Rs. 25,000 from Rs. 15,000.

Changes in Tax Structure Under the New Regime

The new tax regime's revised tax structure simplifies the process and potentially increases savings for taxpayers:

These changes allow a salaried employee under the new tax regime to save up to Rs. 17,500 in taxes.

Simplification of Taxation of Capital Gains

• Holding Periods: The classification of assets into long-term and short-term now only considers holding periods of 12 and 24 months.
  • Listed Securities: Holding period of 12 months.
  • Other Assets: Holding period of 24 months.
• Tax Rates: The tax on short-term capital gains for listed equity shares, units of equity-oriented funds, and units of business trusts has been increased to 20% from 15%.
• Exemption Limits: The exemption limit for long-term capital gains on equity shares, equity-oriented units, or units of business trusts has been increased to Rs. 1.25 lakh per year, with a tax rate increase from 10% to 12.5%.
• Long-Term Assets: The tax on long-term capital gains on other financial and non-financial assets is reduced from 20% to 12.5%, but without the indexation benefit.

Changes in TDS Rates

The Budget 2024 reduced the TDS rates on specified payments to facilitate business operations and improve taxpayer compliance. These changes will be effective from 1st Oct 2024 or 1st April 2025, depending on the section.

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

Any payment by a firm to partners exceeding Rs. 20,000 will now be subjected to a TDS rate of 10%.

Abolishment of Angel Tax

The Angel Tax provisions of Section 56(2)(viib) have been proposed for removal, benefiting startups by reducing compliance costs and facilitating fund raises.

Corporate Taxes on Foreign Companies

The corporate tax rate for foreign companies has been reduced from 40% to 35%.

Increased Deduction on Employer's Contribution to Pension Scheme

The deduction limit for the employer's contribution to the pension scheme has been increased to 14% of the employee's salary from the previous year's 10%.

STT on Futures and Options

The Securities Transaction Tax (STT) has been increased:

• Futures: From 0.0125% to 0.02%
• Options: From 0.0625% to 0.1%

Other Direct Tax Updates

• Reopening of ITR: Assessment can be reopened beyond three years if the escaped income is Rs. 50 lakh or more.
• Income Tax Appeals: Raised monetary limits for filing tax dispute appeals.
• Vivaad se Vishwas Scheme: Reintroduced to facilitate the settlement of income tax disputes.

2. Indirect Tax Proposals

Customs Duties Reductions and Exemptions for Critical Goods

The Budget 2024 has proposed several reductions in customs duties to stimulate various sectors:

Major GST Reforms and Amendments

• Exclusion of Certain Alcoholic Liquors: Un-denatured Extra Neutral Alcohol for manufacturing alcoholic liquor for human consumption is kept out of GST's purview.
• Section 74A: New provisions for tax underpayment, overpayment, erroneous refund, and incorrect ITC availing.
• Extension of Time Limits: Time limits extended for various GST-related claims, notices, and appeals.
• Revocation of GST Registration: New conditions and restrictions for revocation.
• Anti-Profiteering Authority: Appellate authority replaces anti-profiteering authority for accepting applications.

Highlights of Various Sectors

Agriculture

• Allocation: Rs. 1.52 lakh crore for agriculture and allied sectors.
• High-Yield Varieties: 109 new high-yielding and climate-resilient crop varieties.
• Natural Farming: One crore farmers to be initiated into natural farming, supported by certification and branding.
• Digital Public Infrastructure: Implementation in agriculture covering six crore farmers and their lands within three years.

Employment and Education

• Employment Schemes: Three new 'Employment Linked Incentive' schemes based on EPFO enrolment.
• Skilling Programs: Centrally sponsored scheme to skill 20 lakh youth over five years.
• Higher Education Loans: Financial support for loans up to Rs. 10 lakh with annual interest subvention of 3%.

Inclusive Human Resource Development and Social Justice

• Rural Development: Rs. 2.66 lakh crore allocated for rural development and infrastructure.
• Purvodaya: Development plan for the eastern region of India.
• Housing: Three crore additional houses under PM Awas Yojana.
• Women's Development: Over Rs. 3 lakh crore allocated for women-led development.

Manufacturing and Services

• MSME Promotion: Credit guarantee schemes, new credit assessment models, and increased loan limits for MSMEs.
• Public Sector Banks: Developing in-house credit assessment capabilities for MSMEs.
• SIDBI Expansion: New branches to serve major MSME clusters within three years.

Conclusion

India's Budget 2024 introduces significant reforms and incentives aimed at stimulating economic growth, simplifying tax processes, and providing substantial relief to taxpayers. The budget's emphasis on agriculture, employment, social justice, and manufacturing reflects a holistic approach to India's development. With these changes, the Budget 2024 is a marked improvement over previous years, aiming to create a more robust and inclusive economy.