Budget 2024: In the Interim Budget 2024 presented today, Finance Minister Nirmala Sitharaman announced that the income tax landscape for the salaried class remains unaltered, maintaining the status quo on both direct and indirect tax rates. 

Notably, specific tax benefits, including those for start-ups and investments by sovereign wealth or pension funds, were extended. Furthermore, tax exemptions for income generated by International Financial Services Centre (IFSC) units, initially set to expire on March 31, 2024, have been extended until March 31, 2025.

“As for tax proposals, in keeping with the convention, I do not propose to make any changes relating to taxation and propose to retain the same tax rates for direct taxes and indirect taxes including import duties,” Sitharaman said. 

“The Finance Minister's decision not to tinker with personal income tax slabs and rates in the Interim Budget is understandable from a prudence perspective. With global headwinds persisting, fiscal consolidation must balance against adequate capital expenditure to nurture growth,” Ashish Aggarwal, Director, Acube Ventures said.

Decades-long demands dropped

Addressing longstanding concerns, the Finance Minister proposed a withdrawal of outstanding direct tax demands, dating back to 1962. The initiative focusses on demands of up to Rs 25,000 for the period up to the financial year 2009-10 and up to Rs 10,000 for the financial years 2010-11 to 2014-15. This move is expected to benefit around one crore taxpayers, providing relief and streamlining processes for subsequent year refunds.

"I propose to withdraw such outstanding direct tax demands up to twenty-five thousand rupees (Rs 25,000) pertaining to the period up to financial year 2009-10 and up to ten-thousand rupees (Rs 10,000) for financial years 2010-11 to 2014-15. This is expected to benefit about a crore tax-payers," FinMin said.

In line with the government's focus on easing the burden on taxpayers, the Finance Minister announced plans to improve taxpayer services. The focus is on addressing issues related to petty, non-verified, non-reconciled, or disputed direct tax demands, aiming to reduce anxiety amongst honest taxpayers and streamline the overall tax system.

Naveen Wadhwa, CA and taxation expert welcomed the move, saying, "This step is expected to benefit about 10 million taxpayers and will go a long way in improving the ease of living and doing business. It is a relief for taxpayers burdened with anxiety and uncertainty due to these outstanding demands."

New and old regime tax slabs

Under the new regime tax slabs, no tax would be levied for income up to Rs 3 lakh, with subsequent slabs ranging from 5 per cent to 30 per cent. The tax rates are uniform for all categories of individuals, including senior citizens and super senior citizens.

In the old regime tax slabs, income up to Rs 2.5 lakh is exempt, with progressive rates for subsequent income brackets, ranging from 5 per cent to 30 per cent. Senior citizens and super senior citizens have specific exemptions based on their age.

The full budget, with potential further reforms, is slated to be presented in July by the incoming government, whether re-elected or new.