Nirmala Sitharaman, the Finance Minister, unveiled the 2024 Union Budget on Tuesday. She stated that the standard deduction under the new tax slabs will rise from ₹ 50,000 to ₹ 75,000.

New tax slabs under the system were also revealed by Ms Sitharaman. Due to this, salaried workers may save up to ₹ 17,500 under the new system, the Finance Minister said to Parliament.

She said that salaried people will also benefit from greater tax savings and more spare cash.

New Tax Slabs

Income up to ₹ 3 lakh - Nil
Rs 3 lakh to ₹ 6 lakh - 5 per cent
Rs 6 lakh to ₹ 9 lakh - 10 per cent
Rs 9 lakh to ₹ 12 lakh - 15 per cent
Rs 12 lakh to ₹ 15 lakh - 20 per cent
Above ₹ 15 lakh - 30 per cent
The increase in standard deduction was one of the most anticipated ahead of the budget speech.

Industry experts speculated this could double to ₹ 1,00,000, but Ms Sitharaman fell slightly short.

Furthermore, pensioners will now deduct ₹25,000 instead of ₹15,000 from their family pension in the new tax slabs.

New tax slabs
Image Source: ClearTax

According to her, these adjustments will provide relief for around four crore paid workers and pensioners.

Ahead of Ms Sitharaman's address, the nation's sizable middle class demanded relief from tax responsibilities, focusing on both new and existing income tax bracket changes. With the interim budget predicting gross tax collection at ₹ 38.31 lakh crore for 2024–25 in the new tax slabs, an 11.46 percent increase over the previous fiscal year, the middle class had nothing to cheer about. As a result, all eyes were on the Finance Minister today.

On the other hand, Ms. Sitharaman had to tread carefully while trying to promote development and offer comfort.

An increase in the exemption limit was another major anticipated. Tax payments are waived for those making less than ₹ 3 lakh annually in the new tax slabs. There were rumors that this would be increased to ₹ 5 lakh.

Nevertheless, no such notification was made.

Additionally, no modifications to the previous tax regime's tax slabs were announced. There are rumors that this option will no longer be available from the government starting in the following year.

Compared to the same period last year, net direct tax collection increased by a strong 19.5% to ₹ 5.74 lakh crore as of July 11 of this fiscal year, as reported by the Income Tax Department.

Tax on Capital Gains

According to Ms. Sitharaman, long-term profits—on all financial and non-financial assets—would be subject to tax at a rate of 12.5% in the new tax slabs, while short-term gains on specific financial assets will be subject to a 20% tax rate in the new tax slabs.

Long-term financial assets that have been listed and kept for more than a year have also been reclassified.

Angel Tax Eliminated

Additionally, the government declared that all investor classes would no longer be subject to the angel tax, in an effort to support the startup environment.

If the share price of issued shares is deemed to be higher than the fair market value of the firm, angel tax is imposed on cash collected by unlisted companies from Indian investors.

Since it is deemed income, the excess realization is subject to income tax.

The opposition also offered uncommon support to the repeal of this tax, with Congressman and former Finance Minister P Chidambaram expressing his "pleasure." "Congress has pleaded for the abolition for many years..."

Other Levies

In an effort to increase cruise tourism in the nation, Ms. Sitharaman also suggested a more straightforward tax structure for international shipping firms that conduct domestic cruises there in the new tax slabs.

Examination of Tax Laws

A thorough revision of the Income Tax Act of 1961 was also announced by the Finance Minister, with the goal of making it simpler to read and comprehend while simultaneously lowering ambiguity and the likelihood of legal action.

We'll be done with this in six months.

According to Ms. Sitharaman, this revamp limits the tax authorities' ability to reopen assessments to three years from the assessment's conclusion and to cases in which the evaded income exceeds ₹ 50 lakh.

Even yet, the 10-year search case restriction will only apply to searches conducted six years before to the search year.

"A beginning is being made in the Finance Bill by simplifying the tax regime for charities, TDS rate structure, provisions for reassessment and search provisions and capital gains taxation," she stated.

Two separate tax exemption programs for charity will be combined into one under the idea.

According to her, the 20% rate on the buyback of units by mutual funds, or UTI, is being removed, and the 5% TDS, or Tax Deducted at Source, rate is being combined into the 2% rate.

She also mentioned that the TDS rate for e-commerce companies will drop from one to 0.1 percent.

Furthermore, Ms. Sitharaman stated that she has suggested decriminalizing late payments for Tax deducted at source (TDS) until the deadline for submitting the relevant declaration.

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