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Interim Budget 2024: What Finance Minister Nirmala Sitharaman Said About Personal Tax?

The trinity of demography, democracy and diversity, backed by ‘Sabka Prayas’, has the potential to fulfill aspirations of every Indian, says Sitharaman.

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February 1, 2024
Interim Budget 2024: Finance Minister Said About Personal Tax

Interim Budget 2024: Finance Minister Said About Personal Tax

Presenting the Interim Budget 2024-25 in Parliament on Thursday, Finance Minister Nirmala Sitharaman highlighted the transformative changes in the Indian economy, outlining the government programmes accelerating the country towards achieving the Amrit Kal milestones for 2047. “With the ‘whole of nation’ approach of ‘Sabka Prayas’, the country overcame the challenge of a once-in-a-century pandemic, took long strides towards ‘Atmanirbhar Bharat’, committed to ‘Panch Pran’, and laid solid foundations for the ‘Amrit Kaal’,” she said.

Her one-hour-long speech highlighted the key achievements of the government, from poverty alleviation, rural housing, green energy and Mudra loans for entrepreneurs and MSMEs to “Garib Kalyan” Yojanas, “synergised with passion and energy” to achieve “Atmanirbhar Bharat” (self-reliant India). Sitharaman said, “The trinity of demography, democracy and diversity backed by ‘Sabka Prayas’ has the potential to fulfill aspirations of every Indian.”

The minister stressed that all forms of infrastructure—physical, digital or social—are being built in record time. “All parts of the country are becoming active participants in economic growth. Digital Public Infrastructure, a new ‘factor of production’ in the 21st century, is instrumental in formalization of the economy,” she said.

Also Read: Leave Encashment At Retirement: What Is The Tax Exemption Limit And How Is It Calculated?

However, the most anticipated part of her speech, which everyone waited with baited breath, was on the personal tax for FY2024-25. As expected, the interim budget, though middle-class and salaried-friendly as in the fiscal year 2023-24, remains unaltered.

“This budget grants salaried individuals a tax relief of up to Rs 7 lakh amounting to a benefit of Rs 25,000 – Rs 45,000 based on one’s income under section 87A. The rebate u/s 87A has been increased to Rs 7 lakh from Rs 5 lakh under the new tax regime (continues from FY2023-24). This means, no tax for up to Rs 7 lakh of taxable income; not applicable for the old regime,” says Suneel Dasari, Founder & CEO of EZTax.in, a tax filing portal.

As in FY2023-24, the highest surcharge rate is 25 per cent under the new tax regime. So, taxpayers with taxable income of above Rs 5 crore are required to pay only 25 per cent surcharge instead of 37 per cent reduced in FY2023-24. Also, tax slabs for FY2024-25 stay the same from the earlier year. Leave encashment exemption on retirement of non-government salaried employees remains the same at Rs 25 lakh, increased from Rs 3 lakh in FY2023-24. However, taxpayer can continue to avail of the old tax regime, although the new regime is the default one.

Sitharaman also emphasised on providing additional support regarding tax compliance, and ease people’s “anxieties” over old income tax investigations. She said the government will cancel the disputed direct tax demands up to Rs 25,000, pending since FY 2009-10, and Rs 10,000 from FY 2010-11 to FY 2014-15, which came as a big relief for taxpayers.

In continuation from Budget 2023, micro, small & medium enterprises (MSME) and professionals are provided relief under presumptive taxation scheme.

“The threshold under 44AD is increased to Rs 3 crore from Rs 2 crore and threshold under 44ADA is increased to Rs 75 lakh from Rs 50 lakh” added Dasari.

Commenting on the interim budget, Anupama Bhargava, a certified financial planner and partner at Beekay Taxation & Investment LLP, said, “The Govt has decided to go with no change for now. In the past, too, except once in 2019, there have been no major changes to taxes in an interim budget. So this is on expected lines. This gives freedom for the incoming government to make the necessary changes. Income tax refunds that took ages to come in the past would now be cleared within 10 days—again a relief to many especially those who have deduction of TCS on foreign remittance, etc.”

Also Read: What Are Tax Liabilities On Ancestral Or Inherited Gold?

Adhil Shetty, CEO of Bankbazaar.com, said: The recent tax slab updates with new regime were substantive. This covers most of the working population. However, reports suggest that people are still sticking to the old regime because they have a home loan, tax-saving investments, health insurance for family, retirement savings, etc. Their tax-saving measures keep them from moving to the new regime. But that group of captive tax-savers earning Rs 12 lakh or more will have a reason to think the budget could have done more for them.”

Income Tax Slabs For FY2024-25

Individuals under 60 years

Up to 2,50,000 – Nil
2,50,001 to 5,00,000 – 5 per cent
5,00,001 to 10,00,00 – 20 per cent
Above 10,00,000 – 30 per cent

Senior Citizens  (60-80 years)

Up to 3,00,000 – Nil
3,00,001 to 5,00,000 – 5 per cent
5,00,001 to 10,00,000 – 20 per cent
Above 10,00,000 – 30 per cent

Very Senior Citizens (Above 80 years)

Up to 5,00,000 – Nil
5,00,0001 to 10,00,000 – 20 per cent
Above 10,00,000 – 30 per cent

 

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