The finance minister said salaried employees will save up to ₹17,500 annually in taxes due to the changes proposed in the Budget.
Published Jul 23, 2024 | 1:25 PM ⚊ Updated Jul 23, 2024 | 2:05 PM
Nirmala Sitharaman presenting the Union budget.
Presenting the Budget for 2024-25 in the Lok Sabha on Tuesday, 23 July, Finance Minister Nirmala Sitharaman said the standard deduction for salaried employees will be hiked to ₹75,000, from ₹50,000 under the new income tax regime in the financial year (FY) 2024-25.
The government also announced the withdrawal of the 2 percent equalisation levy.
According to the new tax slabs, there would be no tax for earnings up to ₹3 lakh, 5 percent for earnings between ₹3 and ₹7 lakh, 10 percent for earnings between ₹7 and ₹10 lakh, 15 percent for earnings between ₹10 and ₹12 lakh, 20 percent for earnings between ₹12 and ₹15 lakh and a tax of 30 percent for earnings above ₹15 lakh.
The finance minister added that salaried employees under the new tax regime will save up to ₹17,500 annually in taxes due to the changes proposed in the Budget.
The government raised the deduction limit to 14 percent from 10 percent for employers’ contributions for the National Pension System (NPS).
Besides, the government proposed increasing the tax deduction on family pensions for pensioners to ₹25,000 from ₹15,000.
Sitharaman said the government plans to raise the capital gains exemption limit on certain financial assets to ₹1.25 lakh per year for the middle and upper middle class.
She announced a hike in STT (securities transaction tax) on F&O (futures and options) securities by 0.02 per cent and 0.1 per cent.
Income receipt on share buyback will be taxed in the hands of recipients, Sitharaman added.
Tax Relief and Revised Tax Slabs in New Tax Regime 👇
🔸 Income tax saving of up to ₹ 17,500/- for salaried employee in new tax regime
🔸 #IncomeTax Relief for around Four Crore Salaried Individuals and Pensioners
🔸 Standard deduction for salaried employees to be increased… pic.twitter.com/2m7pPRmzgP
— PIB India (@PIB_India) July 23, 2024
The government also announced that it will undertake a comprehensive review of the Income Tax Act to make it easy to read.
Sitharaman also said the government will come up with an SoP (standard operating procedure) for TDS defaults and simplify and rationalise the compounding of such offences.
She added that two tax exemption regimes for charitable trusts will be merged into one.
Also, 58 percent of corporate tax has come from a simplified tax regime in FY23.
More than two-thirds of individuals availed of the new income tax regime, Sitharaman said in the Lok Sabha.
The finance minister further announced that DPI apps will be developed for credit, e-commerce, education, health, law, MSME service delivery, and urban governance.
Giving a big relief to startups, the government also announced the removal of angel tax for all classes of investors to further promote the growth of budding entrepreneurs in the country.
Angel tax refers to the income tax that the government imposes on funding raised by unlisted companies, or startups if their valuation exceeds the company’s fair market value.
“To bolster the Indian startup eco-system, boost the entrepreneurial spirit and support innovation, I propose to abolish the so-called angel tax for all classes of investors,” she said.
Ahead of the Union Budget, the Department for Promotion of Industry and Internal Trade (DPIIT) has recommended the removal of this levy on startups.
Sitharaman further said the fiscal deficit for 2024-25 is estimated at 4.9 percent of GDP. She said the government aims to reach a 4.5 percent fiscal deficit in 2025-26.
The finance minister said gross and net market borrowing is pegged at ₹14.01 lakh crore and ₹11.63 lakh crore, respectively, in FY25.
Net tax receipts are estimated at ₹25.83 lakh crore in FY25 while the total receipts are pegged at ₹32.07 lakh crore.
Total expenditure is estimated at ₹48.21 lakh crore in FY25, she added.
It may be recalled that the interim Budget, presented in February 2024, had pegged fiscal deficit, which is the difference between the government expenditure and income, at 5.1 percent for FY25 against 5.8 percent in the last fiscal year.
In her speech, Sitharaman also said the government plans to launch ‘NPS Vatshalya’ to provide pension contributions by parents and guardians.
Sitharaman said the government will strive to further simplify, and rationalise GST (Goods and Services Tax), a move which would help promote ease of doing business.
The government also proposed to rationalise customs duty rates.
The minister announced customs duty exemptions on three more cancer treatment drugs.
She added that GST has decreased tax incidence on the common man, and reduced logistics costs for industry.
GST was rolled out on 1 July, 2017. It subsumed 17 taxes and 13 cesses into a 5-tier structure, thereby, simplifying the tax regime.
She also said the government will develop a taxonomy for climate finance to help improve the availability of funds for adapting to climate change and reduce greenhouse gas emissions.
This will support the achievement of the country’s climate commitments and green transition, she said while presenting the Budget for 2024-25 in the Lok Sabha.
She said that the government will prepare a roadmap for moving hard-to-abate sectors, such as shipping, aviation, iron and steel and chemicals, from energy efficiency targets to emissions targets.
(With PTI inputs)
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