Union Budget 2024: Key Announcements by Finance Minister Nirmala Sitharaman

New Delhi: India’s Finance Minister Nirmala Sitharaman presented the Union Budget for the year 2024 on Tuesday, outlining the government’s revenue and spending plans for the upcoming fiscal year. The budget focuses on providing tax relief to individuals and pensioners, revising tax slabs, and introducing changes to capital gains tax and angel tax. Here are the key announcements:

Standard Deduction and Tax Slabs

In a move that was highly anticipated, the standard tax deduction has been increased from ₹50,000 to ₹75,000. This change will provide significant relief to salaried individuals and pensioners, with Finance Minister Nirmala Sitharaman estimating that it will benefit around four crore individuals.

The Finance Minister also announced revisions to the tax slabs in the new regime. The updated tax rate structure is as follows:

• Rs 0-3 lakh: Nil
• Rs 3-7 lakh: 5%
• Rs 7-10 lakh: 10%
• Rs 10-12 lakh: 15%
• Rs 12-15 lakh: 20%
• Above Rs 15 lakh: 30%

These changes will result in higher take-home salaries for employees, with the Finance Minister highlighting potential savings of up to ₹17,500 for salaried individuals under the new regime.

Capital Gains Tax and Long-Term Assets

Short-term capital gains on certain financial assets will now be taxed at a rate of 20%. Meanwhile, the long-term capital gains tax rate has been increased from 10% to 12.5% for all financial and non-financial assets. This change is expected to bring in additional revenue for the government.

In a related announcement, listed financial assets held for over a year will now be classified as long-term assets. This reclassification will provide tax benefits to investors who hold these assets for the long term.

Angel Tax Abolished

In a bid to boost the startup ecosystem in the country, the government has abolished angel tax for all classes of investors. Angel tax was previously levied on capital raised by unlisted companies from Indian investors if the share price exceeded the fair market value. This move has been well-received, drawing praise from the opposition, including ex-Finance Minister P Chidambaram.

Tax Relief for Foreign Shipping Companies and Cruise Tourism

The budget also proposed a simpler tax regime for foreign shipping companies operating domestic cruises within India. This move aims to stimulate cruise tourism and make India a more attractive destination for international cruise lines.

Review of Income Tax Act and Litigation Reduction

Finance Minister Nirmala Sitharaman announced a comprehensive review of the Income Tax Act of 1961. This review will aim to simplify the language of the Act, making it easier for taxpayers to understand and comply with their tax obligations. The review will also reduce uncertainty and potential litigation arising from tax assessments.

As part of this overhaul, the time limit for tax authorities to reopen assessments has been reduced to three years from the end of the assessment year. Additionally, for cases involving escaped income of ₹50 lakh or more, the time limit for search operations has been decreased from 10 years to six years before the year of the search.

Other Tax Changes

The budget also included several other tax-related announcements:

• Merging of TDS (Tax Deducted at Source) rates: The 5% TDS rate is being merged into the 2% rate, simplifying the structure.
• Withdrawal of 20% TDS rate on repurchase of units by mutual funds or UTI.
• Reduction of TDS rate on e-commerce operators from 1% to 0.1%, providing relief to online businesses.
• Decriminalization of delays in TDS payments up to the due date of filing the concerned statement.

Conclusion

The Union Budget 2024 presented by Finance Minister Nirmala Sitharaman focuses on providing tax relief to individuals and pensioners, simplifying tax structures, and stimulating economic growth. The revisions to tax slabs and the increase in the standard deduction are expected to benefit a large section of the population, providing them with higher disposable income. The changes to capital gains tax and angel tax are also significant, impacting investors and startups. Overall, the budget aims to balance the need for fiscal stimulus with revenue generation for the government.