Union Finance Minister Nirmala Sitharaman on Tuesday announced that 58 percent of tax revenue in the financial year 2024 came from the simplified corporate tax regime. More than two-thirds of individuals opted for the new income tax regime, she stated while presenting the Union Budget for fiscal year 2024-25 in the Lok Sabha.
In a bid to make the Income Tax Act more accessible, Sitharaman revealed that the government will undertake a comprehensive review of the Act. Additionally, a standard operating procedure (SoP) for TDS defaults will be introduced, and the process for compounding such offences will be simplified and rationalized. The two tax exemption regimes for charitable trusts will also be merged into one.
New Income Tax Regime
Under the new income tax regime for fiscal year 2024-25, the standard deduction for salaried employees has been increased to ₹75,000 from ₹50,000. This change will allow salaried employees to save up to ₹17,500 annually in taxes. The deduction limit for employers’ contributions to the National Pension System (NPS) has been raised to 14 percent from 10 percent. Moreover, the government has proposed to increase the tax deduction on family pensions for pensioners to ₹25,000 from ₹15,000.
Shipping
Sitharaman also proposed a simpler tax regime for foreign shipping companies operating domestic cruises in India. She emphasized the tremendous potential for cruise tourism in the country.
Goods and Services Tax
The Economic Survey report presented on Monday highlighted the significant impact of the Goods and Services Tax (GST) in reducing the country’s logistics costs. The ‘One Nation, One Tax’ regime has ensured that trucks no longer have to wait for hours at state borders, reducing travel time by up to 30 percent.
Among other announcements, Sitharaman mentioned that DPI apps would be developed for credit, e-commerce, education, health, law, MSME service delivery, and urban governance. Additionally, the government has decided to withdraw the equalisation levy of 2 percent.
