- Government Vision: Aiming to simplify taxation as part of the broader vision for Vikasith Bharat (Developed India).
- New Income Tax Bill: A new Bill will reduce complexity, cutting both chapters and words by half. The focus is on good governance, reduced litigation, tax certainty, and responsive policymaking under the principle of Sabka Saath, Sabka Vikas.
Tax Rate Structure Revisions
No Tax on Income Up to ₹12 Lakh
- Individuals earning up to ₹12 lakh annually (₹1 lakh per month) will pay no income tax.
- For salaried taxpayers, due to the ₹75,000 standard deduction, this threshold becomes ₹12.75 lakh.
Revised Tax Slabs and Rates
- 0 – ₹4 lakh: 0%
- ₹4 – ₹8 lakh: 5%
- ₹8 – ₹12 lakh: 10%
- ₹12 – ₹16 lakh: 15%
- ₹16 – ₹20 lakh: 20%
- ₹20 – ₹24 lakh: 25%
- Above ₹24 lakh: 30%
Tax Rebates and Benefits
- Taxpayers earning up to ₹12 lakh (excluding special income like capital gains) will receive a rebate, resulting in zero tax payable.
- Examples of benefits:
- Income ₹12 lakh: ₹80,000 tax benefit (100% reduction).
- Income ₹18 lakh: ₹70,000 tax benefit (30% reduction).
- Income ₹25 lakh: ₹1,10,000 tax benefit (25% reduction).
- These reforms aim to increase disposable income, promoting consumption, savings, and investments.
Revenue Impact
- Estimated ₹1 lakh crore in direct taxes and ₹2,600 crore in indirect taxes will be foregone due to these proposals.
Other Major Tax Proposals
TDS and TCS Reforms
- Simplification through the reduction of the number of TDS rates and thresholds.
- Increased tax deduction limits:
- Senior citizens’ interest deduction limit raised from ₹50,000 to ₹1 lakh.
- TDS threshold for rent payments increased from ₹2.4 lakh to ₹6 lakh annually.
- TCS threshold for remittances under RBI’s Liberalized Remittance Scheme (LRS) raised from ₹7 lakh to ₹10 lakh.
- TCS exemption for educational remittances funded by loans from specified financial institutions.
- Higher TDS provisions for non-PAN holders.
Voluntary Compliance and Updated Returns
- Extended time limit for filing updated returns from 2 to 4 years.
- Success of updated returns: 90 lakh taxpayers voluntarily updating their incomes.
Charitable Trusts and Compliance Relief
- Registration period for small charitable trusts extended from 5 to 10 years.
- Provisions to prevent disproportionate penalties for minor compliance errors.
Property and Transfer Pricing Reforms
- Taxpayers can now claim the benefit of two self-occupied properties without conditions.
- Introduction of a 3-year block period for determining arm’s length pricing in international transactions.
- Expanded safe harbor rules to reduce litigation and enhance tax certainty in international taxation.
Senior Citizen Benefits
- Exemption for withdrawals from National Savings Scheme (NSS) accounts with no interest accrual after August 29, 2024.
- Extension of similar benefits to NPS (Vatsanya) accounts.
Digitalization and Dispute Resolution
- Implementation of paperless, digital processes for tax orders and appeals.
- Vivaat Se Vishwaas dispute resolution scheme: 33,000 taxpayers settled disputes.
Measures for Investment and Employment Promotion
Presumptive Taxation for Non-Residents
- New presumptive taxation scheme for non-residents providing services to electronics manufacturing facilities in India.
Safe Harbor for Electronics Manufacturers
- Tax certainty for non-residents storing components for supply to electronics manufacturers.
Tonnage Tax Extension
- Extension of the tonnage tax scheme to inland vessels registered under the Indian Vessels Act 2021 to promote inland water transport.
Startup Ecosystem Support
- Extension of startup benefits to companies incorporated before April 1, 2030, by an additional five years.
IFSC Investment Incentives
- Specific benefits for ship leasing units, insurance offices, and treasury operations in the International Financial Services Centre (IFSC).