Budget Highlights 2024: Key Tax Proposals You Need to Know

The Finance Bill 2024 has introduced a slew of significant tax proposals aimed at easing the tax burden on individuals and businesses while promoting economic growth. Here’s a detailed breakdown of the important direct and indirect tax proposals that will impact taxpayers:

Important Direct Tax Proposals

1. Changes in Tax Rates under the New Regime:

• Adjustments in three tax slabs ranging from Rs. 3 lakhs to Rs. 12 lakhs.
• Resulting tax benefit of Rs. 10,000.
• New scheme slab rates:
  • Income up to Rs. 3 lakhs: Nil
  • Income from Rs. 3 lakhs to Rs. 7 lakhs: 5%
  • Income from Rs. 7 lakhs to Rs. 10 lakhs: 10%
  • Income from Rs. 10 lakhs to Rs. 12 lakhs: 15%
  • Income from Rs. 12 lakhs to Rs. 15 lakhs: 20%
  • Income above Rs. 15 lakhs: 30%

2. Standard Deduction:

• Increased from Rs. 50,000 to Rs. 75,000 in the new tax regime.
• Provides a tax benefit of Rs. 7,500.
• Not available under the old tax regime.

3. Family Pension Deduction:

• Raised from Rs. 15,000 to Rs. 25,000 under the new tax regime.

4. New Pension Scheme:

• Deduction for private employees’ contributions to NPS increased from 10% to 14% under the new tax regime.

5. Tax Rate for Foreign Companies:

• Reduced from 40% to 35%.

6. Uniform Long-Term Capital Gains Tax:

• Set at 12.5% for:
  • STT paid equity shares and units of equity-oriented funds.
  • Units purchased in foreign currency.
  • Bonds or GDRs purchased in foreign currency.
  • Securities of FIIs.
• Indexation benefits for long-term capital gains have been removed.
• Exemption for long-term capital gains increased from Rs. 1 lakh to Rs. 1.25 lakhs for STT paid equity shares and units of equity-oriented funds.

7. Revised Holding Period for Long-Term Capital Gains:

• For gold, listed debentures, listed bonds, and all units of mutual funds reduced from 36 to 24 months.
• Unlisted shares and immovable property remain at 24 months.
• Only two holding periods will continue: 12 months and 24 months.

8. Short-Term Capital Gains:

• On STT paid equity shares or units of equity-oriented funds, the tax rate increased from 15% to 20%.

9. Capital Gain Exemptions and Deductions:

• Exemptions for gifts, wills, or irrevocable trusts limited to Individual/HUF.
• Private company amounts received above fair value are no longer taxable.
• TDS and TCS rates have been revised for various transactions, including commissions, rents, and sales of immovable properties.

10. Pension Contributions and Settlements:

• Employer contributions to NPS increased from 10% to 14%.
• Settlements for law infractions will not be allowed as deductions.

11. Tax Dispute Resolution – Vivaad se Vishwas Scheme:

• Allows for settlement of appeals filed after January 31, 2020, on payment of the tax amount only.
• Different settlement terms for appeals filed before this date.

12. Block Assessments and Reassessments:

• Introduction of a block assessment scheme for search cases.
• Reassessment provisions revamped, with a reduction in the re-opening limit to 5 years and requiring approval from the Additional/Joint Commissioner.

13. Trusts and Charitable Organizations:

• Section 10(23C) regime merged with section 11.
• New rules for delay condonations, registration timelines, and merger exemptions for charitable trusts.

14. Miscellaneous Changes:

• Buy-back of shares treated as dividends.
• Presumptive taxation for non-resident cruise ship operators.
• Equalization levy on e-commerce supplies abolished.
• Transfer pricing officer (TPO) authority extended to specified domestic transactions.

Important GST Proposals

1. ITC and Refund Adjustments:

• Extended date for availing ITC for FY 2017-18 to 2020-21 to November 30, 2021.
• Refund restrictions on goods subject to export duty.
• New provisions for conditional waivers of interest and penalties.

2. Pre-deposit and Summons:

• Reduced pre-deposit rates for appeals to GSTAT.
• Summons can now be attended by authorized persons.

3. Specific Adjustments:

• Waivers for interest and penalties for specific periods.
• ITC availability between cancellation and revocation periods.
• Introduction of mandatory monthly TDS returns.

The Finance Bill 2024 reflects a comprehensive approach to modernizing the tax system, offering substantial benefits to taxpayers while ensuring greater compliance and streamlined processes. Stay informed and consult with your tax advisor to understand how these changes might impact your tax liabilities and benefits.