Income Tax Slabs 2024 Highlights: ‘Middle class gets relief in income tax…have more money in hands’, says Nirmala Sitharaman

Income Tax Slabs 2024 Highlights: The government has increased the Standard Deduction limit to Rs 75,000, allowing the salaried class to save up to Rs 17,500 in taxes under the new regime. Join us for live updates and expert insights.

Income Tax Slabs, Union Budget 2024 Highlights: In the Union Budget 2024-2025 presented by Finance Minister Nirmala Sitharaman on Tuesday, the new tax regime got better for the middle class with the increase in standard deduction to Rs 75,000 from Rs 50,000. The tax slabs also got tweaked with those falling in Rs 3-7 lakh income bracket requiring to pay 5 percent as tax. While those falling in Rs 7-10 lakh, Rs 10-12 lakh are required to pay 10 and 15 percent of their income as tax.

Commening on the new slab, Sitharaman in a interview with DD said its a relief for the middle class and they are going to have more money in hand. The Budget also proposed a slew of tax simplifcation measures including a complete review of the Income Tax Act, decriminalisation of late payment of tax deducted at source (TDS) and the Vivaad Se Vishwas Scheme 2024 for settling direct tax disputes.

Sitharaman also proposed to remove the indexation benefit permissible for calculation of any long-term capital gains in property, gold and other unlisted asset purchases. The capital tax gains on these assets have been proposed to be at 12.5 percent instead of 20 per cent.

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In a recent statement, former Finance Minister P Chidambaram highlighted the complexities surrounding wage relief in India. While the government claims to have provided relief, the reality is stark. With around 65% of taxpayers having zero tax liability, the relief primarily benefits only 2-3 crore individuals amidst a population of 140 crore. The household consumption data reveals a troubling disparity: the bottom 50% hold a mere 3% of national wealth. With 30 crore daily laborers and many in irregular jobs, the question remains—what tangible support is being offered to those at the bottom of the economic ladder?

Besides Pehli Naukri Pakki and the abolition of the Angel Tax, another idea that the Finance Minister has adopted from the INC’s Nyay Patra 2024 are the Employment-linked Incentives (ELIs). However, the ELIs announced in the Budget raise questions about their effectiveness.

The… pic.twitter.com/9ZKl9d6NGn

As of the latest budget, the standard deduction for salaried individuals is ?50,000, which reduces taxable income directly.

The Union Budget 2024 has simplified tax calculations for many. Learn how the changes in tax slabs and deductions can ease your financial burden and help you keep more of your hard-earned money! Read More

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

Discover how the recent tweaks in the New Tax Regime can save taxpayers up to ?17,500 annually. With increased standard deductions and revised tax slabs, it’s time to reassess your tax strategy and maximize your savings! Read More

Long-term capital gains arise from the sale of assets held for more than 24 months, while short-term gains are from assets held for less than 24 months, with different tax rates applicable.

Late filing of returns can attract penalties ranging from ?1,000 to ?10,000, depending on the delay, and interest on any unpaid tax.

Capital gains tax is calculated on the profit from the sale of capital assets. Long-term gains (assets held for over two years) are taxed at 20%, while short-term gains are taxed at the individual's income tax slab rate.

For individuals below 60 years, the basic exemption limit is ?2.5 lakh. For senior citizens, it is ?3 lakh, and for super senior citizens, it is ?5 lakh.

The old tax regime allows taxpayers to claim various deductions and exemptions, while the new regime offers lower tax rates but removes most deductions. Taxpayers can choose between the two.

The new tax regime introduced in India offers lower tax rates with fewer exemptions and deductions. It provides taxpayers with the option to choose between the old and new regimes, allowing flexibility based on individual financial situations. Key features include reduced tax slabs for various income brackets, simplified compliance requirements, and the elimination of specific deductions. The new regime aims to enhance transparency and ease of compliance, making it easier for taxpayers to calculate their tax liabilities. However, taxpayers must carefully evaluate their financial circumstances to determine which regime is more beneficial for them.

The Black Money (Undisclosed Foreign Income and Assets) Act, 2015, aims to combat the issue of undisclosed foreign income and assets held by Indian residents. It imposes stringent penalties for non-disclosure of such assets, including hefty fines and imprisonment. The Act empowers the government to investigate and prosecute individuals who fail to report foreign income or assets, thereby promoting transparency and accountability. Recent proposals to decriminalise non-reporting of small foreign assets valued up to ?20 lakh aim to alleviate the burden on taxpayers while maintaining compliance with international norms.

The budget proposes to reduce the time limits for the reassessment of income from ten years to five years. Furthermore, assessments can only be reopened beyond three years if the escaped income exceeds ?50 lakh. This change aims to provide greater clarity and certainty for taxpayers, reducing the potential for prolonged disputes and litigation. By streamlining reassessment procedures, the government seeks to enhance taxpayer confidence and compliance, ultimately contributing to a more efficient tax administration system that minimizes uncertainty and maximizes revenue collection.

Merging the two existing tax exemption regimes for charities aims to simplify the tax framework governing charitable trusts and institutions. This consolidation will streamline the registration and approval processes, reducing administrative burdens and enhancing transparency. By creating a unified regime, the government intends to facilitate easier compliance for charities, ensuring that they can focus more on their social missions rather than navigating complex tax regulations. This move is expected to foster greater charitable contributions and improve the overall efficiency of charitable operations in India.

The decriminalisation of late payment of TDS allows taxpayers to pay their dues without facing penal consequences, provided they do so before the deadline for filing the TDS statement. This measure aims to reduce litigation and encourage timely compliance, easing the burden on taxpayers who may face difficulties in meeting deadlines. By focusing on compliance rather than punishment, the government seeks to create a more conducive environment for taxpayers, fostering a culture of accountability and reducing the overall administrative burden associated with TDS payments.

The recent budget has proposed several changes to TDS rates. Notably, the TDS rate on repurchase of units by mutual funds has been withdrawn, while the rate for e-commerce operators is set to decrease from 1% to 0.1%. Additionally, the TDS rate for various transactions, including insurance commissions and brokerage payments, will reduce from 5% to 2%. These changes aim to simplify tax compliance and encourage investment by lowering the tax burden on individuals and businesses, ultimately promoting economic growth and financial inclusion.

The Vivad se Vishwas scheme is an initiative by the Indian government aimed at resolving direct tax disputes. Launched to reduce litigation, it allows taxpayers to settle their disputes by paying the disputed tax amount without interest or penalty. The scheme encourages compliance and aims to clear backlogs in tax disputes, providing a one-time opportunity for taxpayers to resolve their issues amicably. It simplifies the process, making it easier for taxpayers to come forward and settle their dues, ultimately contributing to better tax administration and revenue collection.

Tax Deducted at Source (TDS) is a tax collection mechanism in India where a certain percentage of an individual's income is deducted at the source of payment. It applies to various income types, including salaries, interest, and dividends. The deductor is responsible for deducting this tax and depositing it with the government. TDS aims to ensure a steady revenue stream for the government and reduce tax evasion. Individuals can claim TDS as a credit against their total tax liability when filing their income tax returns, helping them avoid double taxation.

In a post-Budget media interaction, Finance Minister Sitharaman said that the government’s intent is to have a simple income tax regime and widen the tax base, and the simplified NTR is part of that effort. Responding to a question on whether the government is planning a sunset for the OTR as part of the planned comprehensive review of the Income Tax Act, Sitharaman said that she cannot comment on it till the review is done.

While all taxpayers with taxable income of over Rs 12 lakh will save Rs 10,000 on account of rate rationalisation, their savings on account of the increase in standard deduction would be lower than those in the top tax bracket. This is because the savings due to higher standard deduction are calculated based on the applicable income tax rate, which would be different for different income groups.

Tax payers falling in the highest tax bracket—those with a taxable income of Rs 15 lakh or more–will save Rs 7,500 on account of enhancement in the standard deduction limit under the NTR. In addition to this benefit, the rate rationalisation will lead to savings of Rs 10,000 for this segment of taxpayers, taking their total savings to Rs 17,500.

Responding to the Budget, the Income Tax department said 'substantial tax savings' are expected for a vast majority of taxpayers due to reduction in the long term capital gains tax (LTCG) rate in the real estate sector.

While the indexation benefit available to taxpayers has been removed, tax rates on capital gains earned from sale of house properties held for long term has been reduced in the Budget.

In a post on X, the I-T department on Wednsday said the nominal real estate returns are generally in the region of 12-16 per cent per annum, much higher than inflation. "The indexation for inflation is in the region of 4-5 per cent, depending on the period of holding. Therefore, substantial tax savings are expected to a vast majority of such taxpayers."

In a relief to startups, the Centre announced removal of angel tax for all classes of investors. ‘Angel tax’, at 30.9 per cent, refers to income tax imposed on funding raised by an unlisted company when its shares are issued to an investor at a price higher than its fair market value.

Removal of the Angel tax for startups was a long pending issue as this levy was on investment coming into the country and such overseas inflows should not be taxed, a top government official was quoted as saying by PTI.

Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Rajesh Kumar Singh told PTI the decision will help in attracting foreign investments, promoting innovation and further strengthening the startup ecosystem of the country, which is the third largest in the world.

"So this was an ease of doing business issue as well as a tax issue. Ultimately, it was a tax not on income but on investments and investments should not get taxed, that is the basic idea," Singh told PTI.

In the Union Budget session yesterday, Finance Minister Nirmala Sitharaman announced the abolition of the Angel Tax - the income tax that is levied when an unlisted company issues shares to an investor at a price higher than its fair market value.

Responding to the abolition, Mahesh Murthy, a venture capital investor said its too little and too late. “Angel investment happens when people see a reasonable chance of getting outsize returns once their basic personal investments in equity and mutual funds are taken care of. The nature of startup investing is that no one values a startup at ‘fair market value’. These values approach fair market prices when the startup lists or is acquired,” he said.

The Old Tax Regime (OTR) was left untouched in the Union Budget for 2024-25, and the additional savings offered under the NTR may be seen as further sweetening of the new regime in a bid to attract more salaried taxpayers to it. Over the past few years, the government has been trying to make the simple and exemption-free NTR the preferred tax regime for salaried taxpayers.

In the new tax regime, you had kept no tax till Rs 7 lakh. Under the new slab, what’s the motive? You said you’ll review the Income Tax act in the next six months. Are we going towards a direct tax code?

"Yes. We are moving toward it to simplify it. Why was the new tax regime needed? Instead of filling forms in the same system with a hassle, whether you need an exemption or not, come into this system. Rate is less too. If you don’t need exemptions, you’re getting a better rate here.

Secondly, after the scheme’s launch, people said to give the minimum possible standard deduction. We took it till Rs 50,000. This time, that has been raised to Rs Rs 75,000. So that people have money left in their hand.

Apart from this, even in the rate, we’ve simplified and reduced. So the middle class gets relief in income tax, and we’re moving to have more money in their hands. This time, with the tax rates and standard deduction, it’s relief for the middle class.

When I say I’ll review the income tax… I gave the example of the old and new regime, but there’s a lot else that needs simplification. We’ll work towards it. So you don’t need to read such a big book on the income tax, it’ll just be a simple form and you can file taxes. Even the follow-up should be simple…," said Finance Minister Nirmala Sitharaman. Read more

Nil for income between Rs 0 and 3 lakh
5 per cent for income between Rs 3 and 7 lakh
10 per cent for income between Rs 7 and 10 lakh
15 per cent for income between Rs 10 and 12 lakh
20 per cent for income between Rs 12 and 15 lakh
30 per cent for income above Rs 15 lakh

According to Commerce and Industry Minister Piyush Goyal, the removal of angel tax for all classes of investors will help attract investments in the segment and further promote the growth of budding entrepreneurs.

The move would mainly help emerging sectors like deeptech, artificial intelligence, clean energy, among others, which require a large amount of capital at an early stage.

The decision will also reduce disputes and litigation, thereby providing tax certainty and policy stability. Besides, it will also bring down the demand embroiled in assessment and litigation.

Angel tax -- income tax at the rate of 30 per cent -- 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.

Deemed as an anti-abuse measure, Section 56(2)(viib) of the Income Tax Act provides that the amount raised by a startup in excess of its fair market value would be considered as income from other sources and would be taxed at 30 per cent.The section was introduced in 2012. It is called 'angel tax' due to its impact on investments made by angel investors in startup ventures.

The abolition of angel tax is expected to boost investment in start-ups by removing a significant financial obstacle. This is anticipated to encourage more funding from both domestic and foreign investors, which is crucial for the growth of the start-up ecosystem.

"Our intention is - simpler tax regime. Cannot say whether there will be a sunset on the Old Tax Regime. Decision after a review": the Finance Minister told NDTV.

The scope of angel tax was expanded to include non-resident investors starting April 1, 2024. This change increased the tax burden on foreign investments, which are crucial for the Indian start-up ecosystem.

Angel tax was introduced during the UPA era, said the finance minister, adding the government initially kept the tax as the continuum a principal of good governance.

Angel tax was introduced in 2012 to prevent the use of unaccounted money in investments by taxing shares issued at prices above their fair market value. It aimed to curb money laundering and ensure transparency in capital raising

On 12.5% tax on long-term capital gains, Union Finance Minister Nirmala Sitharaman says, "...We wanted to simplify the approach to taxation - also for the capital gains. Second, if anything, the average taxation has actually come down when we say it is 12.5%. We have worked out for each of the different asset classes...The point that we brought it down from below the average to 12.5% encourages investment in the markets..."

Angel tax was problematic because it taxed the difference between the issue price of shares and their fair market value, which start-ups and investors argued hindered funding. The tax was seen as a deterrent to investment, particularly in a challenging funding environment.

The Union Budget 2024 has announced the abolition of angel tax for all classes of investors. This move is intended to facilitate easier capital raising for start-ups and address concerns that the tax was a barrier to investment.

The government proposes merging the two tax exemption regimes for charities into one, simplifying compliance. The 5% TDS rate on various payments will be consolidated into a 2% rate, while the 20% TDS on mutual fund repurchases will be withdrawn. The TDS rate for e-commerce operators will drop from 1% to 0.1%. Additionally, TCS credit will be applicable against TDS on salaries. To foster a more lenient tax environment, delays in TDS payments will be decriminalized up to the filing due date, alongside the introduction of standard operating procedures for TDS defaults.

Finance Minister Nirmala Sitharaman on Tuesday said a solution will be evolved with respect to the New Pension Scheme (NPS) that will address relevant issues and ensure fiscal prudence.

Several non-BJP-ruled states had decided to revert to the DA-linked Old Pension Scheme (OPS) and also employee organisations in some other states have raised demand for the same.

In her Budget Speech in the Lok Sabha, Sitharaman said the Committee to review the NPS has made considerable progress in its work.

In a bid to provide surplus at the hands of the middle class, Finance Minister Nirmala Sitharaman announced an increase in the standard deduction to Rs 75,000 from Rs 50,000, and also tweaked the tax slabs under the simplified New Tax Regime (NTR) marginally. These decisions will provide a tax benefit of up to Rs 17,500 per year to individual taxpayers under the NTR.

The Old Tax Regime was left untouched in the Union Budget for 2024-25, and the additional savings offered under the NTR may be seen as further sweetening of the new regime in a bid to attract more salaried taxpayers to it. Over the past few years, the government has been trying to make the simple and exemption-free NTR the preferred tax regime for salaried taxpayers. Read More

Under the old regime, the tax rates were:

0% for income up to Rs 5 lakh
15% for income between Rs 5 and 7.5 lakh
20% for income between Rs 7.5 and 10 lakh
30% for income above Rs 10 lakh

5% for income between Rs 3 and 6 lakh
10% for income between Rs 6 and 9 lakh
15% for income between Rs 9 and 12 lakh
20% for income between Rs 12 and 15 lakh
30% for income above Rs 15 lakh

In the 2023-24 Union Budget, the rebate limit was increased to Rs 7 lakh under the new tax regime, up from the previous limit of Rs 5 lakh.

The government has digitalized all major taxpayer services, enhancing efficiency and accessibility.

The Vivad se Vishwas scheme is aimed at resolving tax disputes, as announced in the 2024-25 budget.

The Union government abolished the angel tax for all classes of investors in the 2024-25 budget.

0% tax for income between Rs 0 and 3 lakh
5% for income between Rs 3 and 7 lakh
10% for income between Rs 7 and 10 lakh
15% for income between Rs 10 and 12 lakh
20% for income between Rs 12 and 15 lakh
30% for income above Rs 15 lakh

Approximately 4 crore salaried individuals and pensioners are expected to benefit from these changes.

The deduction limit on family pensions has been enhanced from Rs 15,000 to Rs 25,000 in the 2024-25 Union Budget.

In the Union Budget 2024-25, Finance Minister Nirmala Sitharaman announced that the standard deduction for salaried employees would be increased from Rs 50,000 to Rs 75,000.

Short-term gains on certain financial assets will now be taxed at 20 percent, while the rest will be subjected to the applicable tax rate. This change aims to standardize the taxation of short-term financial gains.

"We can expect short-term market volatility following the recent tax rate changes, as such adjustments likely to affect investor sentiment. In her speech, the Finance Minister announced that long-term capital gains on all financial and non-financial assets will now be taxed at 12.5%. Additionally, the exemption limit for capital gains will be set at Rs 1.25 lakh per year. The Securities Transaction Tax (STT) on Futures and Options has also been increased: the STT on futures will rise from 0.0125% to 0.02%, and the STT on options will increase from 0.0625% to 0.10%. These changes are likely to impact investor behaviour and market dynamics. The increase in long-term capital gains tax might prompt some investors to reassess their investment strategies, particularly in assets that were previously more tax efficient. The hike in STT on Futures and Options could lead to a decline in trading volumes in these segments, as the higher transaction costs might deter frequent trading. Overall, while these measures aim to boost government revenues, they could introduce a period of adjustment and uncertainty in the markets"

- Adhil Shetty, CEO, BankBazaar.com

The Tax Deducted at Source (TDS) rate on e-commerce operators has been reduced from 1 percent to 0.1 percent. This reduction lowers the tax compliance burden on e-commerce businesses and facilitates smoother transactions.

The abolition of the angel tax provides significant relief to startups by eliminating the tax on investments received above the fair market value of their shares. This move is expected to foster innovation and growth in the startup ecosystem.

The corporate tax rate for foreign companies has been reduced to 25%. This reduction is aimed at making the Indian corporate tax landscape more attractive to foreign businesses and investors.

All eyes are on the Union Budget set to be presented by Finance Minister Nirmala Sitharaman in Parliament shortly. The first Budget to be presented by Prime Minister Narendra Modi's third government assumes much significance with the BJP falling short of a majority to form government and instead seeking alliance.

With rallying cries over unemployment, inflation, one needs to wait and watch if the government has brought shift in its approach from the interim Budget presented in February. Only Sitharaman's speech will address the queries.

Meanwhile, during the Budget session one comes across a slew of jargon - capital expenditure, tax buoyancy, non-debt capital receipts, fiscal deficit, revenue deficit, effective revenue deficit — the list seems endless and quite capable of causing palpitations. Udit Misra explains the terms in detail.

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