Finance Minister Nirmala Sitharaman presented the Union Budget 2024 in the Lok Sabha on February 1, setting the stage for economic policies amid the upcoming Lok Sabha Elections. In this interim budget, no changes were announced in the income tax slabs for both old and new regimes. Sitharaman emphasized that major announcements were deferred due to the impending polls in April-May.
The Modi Government’s Budget 2023 introduced significant regulations for income tax, with the new income tax regime becoming the default option. Citizens, however, have the flexibility to choose the benefits of the old tax regime. Sitharaman maintained the existing tax rates for both direct and indirect taxes, including import duties, providing much-needed clarity on the status of the new tax regime.
In a notable move on the direct taxation front, Sitharaman proposed withdrawing outstanding tax demands up to Rs 25,000 for the period up to the financial year 2009-10 and up to Rs 10,000 for financial years 2010-11 to 2014-15. This decision is expected to benefit around a crore taxpayers, easing their financial burden.
The only major change to taxation was introduced in relation to startups and investments made by sovereign wealth or pension funds. Additionally, tax exemptions on specific income of some IFSC units, set to expire on March 31, were extended by a year to March 31, 2025.
Sitharaman also highlighted the government’s commitment to social justice as an “effective and necessary governance model.” She emphasized the implementation of pro-people programs, sustained economic vigor, and efforts to create conditions conducive to boosting entrepreneurship and employment.
Discussing structural reforms, Sitharaman pointed out the transformation of the age-old jurisdiction-based assessment system with the introduction of Faceless Assessment and Appeal. These measures enhance efficiency, transparency, and accountability in taxpayer services. The introduction of updated income tax returns, a new Form 26AS, and prefilling of tax returns were cited as steps to simplify the filing process.
Importantly, Sitharaman noted a significant reduction in the average time taken for processing returns, dropping from 93 days in 2013-14 to just 10 days this year. This streamlined process facilitates faster refunds, contributing to a more taxpayer-friendly system.
As the Lok Sabha Elections loom and a new government is expected to form post-election, this interim budget sets the tone for economic policies, taxation reforms, and the government’s commitment to social justice. The full budget, scheduled for July, will likely unveil more comprehensive measures in line with the nation’s evolving economic landscape.