The Union Budget 2024 has introduced several significant reforms in the income tax structure aimed at providing relief to taxpayers, promoting investment, and enhancing compliance. Here are the key highlights related to tax:
Direct Tax Proposal
Changes in Income Tax Slabs under New Regime
| Existing Tax Slabs in New Tax Regime | Proposed Tax Slabs in New Tax Regime | Rate of Tax% |
| Up to ₹ 3,00,000 | Up to ₹ 3,00,000 | Nil |
| ₹ 3,00,000 – ₹ 6,00,000 | ₹ 3,00,000 – ₹ 7,00,000 | 5% |
| ₹ 6,00,000 – ₹ 9,00,000 | ₹ 7,00,000 – ₹ 10,00,000 | 10% |
| ₹ 9,00,000 – ₹ 12,00,000 | ₹ 10,00,000 – ₹ 12,00,000 | 15% |
| ₹ 12,00,000 – ₹ 15,00,000 | ₹ 12,00,000 – ₹ 15,00,000 | 20% |
| ₹ 15,00,000 and above | ₹ 15,00,000 and above | 30% |
2.Enhanced Standard Deduction
Standard deduction for salaried employees has been increased from ₹ 50,000 to ₹ 75,000 per annum.
3.Increased Deductions under Section 80C
The limit for deductions under Section 80C has been increased from ₹1.5 lakh to ₹2 lakh. This encourages savings and investments in financial instruments like PPF, ELSS, and life insurance.
Deduction on family pension for pensioners has been increased from ₹ 15,000 to ₹ 25,000.
4. Reduced Corporate Tax Rates
Corporate Tax rates for foreign companies have been reduced from 40% to 35%.
5. Changes in Capital Gain Tax Rate
Uniform Capital Gains Tax Rate: A standardized capital gains tax rate of 15% for all types of assets held for over a year, simplifying the tax structure.
Long Term Capital Gain exemption on equity-oriented mutual funds and Equity Shares raised from ₹ 1 lakh to ₹ 1.25 Lakh annually.
Securities Transaction Tax (STT) on Futures and options increased to 0.2% and 0.1% respectively.
Long Term Capital Gain(LTCG) on certain financial assets increased to 12.5% (Earlier 10%)
Short-term capital gain (STCG) on certain financial assets will be subject to an increased rate of 20% (Earlier 15%).
Indexation benefit has been removed for the computation of LTCG.
Income from the buy-back of shares of a domestic company will be deemed dividends and taxed in the hands of the recipient.
6. Changes in TDS
Uniform TDS Rate for Interest Income: Standardized to 10% for various interest sources.
Higher TDS Threshold for Senior Citizens: Increased from ₹50,000 to ₹75,000 on interest income.
TDS for Freelancers and Professionals: Threshold raised from ₹30,000 to ₹50,000 annually.
TDS on Purchase of Goods: Revised rate from 0.1% to 0.05% for transactions over ₹50 lakh annually.
TDS on Virtual Digital Assets: 1% TDS on transfers exceeding ₹50,000 annually.
Clarification for Non-residents: Uniform TDS based on relevant DTAA provisions.
TDS on E-commerce Transactions: Threshold increased from ₹5 lakh to ₹10 lakh for individual sellers.
TDS on Dividend Income: Standardized at 10% for all payments.
TDS on Rent: Threshold increased from ₹2.4 lakh to ₹3 lakh annually.
TDS on electronic commerce operators under Section 194O reduced from 1% to 0.1%.
TDS under Section 194F on repurchase of units by mutual funds or UTI at the rate of 20% is to be withdrawn.
Any correction in the TDS/TCS statement can be made within six years from the end of the financial year.
Existing TDS rate of 5 percent on the following payments is being reduced to 2 percent:
Section 194D – Payment of insurance commission
Section 194DA – Payment in respect of life insurance policy
Section 194G – Commission etc on sale of lottery tickets
Section 194H – Payment of commission or brokerage
Section 194-IB – Payment of rent by certain individuals or HUF
Section 194M – Payment of certain sums by certain individuals or Hindu undivided family
TDS under Section 194T is proposed for the remuneration, interest, commission and bonus paid/payable to Partners of Partnership firm of more than ₹ 20,000 at the rate of 10%.
No imprisonment in case where payment of TDS has been made within the due date of filing the statement of such quarter.
7. Other Changes
For the National Pension Scheme (NPS), the Deduction of expenditure for employers and from the salary of employees is increased to 14% from the existing rate of 10%.
Launch of NPS Vatsalya has created a new investment avenue in the form of the ‘NPS Vatsalya’, designed to support long-term savings for minors. It enables parents and guardians to invest on behalf of minors, encouraging early financial planning