Budget 2024: FM Nirmala Sitharaman keeps Income Tax rates unchanged in Interim Budget. Here are the existing tax slabs

Budget updates: In her less than an hour Budget speech, FM Nirmala Sitharaman kept Income Tax rates unchanged in the Interim Budget. This has come as a disappointment for the taxpayers, especially the middle class who have been looking at some additions in the deduction list of the New Tax Regime.  

The finance minister also kept the tax rates for indirect taxes. including export duties, unchanged. 

“As for tax proposals, in keeping with the convention, I do not propose to make any changes relating to taxation and propose to retain the same tax rates for direct taxes and indirect taxes including import duties,” FM Sitharaman said.

FM Sitharaman in her Union Budget 2024 speech appreciated income taxpayers and said that the changes brought about in the new income tax regime last year.

She also announced that the average time for refunds has been reduced from 93 days in 2013-2014 to just 10 days in the last year.

Counting the NDA government's taxation reforms, FM Sitharaman said: "The Government has reduced and rationalized tax rates. Under the new tax scheme, there is now no tax liability for tax payers with income up to Rs 7 lakh, up from Rs 2.2 lakh in the financial year 2013-14. The threshold for presumptive taxation for retail businesses was increased from Rs2 crore to Rs 3 crore. Similarly, the threshold for professionals eligible for presumptive taxation was increased from Rs 50 lakh to Rs 75 Lakh. Also, corporate tax rate was decreased from 30 per cent to 22 per cent for existing domestic companies and to 15 per cent for certain new manufacturing companies." 

Outstanding tax demands

Giving some relief to those with outstanding tax demands,  Sitharaman said: “In line with our Government’s vision to improve ease of living and ease of doing business, I wish to make an announcement to improve tax payer services. There are a large number of petty, non-verified, non-reconciled or disputed direct tax demands, many of them dating as far back as the year 1962, which continue to remain on the books, causing anxiety to honest tax payers and hindering refunds of subsequent years. I propose to withdraw such outstanding direct tax demands up to twenty-five thousand rupees (Rs 25,000) pertaining to the period up to financial year 2009-10 and up to ten-thousand rupees (Rs 10,000) for financial years 2010-11 to 2014-15. This is expected to benefit about a crore tax-payers.”
 

Here are the existing tax slabs under the New and Old Tax Regime:

The old tax regime provides several tax exemptions and deductions for individuals. Some of the frequently claimed exemptions and deductions include house rent allowance (HRA), leave travel allowance (LTA), deductions under Sections 80C, 80D, 80CCD(1b), 80CCD(2), and others.

Income Slabs                    Individuals Below 60 Years and NRIs

> Up to Rs 2.5 lakh           NIL

> Rs 2.5 lakh - Rs 5 lakh   5%

> Rs 5 lakh - Rs 10 lakh    20%

> Rs 10 lakh                      30%

New Tax Regime

The exemptions and deductions in the Old Regime are not available in the New one. If the taxable income (after all deductions) under the old regime is below Rs 5 lakh, then the individual doesn’t need to pay any tax. Under the New Regime, the entire income will be tax-free if the taxable income is under Rs 7 lakh.

> For income up to Rs 3 lakh, there is no tax.

> For income of more than Rs 3 lakh up to Rs 6 lakh, it is 5 per cent.

> Over Rs 6 lakh up to Rs 9 lakh, it is 10 per cent.

> Over Rs 9 lakh to Rs 12 lakh, it is  15 per cent

> Over Rs.12 lakh to Rs.15 lakh, it is 20 per cent.

> Above Rs 15 lakh, it is  30 per cent

Reactions to Budget 2024

“The government has brought 10 million smiles to taxpayers by eliminating outstanding demands below 25,000 up to FY 2009-10 and below 10,000 up to FY 2014-15. This also means they are using their database wisely,” said Sandeep Shah, Managing Partner, N.A. Shah Associates.

“Despite no major announcements, tax buoyancy is expected to increase with a focus on simplified tax laws, easier compliance, and efficient administration thereby increasing taxpayer confidence and encouraging compliance. This could result in an increased tax base,” said Jiger Saiya, Partner & Leader, Tax & Regulatory Services, MSKA & Associates.

"No changes in tax slabs was expected as it is an Interim Budget. Infact Hon’ble Finance Minister had mentioned to expect nothing spectacular. Having said that the extension of the sunset period for Tax benefits of the 3 key areas that is IFSC, Start - ups & Sovreign Funds is welcomed," said Sucharita Basu, Managing Partner, AQUILAW.

“This is a welcome step and will obviate the requirement of involving the government machinery to look at extremely small and minor tax demands, which would be extremely difficult to recover. More importantly, it will also provide solace to a number of small taxpayers,” said SR Patnaik, Partner& Head Taxation;  Cyril Amarchand Mangaldas.

"Focus on rate rationalisation and simplifying the compliances coupled with steady growth have helped in the growth of taxpayers and tax collection. There was a pressing need to extend the timeline of 31 March 2024 providing beneficial rate of 15% corporate tax rate for new manufacturing companies, which has not been announced, said Pranay Bhatia, Partner, Tax & Regulatory Services, BDO India.