Interim Budget 2024: Why the income tax rebate or slabs were not revised? Here's what FM Sitharaman said

Finance Minister Nirmala Sitharaman on Saturday said that the Interim Budget 2024 wasn't the time for her to take a call on income tax rebate or revision of tax slabs. Speaking to Business Today TV, Sitharaman, two days after presenting the Budget statement in the Parliament, said like many sectors, revision of tax rates was not meant for the Interim Budget. 

"As I said for many other things, the Interim Budget 2024 was not the time for me to take a call on that (tax rates), Sithraman said on Saturday. 

It is to be noted that FM Sitharaman on February 1 proposed to retain the same tax rates for both direct and indirect taxes, including import duties. She also maintained the status quo on the capital gains structure, opting not to introduce any changes.

“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.

However, Sitharaman proposed to withdraw small, non-reconciled and disputed direct tax demands. This implies tax demands of up to Rs 25,000 pertaining to the period up to FY 2009-10, and up to Rs 10,000 for FY 2011 to 2015 — would be withdrawn. 

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.”

Speaking on the decreased household savings in the past few years under the Narendra Modi-led government, FM Sitharaman said the notion is wrong. 

"As much as you speak about small savings, the only option for middle class to save money in post office small savings schemes. Besides this, we have noticed this from 2020 that people are going for other form of investments due to greater transparency and greater confidence in the system," Sitharaman said.   

Under the prevailing Old Tax structure, an annual income less than Rs 2.5 lakh attracts no taxation. However, a 5% tax is applied on an income bracket ranging from Rs 2.5 lakh to Rs 5 lakh. Moreover, earnings between Rs 5 to 10 lakh are subject to a tax rate of 20%, and for those who have an annual income surpassing Rs 30 lakh, the imposed taxation stands at a substantial measure of ​​30%.

Under the New Tax Regime, there is a 0% taxation on annual incomes up to Rs 3 lakh. A tax rate of 5% applies to earnings between Rs 3 lakh and Rs 6 lakh. Any income falling within the range of Rs 6-9 lakh will be taxed at 10%, while an annual income bracket of Rs 9-12 lakh will attract a levy of 15%. A 20% tax imposition is firmly placed on revenues in the vicinity of Rs 12-15 lakh, whereas a sharp surge to 30% taxing prevails for any income exceeding Rs 15 Lakh annually.

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 taxpayers 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." 

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