Budget 2024 Direct Tax Proposals
- Tax Slabs: The new tax regime has revised tax slabs as follows:
– ₹0-3 lakh: Nil
– ₹3-7 lakh: 5%
– ₹7-10 lakh: 10%
– ₹10-12 lakh: 15%
– ₹12-15 lakh: 20%
– Above ₹15 lakh: 30%
The old slab rates up to FY 2023-24 were
– ₹0-3 lakh: Nil
– ₹3-6 lakh: 5%
– ₹6-9 lakh: 10%
– ₹9-12 lakh: 15%
– ₹12-15 lakh: 20%
– Above ₹15 lakh: 30%
- Enhanced Limit of Standard Deduction and Family Pension Deduction
The new tax regime has increased the standard deduction for salaried individuals from Rs. 50,000 to Rs. 75,000. Additionally, the deduction for family pension has been increased to Rs. 25,000 from Rs. 15,000 for those filing taxes under the new regime.
- Simplification of Taxation of Capital Gains
The holding period for assets has been simplified to 12 months and 24 months, removing the 36-month holding period. Listed securities with a holding period exceeding 12 months are considered long-term. Unlisted bonds and debentures will attract tax on capital gains at applicable slab rates.
- Changes in rates of TDS
| Sections of TDS | Current rate of TDS | Proposed rate of TDS | WEF |
| Section 194D – Payment of insurance commission in case of other than company | 5% | 2% | 1st April 2025 |
| Section 194DA – Payment in respect of life insurance policy | 5% | 2% | 1st Oct 2024 |
| Section 194G -Commission on sale of lottery tickets | 5% | 2% | 1st Oct 2024 |
| Section 194H – Payment of commission or brokerage | 5% | 2% | 1st Oct 2024 |
| Section 194-IB – Payment of Rent by certain individuals or HUF | 5% | 2% | 1st Oct 2024 |
| Section 194M – Payment of certain sums by certain individuals or HUFs | 5% | 2% | 1st Oct 2024 |
| Section 194-O – Payment of certain sum by e-commerce operator to e-commerce participants | 1% | 0.1% | 1st Oct 2024 |
| Section 194F – Payment on account of repurchase of units by mutual funds or UTI | Proposed to be Omitted | 1st Oct 2024 | |
- Introduction of TDS on Payments Made to Partners by Firms (Section 194T)
A new TDS provision has been introduced for payments made by firms to partners, covering salary, remuneration, interest, bonus, or commission exceeding Rs. 20,000 at 10%.
- Increase in Limit for Partner’s Remuneration
The partner’s limit for remuneration has been increased under section 40(b) as follows:
On the first Rs.6,00,000 of book profit or loss | Rs.3,00,000 or 90% of the book profit,
whichever is higher |
On the remaining balance of book-profit | 60% of the book-profit |
- Abolishment of Angel Tax
The Angel tax provisions of Section 56(2)(viib) have been proposed to be removed, benefiting the startup ecosystem.
- Reduction of corporate tax on foreign companies
The corporate tax on foreign companies has been reduced from 40% to 35%.
- Securities Transaction Tax (STT)
STT on futures has been increased from 0.0125% to 0.02% and STT on options has been increased from 0.0625% to 0.1%.
- Short Term Capital Gains Tax
The rate for short-term capital gains tax on listed equity, equity-oriented mutual funds, and units of business trust has increased from 15% to 20%.
- Long Term Capital Gains Tax
- To support lower and middle-income individuals, the annual exemption limit for Long-Term Capital Gains from the transfer of equity shares, equity-oriented units, or units of Business Trust has been raised from Rs. 1 Lakh to Rs. 1.25 Lakh. However, the tax rate on these gains has been increased from 10% to 12.5%
- The tax rate on long-term capital gains from other financial and non-financial assets has been lowered from 20% to 12.5%. However, the indexation benefit, which was previously available for long-term assets, has been discontinued. As a result, any long-term asset sold on or after July 23, 2024, will be subject to a flat tax rate of 12.5% without the benefit of indexation.
- Deduction under section 80CCD
The deduction limit for employer contributions to the Pension scheme under Section 80CCD has been increased from 10% to 14% of the employee’s salary from the previous year
Other proposals
- Assessment Reopening: A reassessment can only be initiated beyond the three-year period if the undisclosed income exceeds Rs 50 lakh, and only up to a maximum of five years from the end of the assessment year. However, in cases where a search has been conducted, the reassessment period is reduced from 10 years to six years.
- Tax Dispute Appeals: The monetary limits for filing appeals in tax tribunals, high courts, and the supreme court have been increased to Rs 60 lakh, Rs 1 crore, and Rs 2 crore, respectively, to help reduce the number of pending cases.
- Vivaad se Vishwas Scheme: The government has revived this scheme to provide a platform for resolving income tax disputes and reducing litigation, enabling taxpayers to settle their disputes in a convenient and efficient manner
Certain changes with regard to Charitable Organizations wef 1st October 2024
- Condonation of delay in filing application for registration by trusts or institutions for registration under section 12A/12AB
- Rationalization of timelines for funds or institutions to file applications seeking approval under section 80G
- Rationalization of timelines for disposing applications made by trusts or funds or institutions, seeking registration for exemption under section 12AB or approval under section 80G – 6 months from the end of the quarter instead of 6 months from the end of the month.
Time limit to file correction statement in respect of TDS/ TCS statements
- Now TDS/TCS correction statements will not be filed after the expiry of 6 years from the end of the financial year in which the statement was filed wef 1st April 2025