Direct Tax Highlights
No personal income tax payable upto income of Rs 12 lakh (i.e. average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime.
This limit will be Rs 12.75 lakh for salaried tax payers, due to standard deduction of Rs 75,000.
The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment.
The new Income-Tax Bill to be clear and direct in text so as to make it simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation.
Revenue of about ₹ 1 lakh crore in direct taxes will be forgone.
Revised tax rate structure
In the new tax regime, the revised tax rate structure will stand as follows:
| 0-4 lakh rupees | Nil |
| 4-8 lakh rupees | 5 percent |
| 8-12 lakh rupees | 10 percent |
| 12-16 lakh rupees | 15 percent |
| 16-20 lakh rupees | 20 percent |
| 20- 24 lakh rupees | 25 percent |
| Above 24 lakh rupees | 30 percent |
TDS/TCS rationalization for easing difficulties
Rationalization of Tax Deduction at Source (TDS) by reducing number of rates and thresholds above which TDS is deducted.
The limit for tax deduction on interest for senior citizens doubled from the present Rs 50,000 to Rs 1 lakh.
The annual limit of Rs 2.40 lakh for TDS on rent increased to Rs 6 lakh.
The threshold to collect tax at source (TCS) on remittances under RBI’s Liberalized Remittance Scheme (LRS) increased from Rs 7 lakh to Rs 10 lakh.
The provisions of the higher TDS deduction will apply only in non-PAN cases.
Decriminalization for the cases of delay of payment of TCS up to the due date of filing statement.
Reducing Compliance Burden
Reduction of compliance burden for small charitable trusts/institutions by increasing their period of registration from 5 years to 10 years.
The benefit of claiming the annual value of self-occupied properties as nil will be extended for two such self-occupied properties without any condition.
Ease of Doing Business
Introduction of a scheme for determining arm’s length price of international transaction for a block period of three years.
Expansion of the scope of safe harbour rules to reduce litigation and provide certainty in international taxation.
Exemption of withdrawals made from National Savings Scheme (NSS) by individuals on or after the 29th of August, 2024.
Similar treatment to NPS Vatsalya accounts as is available to normal NPS accounts, subject to overall limits.
Employment and Investment
Tax certainty for electronics manufacturing schemes
Presumptive taxation regime for non-residents who provide services to a resident company that is establishing or operating an electronics manufacturing facility.
Introduction of a safe harbour for tax certainty for non-residents who store components for supply to specified electronics manufacturing units.
Tonnage Tax Scheme for Inland Vessels
The benefits of existing tonnage tax scheme to be extended to inland vessels registered under the Indian Vessels Act, 2021 to promote inland water transport in the country.
Extension for incorporation of Start-Ups
Extension of the period of incorporation by 5 years to allow the benefit available to start-ups incorporated before 1.4.2030.
Alternate Investment Funds (AIFs)
Certainty of taxation on the gains from securities to Category I and Category II AIFs which are undertaking investments in infrastructure and other such sectors.
Extension of investment date for Sovereign and Pension Funds
Extension of the date of making investments in Sovereign Wealth Funds and Pension Funds by five more years, to 31st March, 2030, to promote funding from them to the infrastructure sector.