Budget 2024: No change in tax rates of direct, indirect taxes; tax benefits to startups extended till March 2025

Much along expected lines, Interim Budget 2024 refrained from any striking announcements tied to personal taxation.

Union Minister of Finance Niramala Sitharaman neither tweaked the existing tax slabs, in both the old tax regime as well as the new tax regime, nor placed any additional burden on taxpayers, largely in line with historical Interim Budgets.

“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,” Sitharam said.

This drew mixed reactions from industrialists and salaried workers across sectors.

“The interim budget is positive, maintaining neutrality across all tax slabs amidst these changing times. The decision to leave the taxation structure unchanged can be a relief to taxpayers,” Angad Bedi of BCD Group said, adding that the move reflects the government's willingness to absorb the impact of high inflation.

Not everyone agreed with it. “There was a pressing need to extend the timeline of March 31, 2024, providing a beneficial rate of 15 per cent corporate tax rate for new manufacturing companies, which has not been announced,” Pranay Bhatia, who is a partner for tax and regulatory services at BDO India, said.

However, a proposal to extend the expiry date for certain tax benefits awarded to startups and investments made by sovereign wealth or pension funds, to March 31, 2025, brought some cheer.

Furthermore, the withdrawal of certain outstanding direct tax demands, many of which date as far back as 1962, also came as relief for middle class Indians. Some “ petty, non-verified, non-reconciled or disputed direct tax demands” to the tune of Rs 25,000 pertaining to the period up to financial year 2009-10 and up to Rs 10,000 for financial years 2010-11 to 2014-15 will receive a one-time waiver, Sitharaman said.

“This is expected to benefit about a crore tax-payers,” she added.

“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 and Leader, Tax & Regulatory Services, MSKA & Associates.