Budget 2024 Speech (Direct Tax And Indirect Tax)

Introduction: The Finance Minister’s direct tax proposals for the upcoming fiscal year reveal a strategic approach to taxation, focusing on continuity, taxpayer support, and rationalization efforts. This article delves into the significant aspects of the proposal, addressing both direct and indirect taxes.

Direct taxes

• FM proposes to retain same tax rates for direct taxes
• Direct tax collection tripled, return filers increased to 2.4 times, in the last 10 years
• Government to improve tax payer services
  • Outstanding direct tax demands upto Rs 25000 pertaining to the period upto FY 2009-10 withdrawn
  • Outstanding direct tax demands upto Rs 10000 for financial years 2010-11 to 2014-15 withdrawn
  • This will benefit one crore tax payers
• Tax benefits to Start-Ups, investments made by Sovereign wealth funds or pension funds extended to 31.03.2025
• Tax exemption on certain income of IFSC units extended by a year to 31.03.2025 from 31.03.2024 Indirect taxes
• FM proposes to retain same tax rates for indirect taxes and import duties
• GST unified the highly fragmented indirect tax regime in India
  • Average monthly gross GST collection doubled to Rs 1.66 lakh crore this year
  • GST tax base has doubled
  • State SGST revenue buoyancy (including compensation released to states) increased to 1.22 in post-GST period(2017-18 to 2022-23) from 0.72 in the pre GST period (2012-13 to 2015-16)
  • 94% of industry leaders view transition to GST as largely positive
  • GST led to supply chain optimization
  • GST reduced the compliance burden on trade and industry
  • Lower logistics cost and taxes helped reduce prices of goods and services, benefiting the consumers

Tax rationalization efforts over the years

• No tax liability for income upto Rs 7 lakh, up from Rs 2.2 lakh in FY 2013-14
• Presumptive taxation threshold for retail businesses increased to Rs 3 crore from Rs 2 crore
• Presumptive taxation threshold for professionals increased to Rs 75 lakh from Rs 50 lakh
• Corporate income tax decreased to 22% from 30% for existing domestic companies
• Corporate income tax rate at 15% for new manufacturing companies Achievements in tax-payer services
• Average processing time of tax returns has reduced to 10 days from 93 days in 2013-14
• Faceless Assessment and Appeal introduced for greater efficiency
• Updated income tax returns, new form 26AS and prefilled tax returns for simplified return filing
• Reforms in customs leading to reduced Import release time
  • Reduction by 47% to 71 hours at Inland Container Depots
  • Reduction by 28% to 44 hours at Air Cargo complexes
  • Reduction by 27% to 85 hours at Sea Ports

Economy-then and now

• In 2014 there was a responsibility to mend the economy and put governance systems in order. The need of the hour was to:
  • Attract investments
  • Build support to the much-needed reforms
  • Give hope to the people
• The government succeeded with a strong belief of ‘nation-first’
• “It is now appropriate to look at where we were till 2014 and where we are now”: FM
  • The Government will lay a White Paper on the table of the house.

Conclusion: The Finance Minister’s direct tax proposals signal a balanced approach, ensuring stability, taxpayer benefits, and ongoing rationalization efforts. The extension of benefits to key sectors and the commitment to efficient tax-payer services align with the broader goal of economic growth and transformation.