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- Outstanding direct tax demands upto Rs 25000 pertaining to the period upto FY 2009-10 withdrawn
- Outstanding direct tax demands upto Rs 10000 for financial years 2010-11 to 2014-15 withdrawn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.
