Introduction: Interim Budget 2024 presents a comprehensive overview of fiscal measures, emphasizing tax continuity and pivotal changes in direct and indirect taxes. This article dissects the significant aspects, including unchanged tax rates, withdrawal of outstanding demands, and the economic trajectory outlined by Finance Minister Nirmala Sitharaman.
No change relating to taxation has been proposed in the Interim Budget. The same rates for direct taxes and indirect taxes, including import duties, have been retained. However, to provide continuity in taxation, certain tax benefits to Start-Ups and investments made by sovereign wealth or pension funds as also tax exemptions on certain income of some IFC units have been extended by one year up to 31st March, 2025.
Withdrawal of Outstanding direct tax demands
Smt. Sitharaman made an announcement to improve tax payer services which is in line with the government’s vision to improve ease of living and ease of doing business. There are a large number of petty, non-verified, non-reconciled or disputed direct tax demands, many of them dating as far back as the year 1962, which continue to remain on the books, causing anxiety to honest tax payers and hindering refunds of subsequent years. The Interim Budget proposes to withdraw such outstanding direct tax demands up to Rs. 25000/- pertaining to the period up to financial year 2009-10 and up to Rs. 10,000/- for financial years 2010-11 to 2014-15. This is expected to benefit about a crore tax payers.
Direct tax collections trebled
Appreciating the tax payers for their support, Smt. Sitharaman said that over the last 10 years the direct tax collections have more than trebled and the return filers swelled to 2.4 times. She highlighted the fact the Government has reduced and rationalised the tax rates due to which under the new tax regime there is no tax liability for tax payers with income up to Rs. 7 lakh. She also mentioned about increase in threshold for presumptive taxation for retail businesses as well as professionals. The Minister also mentioned about decrease in corporate tax rates for existing domestic companies from 30% to 22%, and for certain new manufacturing companies to 15%. In her Interim Budget speech, the Minister said that in the last 5 years the Government’s focus has been to improve tax-payer services which has led to transformation of age-old jurisdiction-based assessment system, and filing of tax returns has been made simpler and easier. Average processing time of returns has been reduced from 93 days in the year 2013-14 to a mere ten days this year, thereby making refunds faster, she added.
GST reduced compliance burden
On indirect taxes, the Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman said that GST has reduced the compliance burden on trade and industry by unifying the highly fragmented indirect tax regime in India. Mentioning about a recent survey conducted by a leading consulting firm, she said that 94% of industry leaders view the transition to GST as largely positive. In her Interim Budget speech, the Minister highlighted the fact that tax base of GST has more than doubled and average monthly gross GST collection has almost doubled to Rs. 1.66 lakh crore this year. States too have benefited. States’ SGST revenue, including compensation released to states, in the post-GST period of 2017-18 to 2022-23, has achieved a buoyancy of 1.22. The Minister said that the biggest beneficiaries are the consumers as reduction in logistics cost and taxes have brought down prices of most goods and services. Mentioning about a number of steps taken in customs to facilitate international trade, Smt. Sitharaman said the import release time declined by 47 per cent to 71 hours at Inland Container Depots, by 28 per cent to 44 hours at air cargo complexes and by 27 per cent to 85 hours at sea ports, over the last four years since 2019.
Laying of White Paper
On the status of Indian economy, the Union Minister said that in 2014 the responsibility to mend the economy step by step and to put the Governance systems in order was enormous, which she said was done by the Government sucessfully following its strong belief of ‘nation-first’. She assured that the crisis of those years has been overcome and economy has been put firmly on a high sustainable growth path with all-round development. She announced that the Government will come out with a white paper, on ‘where we were then till 2014 and where we are now, only for the purpose of drawing lessons from the mismanagement of those years’.
Conclusion: Budget 2024 showcases a commitment to tax continuity, withdrawal of demands, and fostering economic progress. The withdrawal of outstanding demands and tax rationalization efforts align with the government’s vision for a simplified tax regime and sustained economic growth. The laid White Paper will provide a comprehensive understanding of India’s economic journey.
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