Budget 2024: Prime Minister, Mr. Narendra Modi's government simplifies taxes, fosters foreign investments

Union Minister of Finance and Corporate Affairs, Ms. Nirmala Sitharaman, presented the first financial budget of the re-elected Prime Minister, Mr. Narendra Modi's government for its third consecutive term before the Parliament of India. This budget continues the Prime Minister, Mr. Narendra Modi Government’s focus on simplifying taxes, reducing litigation, and enhancing taxpayer services to boost tax compliance and business growth. Key measures include a comprehensive review of the Income Tax Act 1961, aimed at making it more concise and straightforward. Notable changes include merging two exemption regimes for charities, reducing the tax deducted at source (TDS) rate from 5% to 2% on various payments such as commission/brokerage and rent, and streamlining processes to facilitate better business prospects.

The budget also addresses litigation reduction through an amnesty scheme for dispute resolution, increasing monetary limits for appeals, and deploying additional officers to handle appeal pendency. Significant steps to enhance India’s attractiveness for both domestic and international investors include the abolition of the Angel tax and the equalization levy of 2% on e-commerce services provided by non-residents. Corporate tax rates for foreign companies have also been reduced from 40% to 35%. Other reforms involve rationalizing capital gains tax provisions, such as reducing holding periods to 12 months for listed securities and 24 months for other assets, increasing short-term capital gains tax to 20%, and setting long-term capital gains tax at 12.5%. On the personal taxation front, the new tax regime may provide savings of up to US$ 209.18 (Rs. 17,500), and increases in the standard deduction and family pension deduction are proposed. However, anticipated relief for salaried individuals remains limited. Overall, while the budget advances tax simplification and investment attractiveness, its impact on salaried individuals will become clearer in the coming months.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.