The Indian government has pledged to simplify its tax system, making it easier for individuals and businesses to understand and navigate. Finance Minister Nirmala Sitharaman, while presenting the Union Budget for 2024-25, announced a comprehensive review of the Income Tax Act. This review aims to ensure the Act is easy to read and understand, fostering greater transparency and clarity.
In addition to the review, the government will introduce a standardized operating procedure (SoP) for handling tax deducted at source (TDS) defaults. This initiative aims to streamline the process for addressing TDS discrepancies and provide clearer guidelines for taxpayers. The government will also simplify and rationalize the compounding process for TDS offenses, reducing the burden on taxpayers facing such issues.
Further emphasizing simplification, the Finance Minister announced the merger of two existing tax exemption regimes for charitable trusts into a single regime. This consolidation will simplify the process for charitable organizations and enhance transparency in their tax compliance.
The government’s commitment to simplification is evident in the growing adoption of the new tax regime. The Finance Minister revealed that a significant 58% of corporate tax revenue in Fiscal Year 2023 originated from the simplified tax regime. Additionally, over two-thirds of individuals have opted for the new income tax regime, indicating a clear preference for its streamlined approach.
In further efforts to enhance digital services, the government will develop dedicated mobile applications (DPI Apps) for credit, e-commerce, education, healthcare, law, MSME service delivery, and urban governance. These apps are designed to provide accessible and convenient services for citizens and businesses, promoting digital inclusivity and efficiency.
For those opting for the new tax regime, the government has introduced a significant incentive. The standard deduction for salaried employees under the new tax regime will be increased from Rs 50,000 to Rs 75,000. This increase aims to provide greater financial relief and enhance the attractiveness of the new tax regime for salaried individuals.
The new tax regime will also feature a revised tax slab structure. The revised slabs are as follows:
* 0-3 Lakhs: Nil
* 3-7 Lakhs: 5%
* 7-10 Lakhs: 10%
* 10-12 Lakhs: 15%
* 12-15 Lakhs: 20%
* Above 15 Lakhs: 30%
These changes are expected to further simplify the tax system, making it more accessible and beneficial for individuals and businesses. The government’s commitment to a simplified and efficient tax system signifies a positive step towards a more transparent and equitable tax environment in India.
