Income Tax Budget 2024: Tax Slabs Unchanged; Direct Tax Demand Withdrawal Brings Relief to 10 Million Taxpayers

Delhi: On Interim Union Budget 2024, Union Minister Piyush Goyal says, “Finance Minister Sitaramanji, in her interim budget, has been able to bring out a confident India story. A story of resilience despite severe geopolitical tensions. A story of growth and forward movement which will make India a developed nation by 2047. A story which talks about every section of society. Be it our youth, farmers, poor, or women. Every section has received due attention. It’s very progressive, very forward-looking and lays the foundation of a prosperous India…”

Finance Minister Nirmala Sitharaman on Thursday proposed some tax benefits to startups and pension funds. The government has taken various measures to promote startups in the country. As many as 1.17 lakh startups are recognised by the government so far.

An Action Plan for Startup India was unveiled on 16th January 2016. In this, the government provides tax and non-fiscal incentives. The minister also said that the Indian economy has been put on strong and sustainable growth path.

The finance ministry in its latest monthly economic review said that the Indian economy will become the third largest in the world in the next three years with a GDP of USD 5 trillion from the current USD 3.7 trillion. It also said India can aspire to become a USD 7 trillion economy in the next six to seven years (by 2030).

Finance Minister Nirmala Sitharaman on Thursday hiked capital expenditure by 11 per cent for the next fiscal to sustain world-beating economic growth rate while trimming the deficit in a reform-oriented interim budget that also gave relief to common man from disputed small tax demands of up to Rs 25,000. Presenting a vote on account or an interim budget for 2024-25, Sitharaman proposed no changes in income tax rates for individuals and corporates, as well as customs duty.

In less than an hour-long budget speech, she presented the Modi government’s achievements in the last 10 years that transformed India from being a ‘fragile’ economy to the world’s fastest-growing major economy. She hiked capital expenditure to Rs 11.11 lakh crore for 2024-25 while trimming the fiscal deficit for this financial year to 5.8 per cent, from the budgeted 5.9 per cent of GDP, and further lowering to 5.1 per cent in the next fiscal.

Stating that every challenge of the pre-2014 era was overcome through economic management and governance, she said the government, in its July budget, will present a detailed roadmap to make India a developed country. “Guided by the principle ‘reform, perform, and transform’, the Government will take up next-generation reforms, and build consensus with the states and stakeholders for effective implementation,” Sitharaman said in her speech.

The government has pegged non-tax revenue collection estimates from the communications sector at about Rs 1.20 lakh crore for 2024-25 and expects to exceed the budget estimates for the current fiscal. As per the interim budget document, the government has revised the revenue estimate from other communication services’ for the current fiscal to Rs 93,541.01 crore from the earlier projection of Rs 89,469.17 crore mentioned in the previous budget.

The revenue collections for 2024-25 are seen at Rs 1,20,267.31 crore. Finance Minister Nirmala Sitharaman presented the interim Budget on Thursday. The full Budget will be presented by the new government after the Lok Sabha elections.

The actual revenue receipts of the government in 2022-23 were Rs 64,835.17 crore. The non-tax revenue receipts from the other communication services mainly relate to licence fees from telecom operators and receipts on account of spectrum usage charges.

“I think it is an incredibly positive budget. The government is following a roadmap towards a developed India by 2047. I think all the steps that are being taken are towards the larger objective,” says Ajay Singh, President Industry body Assocham President and Chairman and Managing Director (CMD) of SpiceJet on Union Budget 2024.

Finance Minister Nirmala Sitharaman on Thursday announced a resolution scheme for “disputed direct tax demand” dating back to even 1962. In the Union Budget for 2024-25, the government announced the withdrawal of outstanding direct tax demands up to Rs 25,000 pertaining to the period up to the financial year 2009-10 and up to ₹10,000 for 2010-11 to 2014-15.

The move is expected to benefit about 10 million taxpayers.

The governmentkept a tight check on spending even though it is heading into national elections, budgeting for its fiscal deficit to narrow sharply in the current financial year.

BUDGET NUMBERS FOR INVESTORS

• The government is targeting to reduce its fiscal deficit to 5.1% of GDP in 2024-25 from 5.8% in the current financial year.
• While reducing its budget gap, the government raised capital expenditure, which includes spending on infrastructure projects and supports economic growth, by 11%.
• Subsidies on food and fertilisers, however, were nearly unchanged compared to the previous year.

WHERE DOES THE MONEY COME FROM?

• Most of the government’s revenues come from taxes and the increase in taxes is linked to the expected growth in nominal gross domestic product (GDP), which includes the impact of inflation.
• The government is expecting nominal GDP growth of 10.5% in 2024-25 and sees its tax revenues rising 11.5%, which economists see as achievable.

TAX-TO-GDP RATIO

• In 2023-24, India saw its tax-to-GDP ratio rise to its highest level in a decade as a strong economy and toughened compliance from tax authorities led to stronger collections.

WHERE DOES THE MONEY GO?

• A large part of the government’s resources get used up for interest payments.
• India’s debt-to-GDP ratio is above 80% and interest payments make up a quarter of the government’s total expenditure.
• Transportation and defence spends are the second and third largest expenses for the government.
• In 2024-25, apart from interest payments, rural expenses have seen the sharpest increase of 11%.

Union Finance Minister Nirmala Sitharaman says, “The budget deficit, fiscal deficit 5.8% which is much lower than the 5.9… Similarly, for the 2024-25 budget, we’ve given 5.1 as the fiscal deficit. So clearly indicating that we are on track to meet the glide path which was set in 2021-22 and that we are well on track to meet the 4.5% fiscal deficit on or below 4.5 even by FY 26…”

• India’s fiscal deficit for 2023/24 revised to 5.8% of GDP from 5.9%
• India’s fiscal deficit for 2024/25 target reduced to 5.1% of GDP
• Net borrowings for 2024/25 seen at 11.75 trillion rupees
• Federal gross borrowings for 2024/25 seen at 14.13 trillion rupees
• Govt to spend 11.9 trillion rupees ($143.4 billion) on interest servicing in 2024/25, more than one-third of govt revenue receipts

• Fertiliser subsidies for 2024/25 seen at 1.64 trillion rupees vs 1.89 trillion rupees in 2023/24
• Food subsidies for 2024/25 seen at 2.05 trillion rupees vs 2.12 trillion rupees in 2023/24
• Govt spending on rural jobs programme seen at 860 bln rupees in 2024/25, at the same level as revised estimates of current fiscal

• 2024/25 federal budget spending estimated at 47.66 trillion rupees, 6.1% higher compared to revised spending estimate of 44.9 trillion rupees in 2023/24
• Education budget for 2024/25 seen at 1.25 trillion rupees, 14.5% higher than revised estimate of 1.09 trillion rupees for 2023/24
• Health budget for 2024/25 seen at 901.7 bln rupees, 13.8% higher than revised estimate of 792.2 billion rupees for 2023/24
• Govt’s 2024/25 spending on affordable housing programme seen at 806.7 bln rupees, 49% higher compared to revised estimate of 541 bln rupees in 2023/24

• No change in tax structure
• Investments by sovereign wealth funds and pension funds will be tax-free for one more year
• Tax reforms have widened the tax base and increased tax collections
• Total revenue receipts in 2024/25 estimated at 30 trillion rupees vs revised estimate of 26.99 trillion rupees in 2023/24
• Tax-GDP ratio in 2024/25 seen at 11.7% of GDP vs revised 11.6% estimate for 2023/24

• Allocation for infrastructure for 2024/25 raised to 11.1 trillion rupees ($134 billion), up 11.1% y/y
• Federal govt to allocate 3.86 trillion rupees to states for spending on infrastructure in 2024/25
• Corpus of 1 trillion rupees to be set up with a 50-year interest-free loan for research in sunrise sectors
• Federal govt to allocate 2.55 trillion rupees ($30.7 billion) for spending by railways in 2024/25
• 2024/25 budget allocations for the road transport ministry seen at 2.78 trillion rupees
• Viability gap funding to be provided for offshore wind power
• 10 million houses to get free electricity via rooftop solar programme
• Govt to subsidise construction of 20 million affordable houses in rural areas

• Nominal GDP growth for 2024/25 seen at 10.5% y/y
• Inflation has moderated and economic growth has picked up
• Pro-active inflation management has helped contain inflation within the target band (2%-6%)
• Govt says its policies brought 250 million people out of poverty in 10 years

Union Finance Minister Nirmala Sitharaman on Thursday unveiled plans to spend nearly $134 billion on infrastructure and focus on long-term reforms to drive growth and contain the fiscal gap despite pressures to raise spending before elections.

She said the next generation of reforms will be carried out in consultation with state governments. The government has simplified India’s complicated tax structures, invested in new ports and roads but has struggled to liberalise land acquisition and labour laws.

The fiscal deficit target for the next fiscal year has been reduced to 5.1% of GDP compared to the revised deficit estimate of 5.8% for the current fiscal year.

Union government resisted the temptation of spending trillions of rupees on schemes for the poor in its last budget before elections and instead stuck to the path of fiscal consolidation to attract investors.

The lack of social spending largesse is indicative of PM Narendra Modi’s confidence in returning to power for a rare third term. Tax policies were left unchanged in Thursday’s budget, major subsidies on food, fertiliser and fuel were 8% lower and an allocation for a rural employment scheme was held steady.

“This is an indication that the ruling BJP (Bharatiya Janata Party) is feeling fairly confident about securing another big victory in the upcoming general election,” said Shilan Shah from Capital Economics. National elections are due by May this year.

In a respite for the startup ecosystem, the Centre on Thursday announced to extension of tax benefits for startups and investments made by sovereign wealth and pension funds to March 2025.

Certain tax benefits to startups and investments made by sovereign wealth or pension funds as also tax exemption on certain incomes of some International Financial Services Centre (IFSC) units are expiring on March 31 this year.

“To provide continuity, I propose to extend the date to 31.3.2025,” said Finance Minister Nirmala Sitharaman while presenting the Interim Budget on Thursday.

On Interim Budget 2024-25, Congress leader Supriya Shrinate says, “The government is still in denial mode and is not ready to accept the problems. There is nothing in this budget for common people, employment, agriculture, women… Nirmala Sitharaman said that income has increased by 50% but government data says that real income has decreased by 25%.”

Partha Neog, CEO and Co-founder of Vantage Circle said, “This year’s Union Budget announcement resonates with a visionary outlook, especially for the future of India. Establishing a Rs. 1 lakh crore corpus with a 50-year interest-free loan for tech-savvy youths and the focus on MSME training demonstrates a strong commitment to fostering innovation and global competitiveness. Additionally, the government is also set to provide long-term financial help with extended periods and low interest rates that will benefit the private sector to increase investments in R&D and innovation.”

“We highly applaud these strategic initiatives put forward by the government to leverage the opportunities presented. Our dedication remains unwavering as we contribute to the nation’s progress,” he added.

National Stock Exchange (NSE) CEO Ashish Chauhan said that the “growth, welfarism and fiscal restraint” were the three words that came in his mind during the Budget speech.

“It is very difficult to achieve all three objectives by a government and they have proved over the last 10 years that somewhere they have been able to create brick-by-brick a social security framework which is available to every citizen of India…” Chauhan told ANI.

He further said, “Whatever has happened in last 10 year, in terms of roads, ports, airports – the logistics cost has come down to a single digits. That is a very welcome move. The Atamanirbhar Technology that has been developed in Vande Bharat, many metros is going to reduce the cost of logistics even further…”

“They are waiting for the next full Budget, which we will come and present. INDIA alliance will win and we will present the best budget after the net elections.”

BJP MP Sushil Kumar Singh said this interim budget is “special”. “The budget has made it clear how the country is moving forward… Work has been done for in every sector…”

Chairman of the Board of Hindustan Construction Company Ltd, Ajit Gulabchand, told news agency ANI, “I think this was a short & crisp Budget speech, keeping with the message they want to give. They have not introduced any new taxes or done any changes in a manner that would upset. They have kept stability, as expected, in place. They have said that they will continue to spend on infrastructure as well as welfare programs which are all very necessary and which they have been doing very well over the years. Despite the fact that we had COVID and so many disturbances due to war and supply chain breakups, India has done well with their policies. They continue to push that in the direction of a developed India by 2047…”

Executive Director of the IMF and former Chief Economic Advisor to the Government of India, KV Subramanian told ANI, “…As I said, it is a non-populace budget. Compared to 5.9%, which was a budget estimate, the actual fiscal deficit has been announced at 5.8%. My sense is that when the revised numbers come, the fiscal deficit will be even lower because the revenue that has been projected will actually be much higher. 5.1% is very good…Unless there is a change in the Budget that comes in July, I would say that the 5.1% will definitely be achieved…”

World Health Organisation Representative to India, Dr Roderico H Ofrin said that WHO “applauds the extension of healthcare coverage to them under Ayushman Bharat”.

He said, “ASHA workers, Anganwadi workers, and helpers are at the forefront of health and care delivery at the grassroots level. The World Health Organization (WHO) applauds the extension of healthcare coverage to them under Ayushman Bharat. The initiatives announced today – upgrading existing hospital infrastructure to increase medical colleges, harmonization of maternal and child care implementation, introduction of HPV vaccination for cervical cancer prevention, and the expansion of the U-WIN platform across for managing and intensifying immunization – will further strengthen systems and healthcare services across the country. WHO welcomes investments in these areas and will continue to support the Government of India in achieving health for all and meeting its disease elimination goals.”

The Budget documents is also now available for download on (www[dot]indiabudget[dot]gov[dot]in).

The Budget documents is also available on the Union Budget Mobile App.

The PDF of Finance Minister Nirmala Sitharaman’s Budget Speech can be downloaded from here. The full PDF Budget document can be downloaded from (www[dot]indiabudget[dot]gov[dot]in). The links are live now.

Even as the Interim Budget 2024-25 has been presented by Finance Minister Nirmala Sitharaman on Thursday, February 1, the government has kept the tax slabs and rates unchanged.

“I do not propose to make any changes relating to taxation and propose to retain the same tax rates for direct taxes and indirect taxes including import duties,” Finance Minister Nirmala Sitharaman said in her Budget Speech on Thursday.

Even as the Interim Budget 2024-25 has been presented by Finance Minister Nirmala Sitharaman on Thursday, February 1, the government has kept the tax slabs and rates unchanged.

“I do not propose to make any changes relating to taxation and propose to retain the same tax rates for direct taxes and indirect taxes including import duties,” Finance Minister Nirmala Sitharaman said in her Budget Speech on Thursday.

BJP MP Ravi Shankar Prasad called the interim budget to be “very effective and historical”.

“It mentions the achievements of the past and a strong path towards the future. We will present the full budget in July… The number of taxpayers has increased. They have faith in the government that their money will not be misused… India has traversed a path from ‘Fragile 5’ to the world’s ‘Top 5’ economies in just 10 years,” he told news agency ANI.

BJP Madhya Pradesh President, VD Sharma, said “This budget is omnipresent, and focuses on universal development. In the ‘Amrit Kaal’, this budget will prove to be a stepping stone towards ‘Atmanirbhar Bharat’… PM Modi’s special focus was on speeding up development through infrastructure…”

National Stock Exchange of India (NSE) CEO Ashish Chauhan, in a press conference, said, “The Interim Budget has stuck to the winning formula that I think the current government has figured out – fiscal restraint with welfarism and growth…So, overall it is a 10/10 budget. It is just an interim budget, the actual budget will be presented after the election but they want to stick to their winning formula they have figured out over last 10 years.”

Director of the chair in US-India Policy Studies at Centre for Strategic & International Studies, Richard Rossow, said that the budget is in consonance of the goals towards India becoming a developed country by 2047.

“You talk about these groups that really define that level of prosperity…Many Indians have already achieved the kind of lifestyle that we imagine in the West. But a lot haven’t. Focussing on those groups that haven’t is going to be vitally important…It is not always going to be driven by Delhi. State Governments have to make sure that they are getting onboard as well…” he told ANI.

Union Home Minister Amit Shah said that the “Union Budget draws the roadmap to achieve PM Shri @narendramodi Ji’s vision of a Developed Bharat by 2047.”

“The budget speech sheds light on the milestones achieved by the Modi govt in the last 10 years on its journey to make Bharat the foremost nation in every sector during the Amrit Kaal. On the very foundation of these feats, the magnificent edifice of a Viksit Bharat is being built. My heartfelt gratitude to Modi Ji for leading the nation through this journey of excellence and to FM @nsitharaman Ji for the insightful budget speech,” Shah said with a hashtag of “Viksit Bharat Budget”.

Addressing the nation after the budget presentation, Prime Minister Narendra Modi hailed and thanked Finance Minister Nirmala Sitharaman for her work.

He said this budget is “inclusive and innovative”, adding that, “it has confidence of continuity”.

External Affairs Minister S Jaishankar hailed Finance Minister Nirmala Sitharaman for her budget and said that she “presented the Interim Budget that captures a decade of transformation, while laying out a vision of further development.”

Taking to X, Jaishankar wrote, “Her focus of inclusive development and growth reaffirmed Modi Sarkaar’s commitment to the welfare of the Garib, Youth, Nari and Annadata. The track record of GDP (governance, development and performance) has been impressive. Our prudent economic management has weathered global headwinds.”

“The new programs and priorities announced speak of the determination and optimism with which we enter the Amritkaal. This budget is a blueprint for the making of Viksit Bharat. It will reinforce trust and confidence in Modi’s Guarantee,” he added.

Union Minister Nitin Gadkari has said that the “Finance minister’s budget is aimed to strengthen India’s economic sector, in line with PM Modi’s resolve to make India the third largest economy of the world…This is a budget to speed up country’s development and increase employment…”

Finance Minister Nirmala Sitharaman met Lok Sabha Speaker Om Birla after the presentation of Interim Budget 2024.

Union Minister VK Singh said, “…Everything will be for ‘Viksit Bharat’…everything has been discussed in the budget to strengthen the economy…”