Budget digest: Unveiling tax shifts in 2024

India's Finance Minister Nirmala Sitharaman holds the briefcase containing the annual budget documents as she leaves the Finance ministry with her staff to present the budget in the parliament in New Delhi on February 1, 2024. (Photo by Sajjad HUSSAIN / AFP)

Minister of Finance Nirmala Sitharaman presented the Union Budget 2024 in the Lok Sabha today, which is an interim budget before the elections. She had previously mentioned that no significant budget announcements would be made due to the upcoming elections in April-May this year. Here is a brief overview of ongoing government initiatives and potential tax reforms:  

New meaning of GDP: The finance minister (FM) redefined the well-known term GDP, stating that, in addition to GDP, the government is also focussed on a more complete GDP—governance, development, and performance. The FM stated that the government will give a thorough blueprint for Vikasit Bharat in the July budget.

Income Tax: There were no changes to the tax slabs under either the old or new regime. The full budget is expected in July, after the new administration is formed following the Lok Sabha elections.  

Withdrawal of old demands: The government will not pursue taxpayers to recover past and disputed direct taxes up to ₹25,000 until the financial year 2009-10. Demands for direct taxes up to ₹10,000 from 2010-11 to 2014-15 will also be withdrawn. This measure will help about 1 crore taxpayers.

Tax continuity: Nonetheless, on March 31, 2024, some tax breaks for investments and start-ups established by sovereign wealth or pension funds, as well as a tax exemption on a portion of specific IFSC units' income, would expire. In order to maintain tax continuity, the deadline has been extended to March 31, 2025.