New Delhi:

A new Income Tax bill — promised by Union finance minister in her last year’s budget — will be tabled in parliament on Thursday, sources have told NDTV. The bill is meant to simplify the language of the tax laws and it would later be sent to Parliament’s Standing Committee on Finance. It will not change the existing tax slabs or review the tax rebates given. 

Sources said simplification of the language will make the Act concise, clear, and easy to understand, which will reduce disputes, litigations, and provide greater tax certainty to taxpayers. 

The CBDT had set up an internal committee to oversee the review. Also, 22 specialised sub-committees have been established to review the various aspects of the proposed law that would replace the six-decade-old law. 

Ahead of drawing up the bill, the government had sought inputs from the people under four categories — simplification of language, litigation reduction, compliance reduction, and redundant/obsolete provisions.

The income tax department received 6,500 suggestions from stakeholders on review of the law.
 

Finance Minister Nirmala Sitharaman has announced a revised tax structure under the new regime that will reduce taxes and leave more money in the hands of the people. She also said during her Budget speech in the Parliament that an annual income of Rs 12 lakh will attract no tax.

Hours after her speech, she addressed a press conference on the Budget, which she said was a response to the ‘voice of the people’.

She said the new income tax will not circumvent the parliament and the government will pass it through the legislative process. “It won’t be done without the approval from parliament, we are going to make it simpler and easier and remove exemptions,” she said while replying to NDTV.

The Finance Minister had said during her speech that a new tax bill will be introduced in the parliament next week amid a buzz that a ‘direct tax code’ would simplify income tax compliance and reform the Income Tax Act, 1961.

Ms Sitharaman also told reporters an estimated one crore taxpayers will pay no income tax due to the hike in the rebate.

“It is a very responsive government…as a result, the income tax simplification which I announced in July is already completed. We shall bring the bill next week. So, if we are talking of reform inclusive of taxation, the work is done,” she told reporters.

On another question, she said that the government is continuing with disinvestment and there is no let-up.

Earlier in the day, Ms Sitharaman proposed a revised structure under which the tax slabs have been broken down. The first slab is up to Rs 4 lakh, in which the tax remains nil. Earlier it was Rs 3 lakh. The next slab is Rs 4-8 lakh where the tax rate is 5%, followed by 10% in the Rs 8-12 lakh slab, 15% in the Rs 12-16 lakh slab, 20% in the Rs 16-20 lakh slab, and 25% in the Rs 20-24 lakh slab. It’s flat 30% above Rs 24 lakh.

Citing an example at the post-Budget press conference, she said that those earning Rs 8 lakh annually will pay Rs 30,000 tax for FY24-25, but after the changed slabs take effect, they will pay only Rs 20,000. Even high earners will benefit from this change, she added.

On February 1, 2025, Finance Minister Nirmala Sitharaman unveiled her record eighth Union Budget in the Indian Parliament, setting a progressive roadmap for India’s transformation into ‘Viksit Bharat’ by 2047.

This budget, which encompasses a comprehensive strategy with a focus on agriculture, MSME, investment, and exports, will significantly stimulate economic growth while addressing both immediate and long-term challenges.

Boosting Disposable Income

Central to the 2025 budget is the reform in personal income tax—the biggest of which we have seen in many years. By exempting incomes up to ₹12 lakh from taxation—up from the previous ₹7 lakh bracket—the government has put ₹1 lakh crore back into the pockets of the people. This move will boost disposable income across the board, thereby fuelling consumption and creating a ripple effect across the economy that supports GDP growth.

This will supercharge the economy’s primary engine while also reducing bureaucratic hindrances and the long-standing grievances of India’s middle class by effectively championing a socio-economic justice that will resonate strongly with millions.

Fiscal Deficit Goals

Second, India’s commitment to fiscal consolidation is both visionary and necessary. By pegging the fiscal deficit at 4.4% of GDP by FY26, the government is reassuring current and prospective investors that India is on a path of sustainable economic governance. This balance of growth and fiscal discipline is crucial in maintaining macroeconomic stability—a key factor for attracting foreign direct investments.

As economic shocks and instabilities continue to upend parts of the world, India’s prudent fiscal management will signal a steady and fertile market, creating confidence among global investors and positing India as the top destination to grow industry and infrastructure.

Boost To Labour-Intensive Sectors

Third, by reviving key labour-intensive sectors like textiles, leather, toys, and food processing, India is killing two birds with one stone. These sectors are positioned to absorb large portions of the workforce, effectively addressing unemployment while enhancing skill development. In particular, the initiative to develop tourism by enhancing infrastructure and simplifying travel processes, including visa-free travel for specific groups, will have a vast multiplier effect—boosting significant job creation and regional development across the board.

In tourism, the emphasis on developing the top 50 tourist destinations in partnership with various states creates a dual benefit of economic and cultural enrichment. The policy enhancements in this sector can unlock dormant potential, transforming India into a hub of global tourism that celebrates and monetises its diversity.

Revamping PPPs In Infra

Fourth, revamping public-private partnerships (PPPs) in infrastructure will inject new life into long-standing projects that require innovative solutions and fresh capital. The Rs. 10 lakh crore Asset Monetization Plan is a proactive approach to maximising resource efficiency and ushering in a new era of infrastructural development.

A Nuclear Focus

Fifth, the ambitious energy transition plan, with a strong focus on nuclear energy, is a clear marker of India’s commitment to environmental sustainability and energy independence. The goal of developing 100 GW of nuclear energy by 2047, combined with an allocation of ₹20,000 crores for research on small modular reactors, is the government’s concerted effort to modernise India’s energy landscape. Additionally, proposed amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will catalyse private sector participation, encouraging innovation and investment.

The Fund Of Fund Scheme

Sixth, the budget places a strong emphasis on innovation, with a ₹10,000 crore replenishment for the Fund of Fund Scheme (FFS), doubling its total to ₹20,000 crore and boosting domestic venture capital for startups through Alternative Investment Funds (AIFs). Launched in 2016, the FFS has transformed initial scepticism into measurable success, with ₹11,688 crore committed through 151 AIFs that have catalysed a capital pool exceeding ₹91,000 crore. The FFS is a game-changer in providing essential growth capital to early-stage companies.

As a major plus, the establishment of a dedicated Fund of Fund for DeepTech indicates a concerted effort by GoI to employ advanced technologies to drive economic progress. Innovations in AI, quantum computing, and biotechnology are taking centre stage in this new digital world, and strategic investments will sharply enhance India’s global competitiveness.

The National Geospatial Mission, for its part, will also modernise infrastructure through the integration of geospatial data, in turn, improving urban development and land management. By creating a comprehensive geospatial database, India will be able to undertake informed decision-making and resource allocation, increasing efficiency across sectors.

Improving The Ease Of Business

Seventh, the budget’s focus on regulatory reforms is an extension of the Narendra Modi government’s sustained efforts to make India a more business-friendly environment. The newly established High-Level Committee for Regulatory Reform is another step towards eliminating bureaucratic inefficiencies that have long stifled innovation and investment. The committee will audit current financial regulations and their impacts on the sector’s growth, showing India’s willingness to adapt policies in alignment with evolving economic realities.

The Investment Friendliness Index of States is a proven method of incentivising regional governments to cultivate attractive investment conditions. As we witnessed with the Aspirational Districts Programme, goal-driven competition among states leads to a healthier economic environment overall, encouraging both domestic and foreign investments to flow into various regions, instead of being concentrated in a few metropolitan areas.

Among these pro-market initiatives, the Jan Vishwas Bill 2.0 sends a reassuring message to investors by decriminalising over 100 provisions that have long deterred many entrepreneurs. This shift only encourages healthy risk-taking, while also nurturing an atmosphere where innovation can thrive, laying the groundwork for a more resilient and dynamic economy.

A Fillip To MSMEs

Lastly, and equally important, is the budget’s renewed focus on supporting micro, small, and medium enterprises (MSMEs), which are the backbone of India’s economy. Increasing the investment and turnover thresholds for MSMEs by 2.0 to 2.5 times allows a wider array of businesses to benefit from government programmes designed to support smaller firms. Doubling the credit guarantees addresses longstanding challenges around financing, empowering these enterprises to thrive and contribute significantly to job creation. By redefining the regulatory landscape and bolstering support for MSMEs, the government sets a foundation for a vibrant entrepreneurial ecosystem.

These measures not only aim to stimulate economic growth but also reflect a compelling vision for India’s journey towards becoming a developed nation by 2047. As we move forward, the real test will be in the execution and effectiveness of these reforms. Ultimately, it is this commitment to thoughtful regulation and support that can transform India’s economic narrative.

As India navigates global uncertainties, this budget positions the country as a potential leader, signalling to investors that it prioritises stability, sustainability, and inclusive growth. The initiatives outlined in this budget are strategic actions that can galvanise India’s economy, creating a more equitable society and a vibrant marketplace for generations to come. The future looks good, and with efficient implementation, the vision of a prosperous, developed India could be realised by 2047.

(The author is India’s G20 Sherpa and former CEO, NITI Aayog. Views expressed are personal.)

Disclaimer: These are the personal opinions of the author

Almost all finance ministers of India have faced the challenge of widening the country’s tax net. While the debate over how few people pay income tax in India is old, what is less well-known is that many companies also avoid paying income tax. While only 2% of the population pays income taxes, nearly half of the companies that file income tax returns (ITRs) pay nothing at all.

How to widen the tax net remains a key question with no clear answer. Tax evasion, low wage growth, high unemployment, and high exemption limits mean that very few people qualify to pay income taxes. Additionally, accounting loopholes, low audit quality and income tax relief provided in 2019 have resulted in very few corporations actually paying income taxes. It’s true that the number of tax returns filed by individuals has more than doubled, from 3.35 crore in 2013-14 to 7.54 crore in 2023-24. However, many of these are zero-tax returns, filed simply for compliance purposes. The number of individuals filing zero-income tax returns has more than doubled, from 1.69 crore to 4.73 crore during the same period. The result is that the number of individuals actually paying income taxes has grown at a slow pace between 2013-14 and 2023-24—from 1.66 crore to 2.81.

Rising Exemption Limits

The exemption limit has been raised successively since 2013-14. From Rs 2 lakh, it has gone up to effectively Rs 7 lakh by 2023-24. In 2013-14, as many as half of all returns filed were zero-tax. By 2023-24, that share went up to 63%. Among individuals who pay taxes, almost half (47%) report incomes of up to Rs 5 lakh; 37% earn between Rs. 5-10 lakh, 13% between Rs. 10-25 lakh, and only 1% report income above Rs. 50 lakh.

While hiking the exempt income tax slabs over the years may make political sense, it does not make economic sense, especially when 84% of the population earns less than Rs. 10 lakh per annum—India’s per capita income is just around Rs. 2 lakh—and individuals earning up to Rs. 7 lakh are not required to pay income tax under the new tax regime. As many as 90% of eligible taxpayers in India pay anywhere from no tax to Rs. 1.5 lakh.

The top 1% of ITR filers pay 50% of the total personal income tax collection of India, while the top 9% pay 87% of the total tax, highlighting significant inequality and the challenges in widening the tax net. That’s a huge burden on these top 10% of filers. 

Corporate Filings

The situation among corporations is worse. Of the total 10.7 lakh corporate ITR filers, 57% report zero income, and another 33% earn between Rs. 0-50 lakh. In total, 90% of companies report earnings of just up to Rs. 50 lakh (corporations are taxed on profits, not income). Half (48%) of corporate filers pay zero income tax, while another 36% pay between Rs. 0-5 lakh in income tax. In terms of value, 84% of corporate filers contributed almost nothing to the total corporate tax collections of Rs. 7.16 lakh crore in the assessment year 2023-24. Again, the top 1% of corporate ITR filers pay 85% of total corporate income tax. 

All this highlights significant inequality and raises questions about the financial health of companies in India. Another catch is that agricultural income is exempt from taxation—that is half of India’s population. While that makes socio-economic sense, at least wealthier farmers could be brought under the tax ambit to provide a boost to tax collections.

Personal income tax, corporate tax, and GST collections account for one-third each of the total central government receipts. While tightening efforts to combat tax evasion by both individuals and businesses could bring in additional revenue, there is a limit to direct taxation as well. The government will need to focus on raising revenues through indirect taxes, while also considering the reintroduction of a wealth tax.

(Amitabh Tiwari is a political strategist and commentator. In his earlier avatar, he was a corporate and investment banker.)

Disclaimer: These are the personal opinions of the author

New Delhi:

Representatives from industry bodies sought reduction in personal income tax rates to ensure higher disposable income in the hands of the middle class, reduction in excise duty on fuel, and measures to provide impetus to employment-intensive sectors in their customary pre-Budget meeting with the Finance Minister on Monday.

Industry bodies also raised the issue of dumping of excess stock by China globally, including in India, and challenges posed to food security and inflation due to the “climate emergency”, during the fifth pre-Budget consultation meeting.

The 2025-26 Union Budget will be presented on February 1.

Apart from the finance minister, the meeting was attended by finance secretary, secretary of DIPAM (Department of Investment and Public Asset Management), Secretaries of the Department of Economic Affairs and the Chief Economic Adviser to the Government of India, among others.

Speaking to the media after the meeting, CII President Sanjiv Puri said while the Indian economy is doing very well, globally there are a lot of challenges.

“We are seeing dumping of a lot of products (by China) into various parts of the world, including India. We also have the issue of climate emergency, which, besides other things, also impacts food and nutrition, (food) security and inflation. In this context we have made several suggestions and ideas”.

He said the CII has sought measures to provide impetus to areas that have large employment potential like garments, footwear, tourism, furniture, among others, apart from making suggestions for MSMEs and integrating India into global value chains.

“From a perspective of boosting consumption, we have suggested that there be some relief provided to income tax up to a Rs 20 lakh on the marginal income tax rate so that it boosts consumption, there is more disposable income and in turn also leads to buoyancy in revenues.

“We have also suggested that excise on petroleum be reduced a little, that will also provide higher disposable income and contribute to a virtuous cycle in the hands of the consumers,” Puri said.

FICCI Vice President Vijay Sankar, who was also present in the meeting, said, “Finance Minister and her colleagues gave a very patient hearing to the industry today. There were about 13 people from different industry chambers. There was some commonality of themes across some of the representations, basically the temporary slowdown faced due to dumping products especially by some our neighbours like China due to the slowdown in their economy”.

PHDCCI President Hemant Jain said, “The suggestion we made to the government was reduction in personal income tax so that there can be more money in the hands of people and that can spur the demand and reduce inflation. We have also asked for GST simplification.”

Assocham President Sanjay Nayar said, “We emphasised on what the MSMEs need because they are the backbone of the supply chain… whether it is credit flow, complex registrations, multiplicity of TDS… We focused on simplification of procedures and rationalisation of things like TDS”.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Image used for representation
| Photo Credit: Getty Images

The Income-Tax Department on Sunday (November 17, 2024) cautioned taxpayers that failure to disclose assets held abroad or income earned in foreign shores in the ITR can attract a penalty of ₹10 lakh under the anti-black money law.

Also Read: I-T Dept. has served notices in over 400 cases under anti-black money law

The department issued a public advisory as part of a compliance-cum-awareness campaign launched recently by it on Saturday (November 16, 2024) to ensure that such information is reported by the assessee in their Income Tax Return (ITR) for assessment year (AY) 2024-25.

The advisory specified that foreign asset, for a tax resident of India in the previous year, includes bank accounts, cash value insurance contracts or annuity contracts, financial interest in any entity or business, immovable property, custodial account, equity and debt interest, trusts in which a person is a trustee, beneficiary of settlor, accounts with singing authority, any capital asset etc., held abroad.

The department said taxpayers figuring under this criteria “must mandatorily” fill the foreign asset (FA) or foreign source income (FSI) schedule in their ITR even if their income is “below the taxable limit” or the asset abroad was “acquired from disclosed sources.”

“Failure to disclose foreign asset/income in the ITR can attract a penalty of Rs 10 lakh under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015,” the advisory stated.

The Central Board of Direct Taxes (CBDT), the administrative body for the tax department, had said that as part of the campaign it will send “informational” SMS and email to those resident taxpayers who have already filed their ITR for AY 2024-25.

The communication will be sent to such persons who have been “identified” through information received under bilateral and multi-lateral agreements “suggesting” that these individuals may hold foreign accounts or assets, or have received income from foreign jurisdictions.

The purpose of the campaign is to remind and guide those who may not have fully completed schedule foreign assets in their submitted ITR (AY 2024-25), especially in cases involving high-value foreign assets, the CBDT had said.

The last date to file a belated and revised ITR is December 31.

Net direct tax collection grew 15.41% to ₹12.11 lakh crore between April 1 and November 10.

This include net corporate tax of ₹5.10 lakh crore and non-corporate taxes (including taxes paid by individuals, HUFs, firms) of ₹6.62 lakh crore. Other taxes (which include Equalisation Levy and gift tax) worth ₹35,923 crore were mopped up.

As per the Central Board of Direct Taxes (CBDT) data, the gross collection of direct tax stood at ₹15.02 lakh crore, up 21.20%, during April-November 10.

Refunds worth ₹2.92 lakh crore was issued during the period, a 53% jump over year-ago period.

After adjusting for refunds, net direct tax collection (which include corporate, non-corporate and other taxes) stood at about ₹12.11 lakh crore, a 15.41% growth over ₹10.49 lakh crore mopped up in the same period last fiscal.

The government has budgeted to collect ₹22.12 lakh crore in the current fiscal from direct taxes (personal income tax, corporate tax and other taxes), up 13% over previous fiscal.

New Delhi:
INDIA bloc parties will stage protests in and outside Parliament today against what they describe as “discrimination” against opposition-ruled states in the recently unveiled Union Budget.

1. The high-level meeting saw participation from several prominent leaders, including the Leader of Opposition in the Lok Sabha Rahul Gandhi, Congress’ deputy leaders in both houses Pramod Tiwari and Gaurav Gogoi, NCP (SCP) chief Sharad Pawar, Shiv Sena (UBT) leader Sanjay Raut, TMC’s Derek O’Brien and Kalyan Banerjee, DMK’s TR Baalu, JMM’s Mahua Maji, AAP’s Raghav Chadha and Sanjay Singh, and CPI(M)’s John Brittas. Congress general secretaries KC Venugopal and Jairam Ramesh were also present.

2. “The concept of a budget has already been destroyed by this year’s Union Budget. They have completely discriminated against most of the states. So, the general sentiment of the INDIA bloc meeting was we have to protest against this,” said Mr Venugopal claimed following the meeting. He later expressed on social media that the budget was “extremely discriminatory and dangerous,” going against the principles of federalism and fairness.

3. As part of their protest, Congress chief ministers will also boycott the NITI Aayog meeting scheduled for July 27. “This government’s attitude is completely antithetical to Constitutional principles. We will not participate in an event that is solely designed to hide the true, discriminatory colors of this regime,” Mr Venugopal alleged.

4. On Tuesday, Finance Minister Nirmala Sitharaman presented the Budget for 2024-25, marking her seventh consecutive budget presentation, surpassing former Prime Minister Morarji Desai’s record. This budget is the first under Prime Minister Narendra Modi’s third term in office. During her speech, Ms Sitharaman said that the country’s inflation remains stable and is moving towards 4 per cent, with core inflation at 3.1 per cent.

5. “The ‘#BudgetForViksitBharat’ ensures inclusive growth, benefiting every segment of society and paving the way for a developed India,” wrote Prime Minister Narendra Modi on social media. 

6. Speaking exclusively with NDTV, Union Minister Kiren Rijiju claimed that “no one with a sane mind” will criticise the 2024 Union Budget. “I feel this Budget lays the strongest-ever foundation for ‘atmanirbhar’ Bharat because the Prime Minister has already given a clear-cut vision to make India a developed nation by 2047,” he said. 

7. Ms Sitharaman highlighted several key points in the budget, including rewards for key NDA allies, tax relief for new taxpayers, and a focus on job creation for youth. 

8. The budget introduced several changes to the tax regime, increasing the standard deduction in the new tax regime from Rs 50,000 to Rs 75,000 and revising tax slabs to benefit a broader range of income groups. Salaried employees can now save up to Rs 17,500 in income tax under the new slabs.

9. Additionally, the budget included a major announcement for professionals entering the workforce. The government will provide one month’s salary as a Provident Fund contribution for first-time employees, benefiting an estimated 210 lakh youngsters. Additional measures include raising the exemption limit for capital gains on some financial assets to Rs 1.25 lakh per year and abolishing angel tax for all classes of investors.

10. The budget also earmarked significant projects for Bihar and Andhra Pradesh, states whose political leaders recently aligned with the BJP to secure a parliamentary majority. For Bihar, the budget outlines the development of expressways and a power plant, while Andhra Pradesh will see infrastructure projects prioritised, including substantial financial support for capital development.

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The government allocates 21% of its budget to the State’s portion of taxes and duties
| Photo Credit: Pichumani K

Finance Minister Nirmala Sitaraman presented the Narendra Modi government’s first full-fledged budget after the NDA secured third consecutive win.

Budget 2024 LIVE Updates

The Budget mentioned net tax receipts for 2024-25 at ₹25.83 lakh crore, while the expenditure is estimated at 48.21 lakh crore.

The majority of money comes from borrowing and other liabilities (27%), followed by income tax (19%) and GST & other taxes (18%), with other sources including non-debt taxes and corporation tax.

Ms. Sitaraman stated that taxpayers appreciate the simplified New Tax Regime without exemptions or deductions for corporate tax and personal income tax. “58% of corporate tax came from the simplified tax regime in the financial year 2022-23. Similarly, as per data available till now for the last fiscal, more than two-thirds have availed of the new personal income tax regime,” she added. 

The government allocates 21% of its budget to the State’s portion of taxes and duties, followed by interest payments at 19%.

While 16% of its Budget is utilised for Central sector schemes, excluding capital outlays on defence and subsidies, only 4% of the fund has been used for pensions. To address the issues regarding the New Pension Scheme (NPS), the FM said, “a solution will be evolved which addresses the relevant issues while maintaining fiscal prudence to protect the common citizens”. 

New Delhi:

Finance Minister Nirmala Sitharaman will present the Budget in parliament from 11 am today, and the most anticipation is around whether the government will provide tax relief to the middle class. The Finance Minister will walk the tight rope as she looks to stimulate economic growth while also providing relief to taxpayers.

The middle class got little in the pre-election interim Budget, so their expectations are high.

Here are the 5 key tax rules that will be a talking point today:

Exemption Limit

One of the primary expectations from Budget 2024 is a possible hike in the exemption limit. Under the new tax regime, those earning under Rs 3 lakh a year are exempt from paying tax. There is speculation that this limit could be raised to Rs 5 lakh in Budget 2024, to ease the tax burden on a significant number of Indians.  

Changes In Tax Slabs

Nirmala Sitharaman hasn’t announced any changes to the income tax slabs in the last three Budgets. There is now a strong possibility that the tax slabs in the current regime will be rationalised. Some experts have said called 20 per cent tax rate for individuals earning between Rs 12-15 lakh annually steep and have called for a reevaluation. There are also calls to apply a 30% tax rate solely to those earning Rs 30 lakh per year and adjust rates for income brackets in between seeks to inject fairness into the tax system.

Standard Deduction

Another highly anticipated change is an increase in the standard deduction, presently capped at Rs 50,000. Industry experts are speculating that this figure could potentially double to Rs 1,00,000, offering substantial relief and reducing tax liabilities for salaried individuals.

Capital Gains Tax Reforms

Indian financial markets, corporates, and entrepreneurs have various expectations from the government. Many have voiced their requests and made presentations before the government as part of pre-budget consultations. Retail investors are keenly watching for any modifications that could influence market dynamics significantly.

Overall Tax Relief Strategy

Overall, the overarching expectation from Budget 2024 is a comprehensive strategy aimed at delivering tax relief while fortifying the economic landscape. The government’s approach is likely to emphasise bolstering consumer spending, maintaining fiscal prudence, and investing in critical sectors such as infrastructure to stimulate growth.

The Modi government has put a lot of focus on developing infrastructure. The government’s planned capital expenditure (capex) is at Rs 11.1 lakh crore, higher than Rs 9.5 lakh crore in the last fiscal. The government has been pushing infrastructure creation and also incentivising states to step up capex.