Breaking News: Nirmala Sitharaman Announces Union Budget 2024-25

24-07-2024: The wait is over! India’s Finance Minister, Nirmala Sitharaman, has finally unveiled the Union Budget for 2024-25, and it’s packed with exciting changes that will impact the lives of millions of Indians. One of the most significant announcements is the introduction of new tax slabs, which are expected to simplify the tax system and benefit most taxpayers.

Key Highlights of the Budget

Before diving into the details of the new tax slabs, let’s take a look at some of the key highlights of the budget:

• Simplification of Taxation: The government has announced a major overhaul of the tax system, aiming to reduce compliance burden and increase transparency.
• New Income Tax Slabs: The existing tax slabs have been replaced with a new structure, which is expected to benefit individuals with lower incomes.
• Tax Exemptions: Certain exemptions have been increased, while others have been reduced or abolished.
• Surcharge: The surcharge on income tax has been reduced from 37% to 25% for individuals with annual incomes between Rs. 2 crore to Rs. 5 crore.
• Corporate Tax: The corporate tax rate has been reduced from 25% to 22% for companies with an annual turnover of up to Rs. 400 crore.

New Tax Slabs: A Breakdown

The new tax slabs are designed to provide relief to individuals with lower incomes. Here’s a breakdown of the new slabs:

• 0% Tax Rate: Individuals with an annual income up to Rs. 3 lakh will not have to pay any income tax.
• 5% Tax Rate: Individuals with an annual income between Rs. 3 lakh and Rs. 6 lakh will pay a flat rate of 5%.
• 10% Tax Rate: Individuals with an annual income between Rs. 6 lakh and Rs. 12 lakh will pay a flat rate of 10%.
• 15% Tax Rate: Individuals with an annual income between Rs. 12 lakh and Rs. 18 lakh will pay a flat rate of 15%.
• 20% Tax Rate: Individuals with an annual income above Rs. 18 lakh will pay a flat rate of 20%.

Impact on Middle-Class Taxpayers

The new tax slabs are expected to benefit middle-class taxpayers who earn between Rs. 6 lakh and Rs. 12 lakh annually. This group will now pay a flat rate of 10% tax, which is a reduction from the previous slab of 20%. This change is expected to put more money in their pockets, allowing them to spend more on consumer goods and services.

Impact on High-Net-Worth Individuals

On the other hand, high-net-worth individuals who earn above Rs. 18 lakh annually will now pay a flat rate of 20%, which is an increase from the previous slab of 15%. This change is expected to generate additional revenue for the government.

Other Key Changes

In addition to the new tax slabs, some other key changes announced in the budget include:

• Increased Exemptions: Exemptions for children’s education expenses have been increased from Rs. 1.5 lakh to Rs. 2 lakh per year.
• Reduced Surcharge: The surcharge on income tax has been reduced from 37% to 25% for individuals with annual incomes between Rs. 2 crore and Rs. 5 crore.
• Increased FDI Limit: The Foreign Direct Investment (FDI) limit has been increased from 49% to 74% in certain sectors.

Conclusion

The Union Budget 2024-25 has introduced significant changes to the taxation system, including new tax slabs that are expected to benefit middle-class taxpayers. While high-net-worth individuals may face an increase in taxes, the government’s efforts to simplify taxation and reduce compliance burden are expected to have a positive impact on overall economic growth. As we navigate these changes, it’s essential for taxpayers to review their financial plans and consult with tax advisors to ensure they’re taking advantage of the benefits offered by this budget.

Stay tuned for more updates on the Union Budget and its implications on your finances!