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Introduction:

Welcome to our detailed examination of the India Budget 2024-2025. Our team of KNAV tax experts has meticulously analysed the budget to provide a comprehensive overview of the significant reforms and their potential impacts. This document will guide you through the key changes and what they mean for both individuals and businesses.

Personal Taxation: The budget aims to ease the tax burden on middle-class taxpayers while encouraging the adoption of the new tax regime. Major highlights include:

• Relaxed Tax Rates: Introduction of more favourable tax rates under the new regime.
• Increased Standard Deductions: For salaried individuals, deductions have been raised from INR 50,000 to INR 75,000.
• Enhanced Family Pension Deductions: Deductions for family pensions increased from INR 15,000 to INR 25,000.

Business Profits: Reforms in business taxation focus on closing loopholes and ensuring equitable tax practices. Key changes involve:

• Residential Property Income: Income from letting out residential property will be taxed as “Income from house property” rather than “Profits and gains of business or profession.”
• Employer Contributions: Deductible employer contributions to employee pensions increased from 10% to 14% of the salary.
• Non-Deductibility of Legal Infractions: Expenses related to legal infractions and settlements will no longer be deductible as business expenses.

 Capital Gains: Significant adjustments to the capital gains tax structure aim to simplify and rationalise the tax system. Noteworthy amendments include:

• Uniform Holding Periods: The holding period for short-term capital assets standardised at 24 months.
• Revised Tax Rates: Rationalised tax rates for long-term capital gains across various asset categories.
• Cost Acquisition Adjustments: New rules for calculating the cost of acquisition of equity shares to address existing legal ambiguities.

Sector-Specific Incentives: Targeted incentives are introduced to spur growth in specific sectors such as cruise tourism and the International Financial Services Centre (IFSC). Highlights include:

• Presumptive Tax Regime: New tax regime for non-resident cruise ship operators.
• Expanded IFSC Tax Exemptions: Broader tax exemptions for retail funds and ETFs domiciled in the IFSC.
• Alignment with International Standards: Tax provisions revised to meet global financial standards and practices.

Procedural Amendments: The budget includes several procedural changes to streamline tax administration and reduce disputes. Key amendments cover:

• Transfer Pricing: Expanded powers for Transfer Pricing Officers to handle specified domestic transactions.
• Assessment and Reassessment: Updated provisions and timelines for assessment and reassessment processes.
• TDS and TCS Revisions: Simplified and updated regulations for Tax Deducted at Source (TDS) and Tax Collected at Source (TCS).

Conclusion

The India Budget 2024-2025 brings significant tax reforms designed to reduce burdens, promote growth, and ensure fair taxation. These changes are expected to reshape the economic landscape, providing relief to taxpayers and stimulating sectoral development. For an in-depth understanding of these transformative changes, read our full budget analysis.