01/02/2025
Budget Speech Summary: Tax Reforms and Key Proposals by CA Kaval singh
Vision and Reforms for a Developed India
• The government aims to simplify taxation as part of its broader vision for Vikasith Bharat (Developed India).
• A new Income Tax Bill will reduce the complexity of current laws, featuring clearer and more concise provisions, cutting both chapters and words by half.
• Focus areas include good governance, reduced litigation, tax certainty, and responsive policymaking, guided by the principle of sabka saath, sabka vikas.
Tax Rate Structure Revisions
1. No Tax on Income Up to ₹12 Lakh
• Individuals earning up to ₹12 lakh annually (₹1 lakh per month) will pay no income tax under the new tax regime.
• For salaried taxpayers, due to the ₹75,000 standard deduction, this threshold is ₹12.75 lakh.
2. Revised Tax Slabs and Rates
• 0 – ₹4 lakh: 0%
• ₹4 – ₹8 lakh: 5%
• ₹8 – ₹12 lakh: 10%
• ₹12 – ₹16 lakh: 15%
• ₹16 – ₹20 lakh: 20%
• ₹20 – ₹24 lakh: 25%
• Above ₹24 lakh: 30%
3. Tax Rebates and Benefits
• Taxpayers earning up to ₹12 lakh (excluding special income like capital gains) will receive a rebate, resulting in zero tax payable.
• Examples of benefits from the new regime:
• Income ₹12 lakh: ₹80,000 tax benefit (100% reduction from existing rates).
• Income ₹18 lakh: ₹70,000 tax benefit (30% reduction).
• Income ₹25 lakh: ₹1,10,000 tax benefit (25% reduction).
• These reforms aim to increase disposable income, promoting household consumption, savings, and investments.
4. Revenue Impact
• An estimated ₹1 lakh crore in direct taxes and ₹2,600 crore in indirect taxes will be foregone as a result of these proposals.
Other Major Tax Proposals
1. TDS and TCS Reforms
• Reduction in the number of TDS rates and thresholds for simplification.
• Increase in tax deduction limits:
• Senior citizens’ interest deduction limit raised from ₹50,000 to ₹1 lakh.
• TDS threshold for rent payments increased from ₹2.4 lakh to ₹6 lakh annually.
• TCS thre
