The Union Budget 2024–25, presented by Finance Minister Nirmala Sitharaman, places strong emphasis on simplifying the tax framework and improving taxpayer services. Building on ongoing efforts to streamline both corporate and personal income tax systems, the government seeks to further reduce complexities and provide greater tax certainty. Alongside simplification, the Budget also focuses on strengthening revenue collection to support development and social welfare initiatives. Budget 2024 introduced several key announcements related to income tax, including a comprehensive review of the Income Tax Act, 1961, revisions to tax structures, changes in TDS rates, and enhancements in tax administration. This article covers all the major income tax updates and proposals introduced in the Union Budget 2024–25.
Union Budget 2024–25: Key Highlights on Income Tax
Below are the major Income Tax announcements made in the Union Budget 2024–25:
The standard deduction for salaried individuals under the new tax regime is increased from ₹50,000 to ₹75,000.
The standard deduction for family pensioners under the new regime is raised from ₹15,000 to ₹25,000.
The new tax regime has been revised with updated income tax slabs.
STT on options is increased from 0.0625% to 0.1%, and STT on futures from 0.0125% to 0.02%.
Employer contributions to NPS will now be deductible up to 14% of salary (up from 10%).
A complete review of the Income-tax Act, 1961 is to be undertaken within six months.
ITR reassessment will be simplified, with reopening beyond 3 years allowed only in cases where income of more than ₹50 lakh has escaped assessment.
Short-term capital gains on specified financial assets will be taxed at 20%, while long-term capital gains will be rationalised at 12.5%.
A new Vivad Se Vishwas Scheme, 2024 will help reduce the appellate backlog.
Angel tax is abolished for all investor classes to support startups.
The 2% equalisation levy is withdrawn.
Changes in Personal Income Tax Rates
The Personal Income Tax changes under the new tax regime aim to provide substantial relief to salaried employees and pensioners:
Standard deduction for salaried employees: increased from ₹50,000 to ₹75,000.
Family pension deduction: raised from ₹15,000 to ₹25,000.
Employer contribution deduction under Section 80CCD: increased from 10% to 14% of salary.
Non-government employees under the new tax regime can now claim a deduction of up to 14% of salary (previously 10%).
Union Budget 2024: Revised Income Tax Slabs (New Regime)
| Total Income | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹7,00,000 | 5% |
| ₹7,00,001 – ₹10,00,000 | 10% |
| ₹10,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Comprehensive Review of the Income-tax Act, 1961
A full overhaul of the Income-tax Act, 1961 has been announced to make it more concise, transparent, and easier to interpret. The goal is to reduce litigation and increase tax certainty. The review is expected to be completed within six months. Initial changes proposed in the Finance Bill include:
Simplification of charitable trust taxation
Rationalised TDS rates
Streamlined reassessment and search provisions
Updated capital gains taxation
Simplification for Charitable Trusts and Institutions
The Budget proposes merging the two existing exemption mechanisms for charitable organisations. This will:
Simplify compliance
Streamline registration and approval timelines
Improve administrative efficiency
Changes in Capital Gains Tax
To make capital gains taxation more straightforward and uniform, the following updates have been introduced:
Short-Term Capital Gains (STCG): raised from 15% to 20% on specified financial assets
Long-Term Capital Gains (LTCG): fixed at a uniform 12.5% across all asset categories
Exemption limit on listed financial assets increased from ₹1 lakh to ₹1.25 lakh
Holding period rules:
Listed assets: >1 year → long-term
Unlisted & non-financial assets: >2 years → long-term
Certain debt-oriented instruments (unlisted bonds, debt MFs, MLDs) will now be taxed at applicable rates regardless of holding period
Rationalisation of TDS Rates
Key changes proposed to simplify TDS compliance include:
Reduced TDS Rates (from 5% to 2%) for:
Insurance commissions
Life insurance payouts
Lottery commissions
Commission/brokerage fees
Rent paid by individuals/HUFs
Certain payments by individuals/HUFs
Other TDS/TCS changes
E-commerce TDS reduced from 1% to 0.1%
TDS on mutual fund repurchase (Sec 194F) removed
TDS/TCS credits can now be adjusted while calculating salary TDS
Higher interest rate on delayed TCS payments: 1.5%
Deduction for partner remuneration increased to ₹3 lakh or 90% of book profit
TDS Rate Revision Table
Section
Current Rate
Proposed Rate
Effective From
194D
5%
2%
Apr 1, 2025
194DA
5%
2%
Oct 1, 2024
194G
5%
2%
Oct 1, 2024
194H
5%
2%
Oct 1, 2024
194-IB
5%
2%
Oct 1, 2024
194M
5%
2%
Oct 1, 2024
194-O
1%
0.1%
Oct 1, 2024
194F
20%
Removed
Oct 1, 2024
Increase in Securities Transaction Tax (STT)
Options STT: 0.0625% → 0.1%
Futures STT: 0.0125% → 0.02%
This move is expected to boost government revenue.
Simplification of Tax Reassessment
Key measures include:
Reducing the reassessment window from 10 years to 5 years
Introducing a block assessment system for search & seizure cases
Clear timelines for penalties and appeals
Allowing temporary withholding of refunds for additional scrutiny
Measures to Broaden the Tax Base
Key proposals:
Share buybacks to be taxed as dividends in the hands of investors
Rental income will be taxed only under “Income from House Property”
Capital gains tax to apply on gifting/willing assets by non-individual entities
10% TDS on partner payments exceeding ₹20,000
1% TCS on luxury goods above ₹10 lakh
clarified rules for TDS in property transactions with multiple buyers/sellers
TDS on FRSB and similar securities for interest above ₹10,000
Disallowance of non-business insurance company expenses
Overseas taxes deducted will be treated as income received
Settlement fees for legal violations not deductible
FMV calculation introduced for unlisted shares during IPOs
Promoting Employment and Investment
To encourage business activity and job creation, the Budget includes:
Tax exemptions for retail schemes and ETFs in IFSC
Exemptions for incomes of the Core Settlement Guarantee Fund in IFSC
Angel tax fully abolished
VCFs in IFSC exempt from source-of-funds explanations
Removal of surcharge on income of specified funds
Corporate tax for foreign companies reduced from 40% to 35%
Removal of tax on share premium for private companies
New presumptive tax regime for non-resident cruise operators
Exemption for lease rentals of cruise ships by foreign companies
Improvements in Tax Administration
Administrative reforms include:
New Vivad se Vishwas Scheme to settle tax disputes
Equalisation levy withdrawn from Aug 1, 2024
Minor foreign assets up to ₹20 lakh excluded from Black Money Act penalties
Late TDS payment decriminalised if paid before filing statements
Six-year limit for issuing orders related to non-deduction/collection of tax
Option to apply for lower TDS/TCS certificates
Reduced penalty for late TDS/TCS filings: 12 months → 1 month
New deadlines & penalties for liaison office annual filings
More powers for Transfer Pricing Officers
Aadhaar Enrolment ID no longer valid — Aadhaar number required
Extended time limit for assessments of belated returns
Amendments to enable recovery of Black Money Act liabilities from seized assets
Benami Act changes to provide immunity upon full disclosure and rationalise timelines
About the Author
Ravi
Ravi is an experienced legal writer who breaks down complex laws into clear, practical insights. He supports entrepreneurs in understanding their legal obligations, helping them build confident, compliant, and sustainable businesses.
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