In India, Budget Day is an eagerly anticipated event, with businesses and the public keenly awaiting announcements of schemes and initiatives that could impact them. However, this year, due to the upcoming elections, Budget 2024 has been replaced with an Interim Budget. Nevertheless, the public’s expectations were met as the honourable Union Finance Minister, Smt. Nirmala Sitharaman, presented her sixth consecutive budget, ensuring continuity in plans and benefits.
An interim budget is presented by the government in Parliament to maintain financial continuity until a new government can present a full union budget after an election. This article outlines important tax-related points from the interim budget, along with other significant highlights.
Key Highlights
Expenditure: The government plans to spend Rs.47,65,768 crore in 2024-25, representing a 6% increase from the revised estimate of 2023-24. Notably, interest payments constitute 25% of total expenditure, while 40% of revenue receipts.
Receipts: Non-borrowing receipts in 2024-25 are estimated at Rs.30,80,274 crore, marking a 12% increase from the revised estimate of 2023-24. Tax revenue, a significant component, is expected to rise by 12% over the revised estimate for 2023-24.
GDP: The government forecasts a nominal GDP growth rate of 10.5% in 2024-25, which includes real growth plus inflation.
Deficits: Targeting a revenue deficit of 2% of GDP in 2024-25, the government aims for fiscal prudence, aiming for a fiscal deficit of 5.1% of GDP, lower than the revised estimate of 5.8% in 2023-24.
New Schemes: An allocation of Rs.70,449 crore has been earmarked for the Department of Economic Affairs for new schemes, emphasizing capital expenditure, which constitutes 7.5% of the total capital outlay.
Direct Tax
- Corporation Tax: Collection from taxes on companies is projected to increase by 13% in 2024-25. No changes have been prescribed in the Income Tax Rates for corporations which continue to be as under:
| Conditions | Income Tax Rate (excluding surcharge and cess) |
| Total Turnover or Gross Receipts during the previous year 2022-23 does not exceed ₹400crores | 25% |
| If opted for Section 115BA | 25% |
| If opted for Section 115BAA | 22% |
| If opted for Section 115BAB | 15% |
| Any other Domestic Company | 30% |
| Foreign Company having PE in India | 40% |
The Income tax on corporates shall be further increased by surcharge as under:
| Taxable Income | Domestic company | Foreign company |
| Taxable income above ₹ 1crore – Up to ₹ 10crore | 7% | 2% |
| Taxable income Exceeds ₹ 10crore | 12% | 5% |
| If Company opting for taxability u/s 115BAA or Section 115BAB | 10% | – |
- Personal Income Tax: Income tax slab rates for FY 2024-25 remain unchanged. The new income tax regime is set as the default tax regime. The tax slabs are tabled below.
| Taxable Income | Old Tax Regime | New Tax Regime | |
| For Individual & HUF | For Senior Citizens | ||
| Up to Rs.2.5 lakh | Exempted | Exempted | Exempted |
| Greater than Rs.2.5 lakh to Rs.3 lakh | 5% | Exempted | Exempted |
| Greater than Rs.3 lakh to Rs. 5 lakh | 5% | 5% | 5% |
| Greater than Rs.5 lakh to Rs.6 lakh | 20% | 20% | 5% |
| Greater than Rs.6 lakh to Rs. 9 lakh | 20% | 20% | 10% |
| Greater than Rs.9 lakh to Rs.10 lakh | 20% | 20% | 15% |
| Greater than Rs.10 lakh to Rs.12 lakh | 30% | 30% | 15% |
| Greater than Rs.12 lakh to Rs.15 lakh | 30% | 30% | 20% |
| Greater than Rs.15 lakh | 30% | 30% | 30% |
The personal income tax shall also be increased by surcharge. Surcharge is an additional charge levied for persons earning income above the specified limits, it is charged on the amount of income tax calculated as per applicable rates.
| Taxable Income | Surcharge Rate |
| Less than Rs.50 lakhs | Exempted |
| Greater than Rs.50 lakhs to Rs.1Crore | 10% |
| Greater than to Rs.1 Crore to Rs.2 Crore | 15% |
| Greater than to Rs.2 Crore to Rs.5 Crore | 25% |
| Greater than Rs.5 Crore | 37% |
Note: The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of 4% of such income-tax and surcharge.
- Withdrawal of Direct Tax Demands: The Income Tax department has set a limit of Rs 1 lakh per taxpayer for withdrawing small tax demands. This includes withdrawal of demands up to Rs.25,000 for the period up to 2009-10 and up to Rs.10,000 for FYs 2010-11 to 2014-15. This move aims to alleviate taxpayers’ financial burdens.
Indirect Tax
- GST Retained: The Finance Minister proposes to maintain the same tax rates for indirect taxes (GST) and import duties.
- Positive Impact of GST: The transition to GST has been lauded, with average monthly gross GST collection doubling to Rs.1.66 lakh crore and 94% of industry leaders viewing it as largely positive. The tax base of GST has more than doubled.
Conclusion
Beyond tax reforms, there is a pressing need to re-evaluate taxation policies to better serve middle-income groups, fostering savings and stimulating economic activity. Moreover, extending healthcare and educational infrastructures to rural areas is crucial for inclusive growth. Investing in skill development and vocational training can leverage the demographic dividend and drive economic prosperity. In summary, the Interim Budget 2024–25 reflects the government’s commitment to equitable growth, economic stability, strategic positioning, sector-specific development, environmental sustainability, and the overarching goal of a developed India by 2047.
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