Union Minister of Finance Nirmala Sitharaman announced significant changes aimed at simplifying and reducing litigation for taxpayers in Union Budget 2024-25, along with a comprehensive review of the Income-tax Act, 1961.
Union Minister of Finance Nirmala Sitharaman announced proposals to simplify the Income-tax Act, 1961, which would reduce disputes and litigation, along with changes in how LTCG and STCG will be taxed. Here are the other changes related to charity and Benami Property Transactions Act, 1988
Union Minister of Finance Nirmala Sitharaman announced significant changes aimed at simplifying and reducing litigation for taxpayers in Union Budget 2024-25, along with a comprehensive review of the Income-tax Act, 1961.
The comprehensive review of the Income-tax Act, 1961 is being attempted, Sitharaman said, “to make the Act concise, lucid, easy to read, and understandable. This will reduce disputes and litigation and thereby provide tax certainty to taxpayers. It will also bring down demand embroiled in litigation, and it is proposed to be completed in 6 months.”
The proposed simplification and rationalisation measures include simplifying the tax regime for charities, the rate structure for tax deduction at source (TDS), provisions of reassessment, and search provisions and capital gains taxation.
One of the key reforms outlined in Budget 2024-25 is that the two tax exemption regimes for charities have been proposed to be merged into one.
“The 5 per cent TDS rate on many payments is being merged into the 2 per cent TDS rate and the 20 per cent TDS rate on repurchase of units by mutual funds or UTI is being withdrawn. TDS rate on e-commerce operators is proposed to be reduced from one to 0.1 per cent,” Sitharaman said.
Sitharaman also proposed decriminalising the delay for the payment of TDS up “to the due date of filing statement for the same.”
“I also plan to provide a standard operating procedure for TDS defaults and simplify and rationalise the compounding guidelines for such defaults,” she said.
“I propose to thoroughly simplify the provisions for reopening and reassessment. An assessment hereinafter can be reopened beyond three years from the end of assessment year only if the escaped income is Rs 50 lakh or more up to a maximum period of 5 years from the assessment year....This will reduce tax uncertainties and disputes,” she added.
Sitharaman proposed to provide immunity from penalty and prosecution to benamidar on full and true disclosure.
“It is also proposed to rationalise time limits for attachment of property and reference to adjudicating authority,” she said.
In the domain of capital gains taxation, the Budget aims to rationalise and simplify the tax structure, with changes, such as increase in the exemption limit on capital gains and rate of short-term capital gains (STCG) tax.
“Short-term gains on specified financial assets shall henceforth attract a tax rate of 20 per cent instead of 15 per cent, while that on all other financial assets and non-financial assets shall continue to attract the applicable tax rate. Long-term gains on all financial and non-financial assets, on the other hand, will attract a tax rate of 12.5 per cent. For the benefit of the lower and middle-income classes, it is proposed to increase the limit of exemption of capital gains on certain listed financial assets from Rs 1 lakh to Rs 1.25 lakh per year,” she said.