Government to undertake comprehensive review of Income Tax Act : Sitharaman in the Union Budget Speech

The government on Tuesday announced that it will undertake a comprehensive review of the Income Tax Act to make it easy to read.

Presenting the Union Budget for 2024-25, Finance Minister Nirmala Sitharaman also said the government will come out with SoP (standard operating procedure) for TDS defaults and simplify and rationalise compounding of such offences.

She added that two tax exemption regimes for charitable trusts will be merged into one. Also, 58% of corporate tax has come from simplified tax regime in FY23.

The Finance Minister further announced the merging of two tax exemption regimes for charitable trusts into a single regime. She also highlighted that in the FY 2023, 58% of corporate tax revenue was generated through the simplified tax regime.

Sitharaman informed the Lok Sabha that over two-thirds of individuals opted for the new income tax regime. Further, she revealed plans to develop DPI apps for various sectors, including education, health, law, credit, e-commerce, MSME service delivery, and urban governance.

Additionally, the old tax regime remains unchanged, with those earning from ₹2.5 lakh to ₹5 lakh being taxed at 5%, those from ₹5 lakh to ₹10 lakh taxed at the rate of 20%, and those earning more than ₹10 lakh being charged at 30%.

The rates are higher as compared to the new tax regime, but the old tax regime allows more deductions in the form of house rent allowance (HRA), travel allowance, conveyance allowance and others.