NEW DELHI: Finance Minister Nirmala Sitharaman presented the first Union Budget of the Modi 3.0 government for the seventh time earlier this week. The budget session began on July 22 and is scheduled to conclude on August 12. In her seventh consecutive Union Budget for 2024–25, Sitharaman highlighted the government’s main priorities, introduced several tax simplification measures, including a comprehensive review of the Income Tax Act, and announced the decriminalisation of late payment of tax deducted at source (TDS). Additionally, she introduced the Vivad se Vishwas Scheme 2024 to resolve direct tax disputes.
The Finance Bill introduces several simplifications, including changes to the tax regime for charities, the TDS rate structure, reassessment provisions, search provisions, and capital gains taxation. The budget proposes decriminalising late payment of TDS if the payment is made before the deadline for filing the TDS statement. The reassessment time limits are set to be reduced from ten years to five years, with a streamlined procedure for reassessment. “Assessments can now be reopened beyond three years from the end of the assessment year only if the escaped income is Rs 50 lakh or more, up to a maximum period of five years from the end of the assessment year. For search cases, the time limit is proposed to be reduced to six years before the year of search, compared to the current ten years. This will reduce tax uncertainty and disputes,” Sitharaman stated.
The proposed changes include reducing the TDS rate from 5% to 2% on several transactions, such as payments for insurance commissions, life insurance policies, lottery ticket commissions, brokerage, and rent payments by certain individuals or Hindu Undivided Families (HUF). These changes will take effect from October 1. Additionally, the 20% TDS rate on the repurchase of units by mutual funds or UTI has been withdrawn. The TDS rate for e-commerce operators is proposed to be reduced from 1% to 0.1%.