The Finance Minister had stated in her address that more than two-thirds of the taxpayers had availed the new regime in the previous fiscal year.
| Photo Credit: The Hindu

Altering the structure for taxation of income under the new regime, Finance Minister Nirmala Sitharaman on Tuesday revised the tax slabs whilst retaining the erstwhile corresponding tax rates other than increasing the standard deductions. The present slab of ₹3-6 lakh, that is, the preliminary bracket liable to be taxed, would now be revised upwards to ₹3-7 lakh. However, the corresponding rate of taxation remains unchanged at 5%. No changes were however made for individuals with income of less than ₹3 lakh – who continue to draw no tax liability – the ₹12-15 lakh slab and for incomes exceeding ₹15 lakh.

Ms. Sitharaman held that because of the changes, a salaried employee now stands to save up to ₹17,500 in income taxes.

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The standard deduction for salaried employees, enrolled under the next tax regime, too, has been increased to ₹75,000 from the current ₹50,000. Furthermore, she announced an increase in the deduction on family pension for pensioners from ₹15,000 to ₹25,000. The two measures combined, she stated, would provide relief to “about four crore salaried individuals and pensioners.”  

More under new regime 

According to Deepashree Shetty, Partner at BDO India, who follows tax and regulatory services, the rejig in slabs was aimed at providing relief to middle-class taxpayers and to further promote the new tax regime. The Finance Minister had stated in her address that more than two-thirds of the taxpayers had availed the new regime in the previous fiscal year. 

Poorva Prakash, Partner at Deloitte India, who follows personal taxation, explained that the revision in tax slabs combined with increase in standard deduction would be beneficial for salaried employees. It would facilitate savings of about ₹17,500 on an income of ₹15 lakh, she observed. “This is a good amount [the savings] and also serves the primary objective of the new regime to push more disposable income,” she said. 

About the potential need for the revision in tax slabs, the Deloitte partner explained that taxpayers in the new tax regime cannot claim exemptions citing components as house rent allowances (HRAs), among other things. Therefore, the avenue for incentivisation is limited. Thus, the revision is tax slabs was explored in addition to the standard deduction for salaried individuals to spur their disposable income. 

No penalisation for non-reporting of small foreign assets 

Among other significant measures with respect to personal finance, whilst introducing measures to deepen the tax base, the FM proposed that not reporting movable assets of up to ₹20 lakh would not be liable for penalisation. Explaining the context, she stated that Indian professionals working in multinationals get ESOPs (employee stock ownership plan) and invest in social security schemes and other movable assets outside the country. She elaborated that not reporting such small foreign assets invited penal consequences. The introduction of the ₹20-lakh threshold thus proposed to address this paradigm. 

Sumeet Hemkar, Partner at Deloitte India, explained that the intent was not to penalise smaller individuals who may have missed on disclosing for “some less malign or benign reasons”. He added that the focus was instead on individuals with higher value assets overseas who were not making the disclosures by intent. This could be because they did not want certain transactions to be known to the Indian government and thereby reviewed. 

Mr. Hemkar further stated that the threshold would also help loosen the operational burdens emanating from the smaller cases of non-disclosures.

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| Photo Credit: AP

While presenting the interim budget for 2024, Finance Minister Nirmala Sitharaman announced a set of measures to boost the green economy and the blue economy

Among other measures pertaining to finance and infrastructure, Finance Minister Nirmala Sitharaman also announced some green initiatives and steps which will be taken for India to meet its net-zero commitments by 2070 in the interim budget presented in the Lok Sabha today. She also highlighted some efforts which will go towards creating a ‘Blue economy.’

Ms. Sitharaman announced that viability gap funding would be provided for harnessing offshore wind energy potential for initial capacity of one giga-watt.

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Further, coal gasification and liquefaction capacity of 100 MT shall be set up by 2030, she said, highlighting that this will also help in reducing imports of natural gas, methanol, and ammonia. The Centre also proposes phased blending of compressed biogas in compressed natural gas (CNG) for transport, as well as piped natural gas (PNG) for households. Financial assistance will be given for those seeking to procure biomass aggregation machinery, she shared.

As far as green transport goes, Ms. Sitharaman announced that the e-vehicle ecosystem will be expanded through support to manufacturing and charging infrastructure. Greater adoption of e-buses for public transport networks will be encouraged through payment security mechanism, she said.

Green growth is expected to receive an impetus through a new scheme for bio-manufacturing and bio-foundry, which will provide eco-friendly alternatives such as biodegradable polymers, bio-plastics, bio-pharmaceuticals and bio-agri-inputs. This is expected to push adoption of regenerative principles.

Ms. Sitharaman’s speech also announced certain measures to promote climate resilient activities for blue economy 2.0. These include a scheme for restoration and adaptation measures as well as a multi-sectoral approach towards coastal aquaculture and mariculture.

According to the World Bank, a blue economy refers to a “sustainable use of economic resources for economic growth, improved livelihoods and jobs, and ocean ecosystem health.”

The speech also mentioned enhancing public transport, saying that Metro Rail and NaMo Bharat or Regional Rapid Transit services could be the catalyst for urban transformation and that these systems will be expanded in cities.

Touching upon green power while discussing measures to develop electricity infrastructure, the Finance Minister highlighted that one crore households will be enabled to obtain up to 300 units free electricity every month through rooftop solarization.