Interim Budget 2024: Centre withdraws outstanding tax demands up to Rs 25,000 up to FY10; here is a summary of what FM said on taxes

Budget 2024: Finance Minister Nirmala Sitharaman where on the one hand left the direct and indirect tax rates unchanged, on the other, she withdrew the outstanding direct tax demands for select financial years in the past. The Interim Budget 2024 proposes to withdraw such tax demands up to Rs 25,000 till the financial year 2009-10, and up to Rs 10,000 for five financial years till March 2015, in a move expected to benefit about one crore tax assessees.

“As for tax proposals, in keeping with the convention, I do not propose to make any changes relating to taxation, and propose to retain the same tax rates for direct taxes and indirect taxes including import duties,” she said while presenting the Interim Budget in Parliament. Read the full text of the Interim Budget speech here

The February 1 Budget will be followed by a separate Budget later this year after the Lok Sabha polls to elect a new government at the Centre.

What do tax experts make of the latest Budget announcements?

"Withdrawal of outstanding demand from the records of the Income Tax Department would mean refunds of other years, which were proposed to be adjusted against them, would now be released to the taxpayers. This proposal also indicates that the government wants to do away with old and irrelevant income tax records," said Sandeep Shah, Managing Partner at NA Shah Associates, a Mumbai-based CA firm. 

"While the Finance Bill does not contain the procedural aspects, the same are expected to be rolled out through separate notifications," Shah said.

Meanwhile, the Finance Minister highlighted some of the government’s achievements related to taxes over the last 10 years after the Narendra Modi administration assumed power in 2014.

“I would like to assure the taxpayers that their contributions have been used wisely for the development of the country and the welfare of its people. I appreciate the taxpayers for their support,” the finance minister added in a Budget speech that lasted for about an hour.

Here are some of the key highlights of what the finance minister said her government achieved during its two terms so far:

Direct taxes

• Direct tax collections more than trebled
• The return filer base grew 2.4 times
• Government reduced and rationalised tax rates
• Corporate tax rate decreased from 30 per cent to 22 per cent for existing domestic companies
• Corporate tax rate lowered to 15 per cent for certain new manufacturing companies

Indirect Taxes

• GST reduced the compliance burden on trade and industry (since launch)
• Industry acknowledged GST benefits
• GST tax base more than doubled this year
• Average monthly gross GST collection almost doubled to Rs 1.66 lakh crore this year
• Biggest beneficiaries are consumers (reduction in logistics costs and taxes has led to lower prices of most goods and services)

Where the money comes from?

Meanwhile, the Interim Budget 2024 has raised the share of direct and indirect tax collections to the overall revenue collections to 63 per cent, as against 58 per cent the previous year, Budget documents show.

Ever-growing tax base

The finance minister said the number of tax filers has swollen 2.4 times and the direct tax collection has trebled since 2014, a period during which the tax return processing time has reduced from 93 days to 10 days.

Catch all the highlights of the Interim Budget 2024 announcements here