The Budget for 2024-25 introduced several key tax reforms aimed at simplifying the tax structure and providing relief to citizens and businesses. These reforms include:
1. Income Tax Act Review: Comprehensive review of the Income Tax Act of 1961 to simplify and modernize the tax code.
2. Custom Duty Changes: Reductions in custom duties for key sectors such as the mobile industry, gold, silver, shrimp, fish feed, and manufacturing of solar cells and panels. Full exemption of custom duties on 25 critical minerals. These 25 critical minerals are antimony, beryllium, bismuth, cadmium, cobalt, copper, gallium, germanium, graphite, hafnium, indium, lithium, molybdenum, niobium, nickel, PGE, phosphorous, potash, REE (rare earth elements), rhenium, selenium, silicon, strontium, tantalum, tellurium, tin, titanium, tungsten, vanadium and zirconium.
3. Capital Gains Tax: Short-term gains on financial assets will be taxed at 20%, while long-term gains on all financial and non-financial assets will be taxed at 12.5%. The exemption limit for capital gains on financial assets has been increased to ₹1.25 lakh per year from ₹1 lakh.
4. Standard Deduction Increase: For salaried employees, the standard deduction has been increased from ₹50,000 to ₹75,000.
5. Family Pension Deduction: The deduction on family pension for pensioners has been increased from ₹15,000 to ₹25,000.
6. Abolition of ANGEL Tax: All classes of investors will be exempt from ANGEL tax to bolster the Indian startup ecosystem.
7. Simplified Tax Regimes: Introduction of simpler tax regimes for operating domestic cruises and safe harbor rates for foreign mining companies selling raw diamonds. The corporate tax rate on foreign companies has been reduced from 40% to 35%.
8. Sector-Specific Proposals: Custom duty proposals have been comprehensively reviewed to ease trade, remove duty inversion, and reduce disputes.
