On February 1, 2024, the Finance Minister of India, Ms. Nirmala Sitharaman presented the interim budget before the Parliament. As this is an election year, the interim budget does not contain any significant tax related changes and a full-fledged budget will be presented after the formation of new government after the elections. Due to increasing tax revenue, the budget deficit is expected to be at 5.1% of the gross domestic product in Financial Year (FY) 2024-25 as against 5.8% in the FY 2023-24.
Tax Rates
Individuals:
There are no changes proposed in Personal Income tax slabs and rates. The tax rates applicable for FY 2024-25 (to individuals below the age of 60 years) are same as applicable for FY 2023-24, which are as under:
| Tax Regime without deductions* (default tax regime) | Tax Regime with deductions* | ||
| Annual Taxable Income (In INR) | Income Tax Rate | Annual Taxable Income (In INR) | Income Tax Rate |
| Up to 300,000 | Nil | Up to 250,000 | Nil |
| 300,001 to 600,000 | 5% | 250,001 to 500,000 | 5% |
| 600,001 to 900,000 | 10% | 500,001 to 1,000,000 | 20% |
| 900,001 to 1,200,000 | 15% | Above 1,000,000 | 30% |
| 1,200,001 to 1,500,000 | 20% | ||
| Above 1,500,000 | 30% |
- If the taxpayer opts for the default tax regime, i.e., the one without deductions, no tax would be payable if their income does not exceed INR 700,000, benefiting from a tax rebate of INR 25,000. However, if the taxpayer opts for the tax regime with deductions, the old provisions restricting this benefit to income up to INR 500,000, i.e., the tax rebate of INR 12,500 would apply. Furthermore, a standard deduction of up to INR 50,000 is available for the default tax regime though this regime does not allow taxpayers to claim various other deductions.
- The tax computed as above is to be further increased by surcharge at rates mentioned below and a health and education cess @ 4%.
- Income (all kinds of income) exceeding INR 5 million but not exceeding INR 10 million – 10%
- Income (all kinds of income) exceeding INR 10 million but not exceeding INR 20 million – 15%
- Income (excluding income from dividend and specified capital gains) exceeding INR 20 million but not exceeding INR 50 million – 25%
- Income (excluding income from dividends and specified capital gains) exceeding INR 50 million – 37%. Where the taxpayer opts for the tax regime (without deductions), the surcharge applicable will be restricted to 25%.
- In case of the last two situations mentioned above, surcharge at 15% is applicable on income from specified capital gains and dividend.
Companies:
There is no change in corporate income tax rates (CIT). The key CIT rates applicable to Indian companies (domestic companies) are as under:
| Category/ Condition for FY 2024-25 | Income Tax Rate (Excluding surcharge and cess) |
| Domestic manufacturing companies incorporated on or after October 1, 2019, and which commence manufacturing on or before March 31, 2024, and have opted for special/ optional tax regime | 15% |
| Companies opting for special/ optional tax regime where exemptions/deductions cannot be claimed | 22% |
| Company with total turnover or gross receipt in the FY 2022-23 not exceeding INR 4 billion | 25% |
| Any other domestic company | 30% |
The above tax is further increased by surcharge at rates mentioned below and a health and education cess @ 4%
- Companies with taxable income exceeding INR 10 million but less than INR 100 million – 7%
- Companies with taxable income exceeding INR 100 million – 12%
- Company opting for special / optional tax regime (companies subject to tax rate of 15% or 22% as above) as mentioned above – 10%.
Other Changes
- The period provided for incorporation of eligible start-ups for claiming tax exemption is extended from March 31, 2024, to March 31, 2025. The eligible start up can claim 100% tax exemption for 3 consecutive assessment years out of 10 years beginning from the year of incorporation, at the option of the taxpayer, subject to certain conditions.