Union Finance Minister Nirmala Sitharaman, in her presentation of the interim Budget on Thursday, announced that there would be no alterations to taxation, proposing to retain existing direct and indirect tax rates, including import duties.
Sitharaman also highlighted significant improvements in tax refund processing, reducing the average time from 93 days in 2013-2014 to just 10 days in the past year. Additionally, she noted a substantial increase in the average real income of people, which has surged by 50%.
While maintaining stability in tax structures, Sitharaman provided relief to taxpayers by withdrawing a considerable portion of outstanding petty direct tax demands.
Addressing this issue in her speech, she stated, "There are a large number of petty, non-verified, non-reconciled, or disputed direct tax demands, many of them dating as far back as the year 1962, which continue to remain on the books, causing anxiety to honest taxpayers and hindering refunds of subsequent years. I propose to withdraw such outstanding direct tax demands up to twenty-five thousand rupees (₹ 25,000) pertaining to the period up to financial year 2009-10 and up to ten-thousand rupees (₹ 10,000) for financial years 2010-11 to 2014-15. This is expected to benefit about a crore taxpayers."
In her previous Budget, Sitharaman had introduced five major announcements on personal income tax to benefit the middle class. She reiterated the option for taxpayers to choose between the new and old tax regimes, proposing an increase in the rebate limit from Rs 5 lakh to Rs 7 lakh in the new tax regime.
Under this provision, individuals opting for the new tax regime would not be required to pay any tax on annual incomes up to Rs 7 lakh.
Interim Budgets historically refrain from major changes.
In 2019, then Finance Minister Piyush Goyal proposed increases in standard deduction and the threshold for tax deducted at source, along with incentives for farmers and pension coverage for unorganized sector workers. Similarly, in 2014, the interim Budget presented by P Chidambaram announced cuts in excise duties for various vehicle categories and tax relief for mobile handsets.
The ongoing Budget session of Parliament, commenced on January 31, is scheduled to continue till February 9. With Lok Sabha elections anticipated around April-May, the elected government is expected to present the full Budget in July.
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