Tax reforms in 2024: Changes in Rule:In the last year i.e. 2024, many important changes were made in the tax system of the country. Generally, the objective of these changes has been to simplify the tax structure, reduce the burden of compliance and resolve tax disputes. It is expected that these tax reforms will make doing business easier than before and will also promote economic growth, but in some cases these reforms proved to be a bit challenging. The effect of these changes will be visible in the coming days also. It is also expected that this series of tax reforms will continue in the coming budget also.
abolition of angel tax
Abolition of angel tax in 2024 is being considered a welcome step. This tax was being considered a major hindrance especially in the efforts of startups to raise funds. Due to this tax, confusion was created among the investors and hurdles were felt in raising funds at premium valuation. Its removal will make it easier for startups and other businesses to raise funds, making it better than before to start and grow their business.
Also read: Income Tax Rule Changes 2024: There have been many important changes in the Income Tax rules, these things will have to be kept in mind while filing returns in 2025.
Changes in capital gains tax
In 2024, capital gains tax has been standardized for different asset classes. Under the new rules, short term capital gains (STCG) are now taxed at 20% and long term capital gains (LTCG) at 12.5%, although the indexation benefit for LTCG has been abolished. Under the new rules, earlier the indexation benefit on any type of property (Immovable Assets) was abolished, but after strong opposition to this change, the government decided to retain the indexation benefit on properties purchased before July 23, 2024. Did. This has brought great relief to those who bought property years ago.
Also read: Income Tax Rate Cut: Government may reduce income tax in the next budget! Those with annual income up to Rs 15 lakh will get relief, what will be the impact on the economy?
Buy-back tax abolished
Under the previous budget proposals, the 20% tax on buy-back of shares has been abolished from October 1, 2024. The taxation applicable on this has now been brought under the normal slab rates like the tax applicable on dividends. Due to this move, share buy-back has now become less attractive. In such a situation, before the implementation of the new rule i.e. till 30 September 2024, promoters of private companies came up with a large number of buy-back offers. This change in rules has made share buyback less attractive in the future.
Also read: PM-JAY For Senior Citizens: How to enroll the elderly for free health insurance of Rs 5 lakh, how to get the benefits of Ayushman Bharat PM Jan Arogya Yojana
Reforms in International Taxation
Removal of 2% equalization levy applicable on e-commerce transactions of foreign companies is being considered a welcome step. This is expected to promote investment and business. This levy was brought in as an interim measure until the implementation of the Pillar 2 provision of the proposed Base Erosion and Profit Shifting (BEPS) measures to improve the tax collection from large multinational companies at the international level, but it has not been implemented. Due to obstacles in implementation and lack of clarity, it has been scrapped. There is still confusion around the world regarding implementing the system of charging at least 15% tax from big multinational companies under BEPS. In the current situation, India is also considering further delay in implementing these proposals.
Also read: Long Term Return: Money doubled on SIP in 5 years and tripled on lump sum, this scheme of HDFC MF increased wealth 5 times in 12 years
Increasing burden of tax disputes
There has been a huge increase in both the number of direct tax appeals and the disputed amount in the year 2023-24. The number of cases pending appeal has increased from 51,567 to 64,311, and the amount involved in disputes has also more than doubled to Rs 14.21 lakh crore, compared to Rs 6.64 lakh crore. The government has tried to reduce the number of such disputes through measures like Vivad Se Vishwas Scheme 2.0, but in view of the increasing number of disputes, there is a need to work more effectively.
What are the prospects for 2025?
The tax reforms in 2024 are expected to especially help start-ups and sectors that focus on innovation. With the simplification of tax laws and reduction in the burden of tax compliance, businessmen will get more opportunity to overcome administrative hassles and focus on business expansion. In the coming year, there is a need to take more concrete steps towards resolving tax disputes and making the tax system more stable. The government will have to make policy decisions more effective so that investor confidence increases and India can be further strengthened as a reliable investment destination at the international level.
Following the Finance Minister’s speech while presenting the Union Budget 2024, the Central Board of Direct Taxes (CBDT) in October formed an internal committee for a comprehensive review of the Income Tax Act, 1961. Its purpose is to make the law more clear and easier to understand. Along with the Act, suggestions have also been sought from the common people on issues like simplifying the language of Income Tax Rules (Income-tax Rules, 1962), reducing the burden of compliance and eliminating redundant provisions. It is expected that this work started in 2024 will progress further in 2025 and its reflection will be seen in the upcoming budget also.
