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Budget: FY 2024 - 2025

for Small Businesses

for Individuals

Income Tax

Last updated on
Budget: FY 2024 - 2025

Q. How does the budget work? Is it applicable from today onwards?

Before any financial year begins, the Finance Minister presents a draft budget detailing the planning of the incomes and expenditures of the government, and any changes in policies. Then, the budget is revised (usually, only minor revisions) by the Lok Sabha and Rajya Sabha, and the finalized version is applicable from the beginning of the financial year.

The draft budget for FY 2025-26 was presented on 01/02/2025. It will be finalized, and detailed budget will be released and be applicable from 01/04/2025 onwards.

Q. How does this budget affect you directly?

  • For individuals, there’s a large reduction in annual income tax:

    • Rebate (No tax) up to total income of INR 12 lakhs (excluding special rate income, e.g. capital gains, betting)

    • Revised tax slabs for individuals & HUFs to reduce overall tax burden

Income Total Tax (under New Scheme) Tax Benefit Tax Benefit (%)
Before Budget After Budget
8 lakhs 0.30 lakhs NIL 0.30 lakhs 100%
12 lakhs 0.80 lakhs NIL 0.80 lakhs 100%
16 lakhs 1.70 lakhs 1.20 lakhs 0.50 lakhs 30%~
20 lakhs 2.90 lakhs 2.00 lakhs 0.90 lakhs 30%~
24 lakhs 4.10 lakhs 3.00 lakhs 1.10 lakhs 27%~
50 lakhs 11.90 lakhs 10.80 lakhs 1.10 lakhs 9%~

The big benefits are to people earning just under 12 lakhs, and people earning more than 20 lakhs.

  • There are no changes in tax rates for companies, firms, or on capital gains.

  • Reduction in TDS / TCS compliances:

    • TCS on foreign remittances for education under LRS limit increased from INR 7 lakhs to INR 10 lakhs.

    • Abolition of TCS on sale of goods.

    • Increase in limits for TDS on interest, dividend, commissions, rent and professional / technical services.

  • Increase in the thresholds to register as MSME, to 125Cr of investment and 500Cr of Turnover.

  • One can now file updated returns for the last 4 financial years, allowing non-filers to come under compliance.

  • Small Charitable Trusts now get registered for a block of 10 years rather than 5 years.

Q. How does this budget affect you indirectly?

The budget has an overarching effect on the functioning of the country, and it helps to have an understanding of it. The reduction of taxes results in INR 1 lakh crore of the government’s revenue forgone.

This results in the common man having more to spend, which promotes businesses which target him, like consumer goods, and automotives, leading to increase in stocks of Maruti, ITC or Zomato. On the contrary, the government has less to spend – which means less infrastructure projects, leading to decrease in the stocks of L&T, PowerGrid, etc.

For specific guidance on how the budget may affect your business and compliances, or any confusion, feel free to reach out to us.

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