Union Budget 2024: Finance Minister Emphasizes Streamlining Tax Processes and Improving Services

During the Union Budget 2024-2025 presentation, Finance Minister Nirmala Sitharaman highlighted the government's ongoing efforts to simplify taxation and enhance taxpayer services. She noted that 58% of corporate tax revenue in 2022-23 came from the simplified tax regime, with over two-thirds of taxpayers opting for the new personal income tax regime.
To further streamline taxation, a comprehensive review of the Income-tax Act, 1961 will be conducted within six months. This review aims to make the Act more concise and clear, reducing disputes and litigation. "This will provide tax certainty to the taxpayers," said Sitharaman.

Here in this article, a look at the Streamlining Tax Processes and Improving Services that have been announced in the Union Budget 2024 is discussed. This is also referred to as the ' Vivad se Vishwas Scheme 2024'. So, let us have a look into it:

Digitalization of Tax Services:

The Finance Minister announced plans to digitalize all major taxpayer services under GST and most services under Customs and Income Tax within two years. This includes making processes like rectification and order implementation paperless.

In another move to reduce tax uncertainty, reassessment rules will be simplified. Assessments can only be reopened beyond three years if the escaped income is ₹50 lakh or more, up to a maximum of five years. For search cases, the time limit is reduced from ten to six years before the year of search.

Tax Simplification Measures:

Sitharaman proposed merging two tax exemption regimes for charities into one. The TDS rate on many payments will be reduced from 5% to 2%, and the 20% TDS rate on mutual fund unit repurchases will be withdrawn. The TDS rate for e-commerce operators will decrease from 1% to 0.1%. Additionally, credit for TCS will be given in TDS deducted from salaries.
The Vivad se Vishwas Scheme, 2024 was introduced to resolve pending income tax disputes in appeals. The monetary limits for filing appeals related to direct taxes, excise, and service tax in various courts have been significantly increased.

Expanding Tax Base:

To broaden the tax base, two key measures were announced: increasing the Security Transactions Tax on futures and options of securities to 0.02% and 0.1%, respectively; and taxing income received from share buybacks as a measure of equity.

Sitharaman elaborated that these proposals would result in a revenue loss of about ₹37,000 crore-₹29,000 crore in direct taxes and ₹8,000 crore in indirect taxes while mobilizing an additional ₹30,000 crore annually. Thus, the net revenue forgone is approximately ₹7,000 crore per year.

The Finance Minister also emphasized that litigation and appeals would continue to receive high priority from the government. The scope of safe harbor rules will be expanded along with streamlining transfer pricing assessment procedures to ensure certainty in international taxation.

These initiatives reflect the government's consistent effort to simplify taxation processes while improving services for taxpayers across India.