Interim Budget 2024: Decoding key terms for taxpayers


Team Udayavani, Jan 30, 2024, 10:43 AM IST

Representative image (Source: Pexels)

As the nation awaits the presentation of the interim budget before the 2024 general elections by Union Finance Minister Nirmala Sitharaman on February 1, understanding key terms in the document becomes crucial for taxpayers.

Here’s a simple guide to help you navigate through the budget jargon:

Tax Deduction – Like a Discount on Taxes:

Think of tax deduction as a discount on your tax bill. For instance, a standard deduction of ₹50,000 lowers your total income, reducing the taxable amount. Investments in PPF, NSC, and tax-saving FDs can fetch deductions under section 80C.

Rebate – Lessening the Tax Burden:

A rebate in the context of income tax refers to a reduction in total income tax, effectively lessening the tax burden for taxpayers. It operates as a stimulus for economic activity by providing individuals with a decrease in their overall income tax liability. This reduction is applied after the calculation of the total tax amount, providing financial relief to eligible taxpayers.

Tax Surcharge – Extra Tax for High Earners:

Tax surcharge is an additional tax imposed on high-income earners, typically those earning more than a specified threshold, as a percentage of their existing tax rate. For instance, a 10 percent surcharge on a 30 percent tax rate would increase the total tax liability to 33 percent. This surcharge is designed to contribute additional revenue from wealthier individuals to support government initiatives.

Cess on Tax – Additional Tax for Specific Objectives:

Cess on tax is an additional levy imposed on the income tax amount, aiming to fund specific objectives such as health and education. Currently set at 4 percent, this extra tax is applied to the total tax liability, including any applicable surcharge. The revenue generated from this cess is earmarked for designated purposes outlined by the government.

New Tax Regime:

Introduced as an optional alternative in the Union Budget 2020-21, the new tax regime offered concessional tax rates, presenting a lower tax structure compared to the old regime. Notably, this system significantly reduced the number of exemptions and deductions available to taxpayers. It provided flexibility, enabling taxpayers to choose between the old regime with deductions and the new regime with lower tax rates. To encourage adoption, the government made landmark amendments that aimed to enhance transparency and simplify the tax system.

Old Tax Regime:

The old tax regime, in existence before the Union Budget 2020-21, featured higher tax rates, with the maximum rate reaching 30 percent for incomes exceeding a specified threshold. This traditional system allowed taxpayers to avail various exemptions and deductions, contributing to a complex tax structure. Individuals could plan their taxes using a range of deductions under this regime.

TDS – Collecting Tax at the Source:

TDS, or Tax Deducted at Source, is a method of collecting income tax directly from the source of income. For example, banks may deduct tax when transferring interest income to ensure that the government receives its share upfront. This mechanism streamlines tax collection by collecting a portion of the tax liability at the source of income, providing a more efficient means of revenue collection.

Tax Saving Instruments – PPF, NSC, NPS:

Tax-saving instruments such as PPF (Public Provident Fund), NSC (National Savings Certificate), and NPS (National Pension System) enable taxpayers to claim deductions in their income tax. These financial tools are designed to encourage savings and investments while providing a benefit in the form of reduced taxable income. Contributions to PPF, NSC, and NPS are eligible for deductions under specified sections of the income tax laws, offering individuals a means to optimize their tax liabilities.

Tax Collection at Source (TCS) – Extra Amount Collected at Sale:

Tax Collection at Source (TCS) is a mechanism where an additional amount of tax is collected by the seller from the buyer during a sale transaction. This collected amount is then deposited with the tax authority. TCS serves as a means for the government to collect taxes at the point of sale, ensuring a more direct and efficient method of revenue collection.

Understanding these terms will empower taxpayers to navigate the intricacies of the interim budget, fostering a clearer comprehension of the fiscal landscape. Stay tuned for the latest updates on the budget’s impact.

Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.

Top News

Delhi Police identifies 175 people in verification drive against illegal Bangladeshi immigrants

We have evidence of BJP MLC Ravi using invective inside K’taka Legislative Council: CM Siddaramaiah

Maintain strong relations with all community outfits, don’t oppose their views: Cong’s Chennithala

SC asks HC, Maharashtra govt to evolve mechanism to ensure production of accused before trial courts

7 Indians among around 200 injured in German Christmas market attack

Gambhir Problems: He wants his team but will he get that?

From reel to real: Drug smuggler caught from theatre during ‘Pushpa 2’ show

Related Articles More

Front-running case: Sebi bans 9 entities from market , impounds illegal gains of over Rs 21 crore

Global trends, FIIs’ move to dictate trends in markets in holiday-shortened week: Analysts

GST Council postpones decision to cut tax on insurance, rate panel defers report submission

GST Council meet to decide on lower taxes on insurance policies, ATF inclusion

D-Street investors become poorer by Rs 18.43 lakh cr in 5 days of market crash

MUST WATCH

Tulunadu Daivaradane

Feeding Birds with Creative Paddy Art!

Areca Nut

HOTEL SRI DURGA BHAVANA

Harish Poonja


Latest Additions

Persecution in the name of Dharma took place due to lack of its understanding: Bhagwat

Puttur: Driver killed after electric auto rickshaw overturns

Will SC conduct further inquiry, asks Surjewala after Pegasus spyware case verdict in US

Rahul summoned by Bareilly court for remarks against Economic Survey

Kejriwal announces doorstep registration for women, elderly welfare schemes starting tomorrow

Thanks for visiting Udayavani

You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.