Budget 2020 – Income Tax Relief for Individuals
#Budget2020 Finance Minister #NirmalaSithraman announces major tax relief for individuals
Income between Rs. 5-7.5 lakh – Tax rate 10%
Income between Rs. 7.5-10 lakh – Tax rate 15%
Income between Rs 10-12.5 lakh – Tax rate brought down to 20% from 30%
Around 70 of more than 100 income tax deductions and exemptions removed to simplify tax system and lower rates: FM
Finance Minister #NirmalaSitharaman announces big relief for taxpayers; new tax rates made optional. Check out the new #IncomeTax rates.
Income above 15 lakh rupees will continue to be taxed at 30%
Government of India
Ministry of Finance
In order to provide significant relief to the individual taxpayers and to simplify the Income-Tax law, the Union Budget proposes to bring a new and simplified personal income tax regime wherein income tax rates will be significantly reduced for the individual taxpayers who forgo certain deductions and exemptions. While presenting the Union Budget 2020-21 in Parliament today, the Union Minister for Finance & Corporate Affairs, Smt Nirmala Sitharaman said, “The new tax regime shall be optional for the tax payers.” She further said that an individual who is currently availing more deductions and exemptions under the Income Tax Act may choose to avail them and continue to pay tax in the old regime.
The New personal Income tax regime proposes the following tax structure:
|Taxable Income Slab (Rs.)||Existing tax rates||New tax rates|
|Above 15 Lakh||30%||30%|
In the new tax regime, substantial tax benefit will accrue to a taxpayer depending upon exemptions and deductions claimed by him. For example, a person earning Rs 15 lakh in a year and not availing any deductions etc. will pay only Rs, 1,95,000 as compared to Rs, 2,73,000 in the old regime. Thus his tax burden shall be reduced by 78,000 in the new regime. He would still be a gainer in the new regime even if he was taking deduction of Rs 1.5 lakh under various sections of Chapter VI –A of the Income Tax Act under the old regime.
The new tax regime will be optional for the taxpayers. As per the Memorandum explaining the provision in the Finance Bill, the option shall be exercised for every previous year where the individual or the HUF has no business income and in other cases the option once exercised for a previous year shall be valid for that previous year and all subsequent years. The option shall become invalid for a previous year or previous years as the case may be if the individual or HUF fails to satisfy the conditions and other provisions of the Act shall apply.
The new personal income tax rates will entail estimated revenue forgone of Rs 40,000 crore per year. Smt Sitharaman said, “We have also initiated measures to prefill the income tax return so that an individual who opts for the new regime would need no assistance from an expert to file his return and pay income tax.” The Finance Minister said that in order to simplify the income tax system, she has reviewed all the exemptions and deductions incorporated over the past several decades.”
In the Budget, around 70 of the existing exemptions and deductions of different nature (more than 100) have been proposed to be removed. Remaining exemptions and deductions will be reviewed and rationalised in the coming years with a view to further simplifying the tax system and lowering the tax rate.