Budget 2020 Income Tax Implications
Lower tax slab if you forego exemptions
In a significant boost for taxpayers, Finance Minister Nirmala Sitharaman proposed a new optional income tax structure for those who are willing to forego existing exemptions and deductions. These changes will become effective from the financial year 2020-21 after the Parliament passes these proposals.
Budget 2020 Highlights: The New IT Slabs under Budget 2020
Under the new proposals, income between
- 0-5 Lakh would not be taxed
- Rs. 5 Lakh to Rs. 7.5 Lakhs will be taxed at 10%, down from the current 20%,
- Rs. 7.5 Lakh and Rs. 10 Lakhs will be taxed at 15%, down from the current 20%,
- Rs. 10 Lakh and Rs. 12.5 Lakhs will be taxed at 20% down from the current 30%,
- Rs. 12.5 Lakh and Rs. 15 Lakhs will be taxed at 25% down from the current 30%,
- Above Rs. 15 Lakhs would continue to be taxed at 30%
Other Union Budget 2020 benefits for Income Tax payers
- If you are working for a start up, you have reason to cheer, because the tax on your Employee Stock Options will be deferred by five years
- The additional Rs. 1.5 Lakh tax deduction on interest paid for affordable housing loans has been extended to March 2021. This would give some relief to those who are planning to buy a new home
What went well:
Attempt to simplify the tax regime, reduced tax burden on those earning below Rs. 15 lakh per annum.
Taxpayers could be left scrambling to decide which tax structure suits them best.
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