Budget 2020: New 'optional' income tax slabs with reduced rates announced

Budget 2020: New 'optional' income tax slabs with reduced rates announced

Budget 2020: New 'optional' income tax slabs with reduced rates announced

Observing that there are about 100 tax exemptions and deductions, she said that 70 of them are being removed in the new simplified tax regime, while the remaining will be reviewed and examined in due course.

As DNA predicted earlier that the Budget 2020 will bring income tax relief to salaried employees, Finance Minister Nirmala Sitharaman on Saturday announced a new income tax regime to allow taxpayers save more money. Those those earning less than 500,000 rupees will pay no tax, up from 250,000 rupees now, she said. The tax rates have been reduced to a large extent under this new regime - however, those opting to file taxes under the new slabs will not be able to avail deductions.

India's government proposed to cut personal income tax rates to encourage spending by the middle class and vowed to invest billions of dollars on rural infrastructure and agriculture to shore up a slowing economy. No changes have been done for income below Rs 5 lakh and above Rs 15 lakh.

The minister further said that the new regime will be optional and the people can continue with old regime if they desire so. "An individual who is now availing more deductions and exemption under the Income-tax Act may choose to avail them and continue to pay tax in the old regime", FM Sitharaman said in her Budget Speech today. Meanwhile those earning between Rs 10 lakh and Rs 12.5 lakh will be taxed at 20%, instead of the existing 30%.

While those earning up to Rs 5 lakh in a year will pay no tax, a person earning Rs 15 lakh per annum and not availing any deductions will now pay Rs 1.95 lakh tax in place of Rs 2.73 lakh, the FM said. The amount allocated to the ministry this year is a modest increase over Rs 1.03 lakh crore allocated to it last year.

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