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Budget 2020 Income Tax Slabs and Rates HIGHLIGHTS: Big relief for middle class tax payers, but if they forgo exemptions

Budget 2020 Income Tax Slabs and Rates for FY 2020-21 HIGHLIGHTS: No tax upto Rs 5 lakh, 10% tax for income between Rs 5 lakh to Rs 7.5 lakh, 15% tax for income between 7.5 lakh to 10 lakh, 20% tax for income between 10 lakh to 12.5 lakh, 25% tax for income between 12.5 lakh to 15 lakh and 30% tax for income above 15 lakh

By: Express Web Desk | New Delhi |
Updated: February 2, 2020 4:40:49 pm
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Budget 2020 Income Tax Slab Rates Changes Expectations: Presenting her second Union Budget in Parliament Saturday, Finance Minister Nirmala Sitharaman cut tax rates significantly for the salaried class, giving them relief, but provided they forgo exemptions. For financial year 2020-21, people earning up to Rs 5 lakh will not have to pay any income tax while those with income between Rs 5 lakh to Rs 7.5 lakh will have to pay 10 per cent of income tax, this is half of what they are paying now. Also, there will be 15% tax for income between 7.5 lakh to 10 lakh and 20 per cent tax for income between 10 lakh to 12.5 lakh. The Finance Minister also said people earning between Rs 12.5 lakh to Rs 15 lakh will have to pay 25 per cent of tax while those with income above Rs 15 lakh will pay 30 per cent tax.

READ | Govt invokes clause in FRBM Act to raise fiscal deficit target to 3.8% from 3.3%

So, as per the new announcements, a person earning Rs 15 lakh per anum and not availing any deductions will pay Rs 1.95 lakh tax in place of Rs 2.73 lakh now. Sitharaman also said Rs 40,000 crore per annum will be revenue foregone from new income tax rates for individuals and that the government has removed 70 exemptions, deductions with a view to further simplify tax regime.

READ | Budget 2020 new income tax regime will take away these exemptions; Full list

Nirmala Sitharaman, however, said the government expected tax buoyancy will take time and the recent cut in corporate tax will cause loss of substantial revenue in short-run and that economy will reap huge returns in due course.

Live Blog

Finance Minister Nirmala Sitharaman presented the Union Budget 2020. Income Tax Slabs and Rates were announced, giving relief to middle-class taxpayers, but if they forgo exemptions. Follow this space for HIGHLIGHTS. Read our other Live blogs on Budget 2020, Markets

16:40 (IST)02 Feb 2020
Finance Commission recommends 41% share of taxes for states; 1% for J&K, Ladakh in FY21

The 15th Finance Commission has recommended keeping the tax devolution share “virtually unchanged” to states at 41 per cent for the year 2020-21, compared to 42 per cent at present. The 1 percentage point reduction has been done to account for the reorganisation of the erstwhile state of Jammu and Kashmir. READ MORE

22:41 (IST)01 Feb 2020
New income tax slabs, lower rates if exemptions foregone

Moving to reform personal income tax, the government Saturday announced a new tax regime for individuals, offering much lower tax rates to taxpayers who are willing to forego all deductions and exemptions including those currently available on EPF contribution, tuition fee payment, principal and interest outgo on home loans, standard deduction of Rs 50,000 and medical insurance premium among others. READ MORE

16:21 (IST)01 Feb 2020
Kya Budget? Kaisa Budget? Delhi talks about Budget 2020 expectations

As Nirmala Sitharaman, finance minister in Modi Government 2.0 presented her second budget, we asked the people of Delhi NCR about their expectations from Budget 2020.

16:13 (IST)01 Feb 2020
Explained: How the government plans to reboot the economy with this budget

The government’s strategy, or hope at least, is that leaving people with more money will help boost their consumption levels, which are at present quite subdued, as witnessed in the slump in sales of goods and services across the board. READ MORE

16:01 (IST)01 Feb 2020
For every rupee in govt kitty, 64 paise come from taxes

For every rupee in the government coffer, 64 paise will come from direct and indirect taxes, while states' share of taxes and duties is the single-largest expense head accounting for 20 per cent of the total spending, Budget documents showed. According to the Union Budget 2020-21 presented in Parliament by Finance Minister Nirmala Sitharaman on Saturday, goods and services tax collections will contribute 18 paise in every rupee revenue.Corporation tax will contribute 18 paise to each rupee earned.  The collection from borrowings and other liabilities will be 20 paise, while income tax will yield 17 paise to every rupee collection.  READ MORE

15:32 (IST)01 Feb 2020
Conditions when most key exemptions become invalid

Budget 2020 announcement for the salaried class proposes a new tax regime slashing income tax rates and rejigging income tax slabs to slash total tax payable by individuals. But the rider: most key exemptions are gone if one were to go for this option: home loan interest, HRA, LTA, health insurance, along with the standard deduction.  Here is a detailed list

14:49 (IST)01 Feb 2020
New benefits for only those who don’t claim deductions: BankBazaar.com CEO

BankBazaar.com CEO Adhil Shetty said, "To maximise their benefits from the new tax regime, taxpayers must understand what it means to claim or not claim deductions, since the new benefits are available only to those who don’t claim deductions. Under the new regime, the 30% slab, which was stuck for nearly a decade at Rs. 10 lakh, has finally moved to Rs. 15 lakh – an increase of a whopping 50%. Also, income up to Rs. 5 lakh is now exempted from tax, and lower tax rates apply on income between Rs. 5 lakh and 15 lakh if you don’t claim deductions. The move to increase tax-exempted income through the introduction of new tax slabs, as well as through the reported rationalization of deductions and exemptions, may be welcomed by taxpayers seeking simplicity in taxation. However, tax-payers own and want to continue with their tax-saving investments. Therefore, they must calculate whether they benefit by moving to the new regime without deductions or remaining in the old regime to continue claiming deductions."

14:44 (IST)01 Feb 2020
Govt removes incentives to 'save' nation with no social security: TMC on Budget

The Trinamool Congress on Saturday slammed the Union Budget over removal of tax exemptions and questioned such a move in a country with no social security. Finance Minister Nirmala Sitharaman introduced new slabs and reduced the tax rate for different slabs for an individual income of up to Rs 15 lakh per annum, if a taxpayer opts for foregoing exemptions and deductions. "Tax cut ki goli mat do (don't lie about tax cuts). Read the fine print on the so-called IT cuts. Govt removes incentives to 'save' in a nation where there is no social security," TMC's national spokesperson and Rajya Sabha MP Derek O' Brien tweeted.

14:40 (IST)01 Feb 2020
Here's how India Inc. reacts to Budget 2020

Commenting on the Budget 2020, Mr. Loknedra Ranawat, Founder & CEO, WoodenStreet says, "The allocation of Rs. 27,300 crore will lead to a setup of a better environment for industry and commerce. As the electronic sector is in focus of Government, new startups based on the manufacturing of electronic equipment and semiconductors will also see a rise. New investment in this sector and change in export norms will also give a boost to this industry. The subordinated debt for MSME’s and overall debt restructuring will also benefit the entrepreneurs and small businesses greatly."

14:39 (IST)01 Feb 2020
Budget 2020 emphatically laid down $5-Trillion economy goal to be achieved by 2024-45: Rajnath Singh

Rajnath Singh on Budget 2020: "By focusing on reviving growth and rejuvenating demand the Budget is expected to trigger a new virtuous cycle in our economy. Despite the fact that there is lack of fiscal headroom to pursue fiscal expansion, the Budget has done a wonderful job at this juncture. Under the leadership of Prime Minister Narendra Modi, the nation aspires to be a $5-Trillion economy. The Budget today has emphatically laid down this goal to be achieved by 2024-25. I must congratulate the Prime Minister Narendra Modi and the Finance Minister Nirmala Sitharaman for giving the country an excellent Budget by addressing the aspirations of the people and at the same time clearly underling our national goals and priorities."

13:59 (IST)01 Feb 2020
Govt announces Vivaadh sey Vishwas Scheme

The Finance Minister has announced the 'Vivaadh sey Vishwas Scheme' for direct taxpayers to reduce tax litigations. There are currently 4.83 lakh direct cases pending in various appellate forums. Get complete waiver of interest and penalty by paying dispute amount by March 31, 2020.

13:54 (IST)01 Feb 2020
Tax exemption of affordable housing increased by a year

Date of approval of affordable housing projects for availing tax holiday on profit earned by developers extended by 1 year.

13:54 (IST)01 Feb 2020
Union Budget 2020: Govt proposes 100% tax concession to sovereign wealth funds

Finance Minister Nirmala Sitharaman says the government has removed 70 exemptions, deductions with a view to further simplify tax regime. Concessional tax rate of 15 per cent extended to power generation companies, and 100 per cent tax concession to sovereign wealth funds on investment in infra projects.

13:49 (IST)01 Feb 2020
Nirmala Sitharaman concludes presentation of Union Budget 2020-21

Finance Minister Nirmala Sitharaman has concluded presentation of Union Budget 2020-21.

13:25 (IST)01 Feb 2020
Here are the new income tax rates

Sitharaman has proposed 15% tax for income between 7.5 lakh to 10 lakh; 20% tax for income between 10 lakh to 12.5 lakh; 25% tax for income between 12.5 lakh to 15 lakh; 30% tax for income above 15 lakh and no income tax for those with taxable income below Rs 5 lakh. Sitharaman says Rs 40,000 crore per annum will be revenue foregone from new income tax rates. Now you can calculate how much income tax you need to pay now

13:25 (IST)01 Feb 2020
Dividend distribution tax abolished: FM Sitharaman

Finance Minister Nirmala Sitharaman says, 'Dividend distribution tax has been abolished. Companies will no longer be required to pay DDT. A total of Rs 25,000 crore is revenue foregone due to DDT abolition, says FM. This will make India an attractive investment destination.

13:08 (IST)01 Feb 2020
What are the new Income tax rates?

#No tax upto Rs 5 lakh
# 10% tax for income between Rs 5 lakh to Rs 7.5 lak
# 15% tax for income between 7.5 lakh to 10 lak
# 20% tax for income between 10 lakh to 12.5 lak
# 25% tax for income between 12.5 lakh to 15 lak
# 30% tax for income above 15 lakh

13:07 (IST)01 Feb 2020
Sitharaman: New simplified income tax regime soon

FM Nirmala Sitharaman says that loss of substantial revenue in the short term due to the corporate tax rate cut. "New simplified income tax regime soon," she adds.

12:45 (IST)01 Feb 2020
Steps being taken to professionalise cooperative banks: Sitharaman

Deposit insurance cover being raised fivefold to Rs 5 lakh per account from Rs 1 lakh per account at present. This measure is important in the backdrop of recent default by cooperative lender PMC Bank. Steps being taken to professionalise cooperative banks.

12:38 (IST)01 Feb 2020
A taxpayer charter will be institutionalised in the statute to build trust: Sitharaman

Sitharaman says, 'A taxpayer charter will be institutionalised in the statute to build trust. And for that, we will introduce a statute in the law via this Budget 2020. "

Income tax, Union Budget 2020, Income tax news, Income tax rebate in Budget 2020, Finance Minister Nirmala Sitharaman, economic survey, Indian express Budget 2020 Income Tax Slabs, Rates for FY, AY 2020-21 Expectation: Will there be income tax reliefs for you in this Budget?

Budget 2020 Income Tax Slab Rates Changes Expectations:

On the direct tax front, the government has already announced a sharp cut in corporate tax rate from 30 per cent to 22 per cent (excluding cess and surcharge) in September 2019 to promote investment activity in the economy. Even on the indirect taxes front, the GST rates have been reduced on the multiple occasions.

When the government had announced cut in corporate tax rate last year, many argued for a cut in income tax rate for individuals in a bid to leave more at the hands of consumers at a time when the consumption in the economy has been slowing down.

The CEO of a brokerage firm said that that a cut in corporate tax rate would not help push investments at a time when the capacity utilisations remain low. “Only when the consumption in the economy rises and capacity utilisations grow, will companies be willing to go for expansion and fresh investments. And in a bid to push consumption, some relief should be provided to individual tax payers in the forthcoming Budget,” he said.

The government has pegged its tax collections to drop by Rs 1.45 lakh crore annually as a result of cut in corporate tax rates in the short term. Over a period, rising economic growth through higher investment activity is expected to compensate for the tax shortfall.

Last year, the gratuity limit was raised from Rs 10 lakh to Rs 30 lakh. The creation of a new pension scheme for employees in the unorganised sector was announced. A full tax-rebate to all those earning less than Rs 5 lakh was also announced. There was a reduction in standard deduction and there were tax benefits granted for interest earned on bank deposits and tax benefits for home sales.

Also Read —

Budget 2020 LIVE updates

Explained: Five things to watch out for in Budget 2020

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The personal tax changes Budget 2020 can make for the common man

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