December 1, 2020

Budget 2020: Govt gives incentives to taxpayers… but conditions apply! Check impact of income tax changes


Finance Minister Nirmala Sitharaman on Saturday announced various incentives for taxpayers, but with conditions. If you are still wondering what the Budget 2020 holds for you, the taxpayer, Zee Business gives you a detailed insight. The Finance Minister announced a new income slab for taxation purpose. Has the government given in the one hand while taken from the other? Let us see: 

The government has made changes in the income tax slabs. The whole system has been divided into 5 slabs. Under the new slab structure, there would be no tax on income up to Rs 5 lakh. Moreover, on income over Rs 15 lakh, the tax levied will be 25%. But this tax slab has an angle to it. (#BudgetOnZee)

Know what has changed for you
According to the new tax slab, the people falling within the income slab of Rs 5 lakh and 7.5 lakh will now have to pay 10% from the current 20%. Meanwhile, people with income between Rs 7.5 lakh and Rs 10 lakh will have to pay 15%. Notably, the finance minister said that under the new income slab, people with income of 15 lakh or more will be able to save Rs 78000.

  Conditions Apply
The change in income tax slab has been brought with some conditions. Under the new changes, the taxpayers will have to let go of exemptions given under the investment if he wishes to take income tax benefits. This means that exemptions are given to the taxpayers for insurance, investment, medical, school fee, HRA, 80C, 80CCC, 80D, etc and all will cease to apply. Income will be directly taxed here. If you need exemptions, then the old system will be applicable. Also, know that only 30 exemptions are now allowed from 100 exemptions, earlier.

What do experts say
Personal Finance expert Balwant Jain said that the new tax slab is completely optional. If any person is willing to take benefits of the new tax slab, he will have to let go the exemptions that were till now applicable.

What should the taxpayer do
It is too early for the tax experts to decide which way to go whether to remain in the current tax slab or switch to the new one. This requires a lot of calculation which the tax expert will be able to decide after a careful look. In fact, importantly, you may not get exemptions for investing in PPF or Sukanya Samridhi Yojna.

The finance minister today announced that if the taxpayers choose the new tax slab, a system will be made so that the people would not have to go to the chartered accountant or a tax consultant at all to file their income tax returns.

Watch Union Budget 2020 Live TV Streaming Below on Zee Business:

The new tax slabs

–On income between 2.5 and Rs 5 lakh, 5% tax is levied. But the new slab would give exemptions up to Rs 5 lakh
–Income between Rs 5 and 7.5 lakh will have 10% tax
— Income between Rs 7.5 and 10 lakh will have 15% tax
–Income between Rs 10 से 12.5 will have 20% tax
–Income between Rs 12.5 and 15 lakh will have 25% tax
–For income above 15 lakh tax is 30% tax





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