Budget 2020: Govt introduces five income tax slabs with lower rates for those foregoing exemptions, earlier regime to coexist for now

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Finance Minister Nirmala Sitharaman on Saturday 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.

The new tax regime will be optional and the taxpayers will be given the choice to either remain in the old regime with exemptions and deductions or opt for the new reduced tax rate without those exemptions, she said in the Lok Sabha while unveiling the Budget 2020-21.

Revised income tax slabs Tax rate*
Up to Rs 5 lakh No tax
Rs 5 - 7.5  lakh 10%
Rs 7.5 - 10 lakh 15%
Rs 10 - 12.5 lakh 20%
Rs 12.5 - Rs 15 lakh 25%
Above Rs 15 lakh 30%
*without exemptions and deductions

Under the proposal, people with an annual income of Rs 5 lakh to Rs 7.5 lakh will have to pay a reduced tax rate of 10 percent; between Rs 7.5 lakh and Rs 10 lakh 15 percent; between Rs 10 lakh and 12.5 lakh 20 percent; between Rs 12.5 lakh and 15 lakh 25 percent; and above Rs 15 lakh 30 percent, she said.

The proposal would lead to a revenue sacrifice of Rs 40,000 crore per annum, she added.

The minister further said that the new regime will be optional and the people can continue with old regime if they desire so.

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.

Citing an example, she said, a person earning Rs 15 lakh per annum would be able to save Rs 78,000 in taxes by opting for the new tax regime.

No dividend distribution tax for corporates

Finance Minister Nirmala Sitharaman on Saturday said dividend distribution tax has been shifted to individuals instead of companies.

In her second Budget presentation, the Finance Minister said concessional tax rate of 15 per cent has been extended to power generation companies.

The government plans 100 per cent tax concession to sovereign wealth funds on investment in infra projects, she added.

Sitharaman further said concessional withholding rate of 5 per cent on interest payment to non-residents has been extended up to June 30, 2022.

The Finance Minister also proposed deferment of tax payment by employees on employee stock ownership plan (ESOPs) from startups by five years.

Govt proposes cut in tax on cooperative societies to 22%

Finance Minister Nirmala Sitharaman also proposed reduction of tax on cooperative societies to 22 per cent plus surcharge and cess, from 30 per cent at present.

Presenting the Budget for 2020-21, Sitharaman also announced extending by one year the date of approval of affordable housing projects for availing tax holiday on profit earned by developers.

She also announced extension of additional Rs 1.5 lakh tax benefit on interest paid on affordable housing loans to March 2021.

Sitharaman further said the Income Tax Act will be amended to allow faceless appeals against tax orders on lines of faceless assessment.

She also proposed a scheme -- 'Vivad se Vishwas' -- to bring down litigation in direct taxation scheme saying 4.83 lakh direct cases are pending in various appellate forums.

In order to ease allotment of PAN, new process of instantly allotting the same through Aadhaar will be brought, Sitharaman added.

Direct taxes are the lowest, simplest and smoothest, the finance minister said.

(With PTI inputs)

Follow full coverage of Union Budget 2020-21 here



from Firstpost India Latest News https://ift.tt/2uUo0h0
FP Staff

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