Budget 2020 has brought about several changes in the tax structure of India. Read on to know more about how the changes proposed in this year’s budget.
Budget is one of the critical events in the country that every taxpayer pays attention to. While some want the amount in tax slabs to be increased, others wish to the interest rate to go down. Things were no different with Union Budget 2020 too. Everyone wanted to see how the finance minister will help the citizens save money. The Govt has reduced tax rates of almost every salary group. However, the new budget is only for those who can let their exemptions go. For the ones who want to claim exemptions and deductions, they can pay tax with the old rates. The Govt has allowed the citizens to pick between the old and the new income tax rate.
Here is the income tax slab 2020
- People earning up to Rs. 5 Lakh don’t have to pay any tax. If their salary goes above Rs. 5 Lakh, then their tax slab will begin from Rs. 2.5 Lakh.
- People between Rs. 2.5 Lakh and Rs. 5 Lakh must pay 10% tax.
- Salary group between Rs. 5 Lakh and Rs. 7.5 Lakh will have to pay 10% tax.
- People who are earning between Rs. 7.5 Lakh and Rs. 10 Lakh must pay 15% tax.
- Salary group between Rs. 10 Lakh and Rs. 12.5 Lakh must pay 20% tax.
- For people in salary group between Rs. 12.5 Lakh and Rs. 15 Lakh, they must pay 25% tax.
- People earning above Rs. 15 Lakh must pay 30% tax. The tax rate for this salary group is the same as it was in the old regime.
Taxpayers must pay less amount with the new regime compared to the old regime. Here is a comparison between both the regimes-
|Salary||New Tax Regime||Old Tax Regime|
|Up to Rs. 2.5 Lakh||Nil||Nil|
|Rs. 2.5 Lakh to Rs. 5 Lakh||5%||5%|
|Rs. 5 Lakh to Rs. 7.5 Lakh||10%||20%|
|Rs. 7.5 Lakh to Rs. 10 Lakh||15%||20%|
|Rs. 10 Lakh to Rs. 12.5 Lakh||20%||30%|
|Rs. 12.5 Lakh to Rs. 15 Lakh||25%||30%|
|Above Rs. 15 Lakh||30%||30%|
However, the new income tax slab rate is only for those who will leave their exemptions. If people want to claim exemptions, then they can pick the old tax regime.
Here are some exemptions that are left out in the Union Budget 2020
- House Rent Allowance
- Housing Loan Interest
- Standard Deduction of Rs. 50,000
- Section 80C Deduction of Rs. 1.5 Lakh
- Leave Travel Allowance
- Medical Insurance
- NPS Contribution Deduction of Rs. 50,000
- Savings Bank Interest under Section 80TTB of Rs. 75,000
- Education Loan Interest
- Disability Deduction of Rs. 75,000 to Rs. 1.25 Lakh
The Govt has allowed some exemptions that can still be claimed
- Standard Deduction on Rent
- Life Insurance’s Income
- Leave Encashment on Retirement
The income tax exemption was different for three age categories in the old regime. However, it is the same for every age category in the new regime. The exemption limit was Rs. 2.5 Lakh for people below 60 years of age in the old regime. It was Rs. 3 Lakh for people between 60 to 80 years of age. For people above 80 years of age, it was Rs. 5 Lakh. In the new regime, the amount is Rs. 2.5 Lakh for every person.