Changes in Income Tax slab in Budget 2020
There are many changes made in the income tax slab by Nirmala Sitaraman in the Budget 2020. It is optional for taxpayers to choose between the new and the old regime.
Tax slab rate of old and new regime
| Old Rate | Annual Income | New Rate |
| Nil | Up to ₹2.5 lakh | Nil |
| 5% | ₹2.5-5Lakh | 5% |
| 20% | ₹5-7.5 lakh | 10% |
| ₹7.5-10 lakh | 15% | |
| ₹10-12.5 lakh | 20% | |
| 30% | ₹12.5-15lakh | 25% |
| Above ₹ 15 lakh | 30% |
Some of the exemptions and deduction of the old regime, which is not there in the new one
- Section 80C investments
- House rent allowance
- House loan interest
- Leave travel allowance
- Medical Insurance premium
- Standard deduction
- Saving bank interest
- Education loan interest
Some of the exemptions which are same in the new tax slab
- Standard deduction on the rent
- Agriculture income
- Income from life insurance
- Retrenchment compensation
- VRS proceeds
- Leave encashment on retirement
Impact on Taxpayers
The new tax regime, the taxpayer earning ₹15 lakh will save ₹78000 in tax. However, the person will avail the deduction, and exemptions will pay only ₹1.95 lakh as compared to ₹2.73 lakh.
The budget, however, has left the surcharge unchanged. Taxpayer between ₹50 lakes and ₹1 crore will pay a 10 % surcharge on the income. The surcharge is 15% for income between ₹1 crore and ₹2 crores, 25% for between ₹2 crores and ₹5 crores and 37 % for the income over ₹ 5 crores.
Tags: #budget2020, #tax slab, #income tax, #tax payers, #new tax regime.
Source credit: The Economic Times, Business Today and The Hindu
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