Budget 2020 Income Tax Slabs Reduced For 2020-21; Check revised Tax rates

Tax Slabs Reduced For 2020-21: The Union Finance Minister Nirmala Sitharaman presented the Union Budget 2020-21 in the parliament today highlighting the allocation provided to various sectors of the government. Various reforms were announced highlighting the measures to be taken to energize the Indian Economy leading to growth and development of the country. Government has estimated the nominal growth of GDP for the year 2020-21, on the basis of trends available, at 10%. Under the Budget 2020-21 announced, the taxpayers will be benefitted as the tax rates have been reduced. The new tax regime will be followed resulting in the simplified tax regime. Check out the current tax rates as compared to the previous tax rates followed by the government:

Budget 2020 Impact : Income Tax, Agriculture, Education, Health, Infrastructure, Industry and Commence and Tourism

Budget 2020 Income Tax Slabs Reduced For 2020-21; Check revised Tax rates

The new tax slabs will see a total of 7 slabs as against 4 slabs earlier. The tax rates for all the slabs and income of an individual has been provided below. The tax system has been simplified further. The government reviewed all the exemptions and deductions and it was seen that more than 100 exemptions and deductions are provided in the Income-tax Act. The government has now removed 70 exemptions and deductions to ease the tax paying process for the individuals. The new personal income tax rates will cause an estimated revenue foregone of Rs. 40,000 crore per year for the government. Take a look the tax to be paid as per the income bracket and the comparison of slabs for previous and new income tax rates.

As per the budget, the new tax regime will be optional for the taxpayers. An individual who is currently availing more deductions and exemption under the Income Tax Act may choose to avail them and continue to pay tax in the old regime.

Tax Rates as per the Income Bracket of an Individual

Income
Bracket (in
lakh)
Tax Rate (per cent)
Below 5 Lakh Exempt
5- 7.5 Lakh 10
7.5- 10 Lakh 15
10-12.5 Lakh 20
12.5-15 Lakh 25
Above 15 Lakh 30

Tax Rates as per the Taxable Income Slab: Comparison with previous years

Taxable Income Slab (Rs.) Existing tax rates New tax rates
0-2.5 Lakh Exempt Exempt
2.5-5 Lakh 5% 5%
5-7.5 Lakh 20% 10%
7.5-10 Lakh 20% 15%
10-12.5 Lakh 30% 20%
12.5-15 Lakh 30% 25%
Above 15 Lakh 30% 30%

 

Taxable Income Slab Explained: Take a look at the example

To know about how the income tax slabs work, we are providing you with an example. Take a look at the points:

  • If your income falls up to 5 Lakh rupees, then you will not be required to pay any tax under the current slab.
  • If your income falls under the income bracket of 5-7.5 Lakh, then you have to pay with the tax rate 5% for 2.5 to 5 Lakh and 10% tax for the remaining amount more than 5 Lakh. Suppose if your income is 6 lakh then you will pay 5% for 2.5 to 5 Lakh and 10% for the remaining 1 Lakh. Earlier, 20% tax was paid for the 5-7.5 Lakh slab.

Dividend Distribution Tax

Dividend Distribution Tax (DDT) is paid by the companies on the dividend paid to its shareholders at the rate of 15% plus applicable surcharge and cess, in addition to the tax payable by the company on its profits.  Now, the Dividend Distribution Tax will be removed and hence, companies would not be required to pay DDT. The dividend will be taxed only at the hands of recipients at applicable rates.

Questions Based On Economic Survey 2020 For SSC, IAS, Railways and Other Government Exams 2020

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