Union Budget 2020 on Income Tax

Union Budget 2020: Finance Minister Nirmala Sitharaman Announced Income Tax Slab For FY 2020

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Union Budget 2020: On Saturday, Finance Minister Nirmala Sitharaman presented the Union Budget 2020. Nirmala Sitharaman announced a major change in the tax slab rates, giving great relief to the middle class. Making big changes to the tax slabs, she gave exemptions to the jobbers.

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New tax slab rates are optional

However, the Finance Minister has kept the new tax slab rates optional. If a taxpayer is benefiting more from the old slab, he can file it. However, with the introduction of the new tax slab, taxpayers will not be able to avail of any exemption.

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She said that if taxpayers do not take some tax exemption under the Income Tax Act, then those earning up to Rs 15 lakh will have to pay tax at a lower rate than before. However, it will depend on the will of the taxpayers whether he chooses the former tax slab or the new one.

Change in income tax rates

No tax on income up to 5 lakhs.
Tax at the rate of 10 percent on income from 5 lakh to 7.5 lakh.
Taxes at the rate of 15 percent on income from 7.5 lakh to 10 lakh.
Taxes at the rate of 20 percent on income from 10 lakh to 12.5 lakh.
Taxes at the rate of 25 percent on income from 12.5 lakh to 15 lakh.
Taxes at the rate of 30 percent on income above 15 lakhs.

Committee on direct tax code had recommended

Only last year, the Committee on Direct Tax Code recommended the government to change the income tax slab. The main focus of this task force is on the middle class. The committee recommended that the tax exemption limit should be increased to Rs 6.25 lakh.

Let me explain to you that up to five lakh rupees income is tax-free. According to sources, this committee had recommended a 10 percent tax on income between 2.50 lakh to 10 lakh, 20 percent tax on income between 10 lakh to 20 lakh.

30 percent slab for the super-rich

The committee has recommended a tax of 30 percent of people in the super-rich, whose annual income is between Rs 20 lakh and Rs 2 crore, and 35 percent tax on income above Rs 2 crore. It has recommended levying surcharge only for a specific purpose.

The committee had said that revising the tax slab may reduce the income for two to three years, but after this, people will be able to pay the tax easily and tax evasion will also stop.

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Surcharge should be ended

In addition, the committee has recommended the abolition of surcharge and cess altogether. Currently, Indian companies have to pay a 15% distribution tax on the total dividend declared or paid in a financial year.

There is also a surcharge of 12 percent and education cess of three percent. According to the panel, all capital gains should be classified into three categories – Financial Equity, Financial Other and Non-Financial.

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