Budget 2020 has given an option to the personal income tax-payers to avail of lower rates for those earning up to Rs 15 lakh per year. Making the announcement of the new income tax rate for those who opt to forego deductions and exemptions under various sections of the Income Tax Act, Finance Minister Nirmala Sitharaman said the proposal will come as a big relief for the individual tax-payers, result in ease of compliance while reducing litigation.
Giving some relief to the individual income tax-payers, Nirmala Sitharaman announced that the new personal income tax regime for those do not go for any deductions and exemptions will be as follows - the rate will be 10 per cent for those earning between Rs 5 lakh-7.5 lakh per annum against the present rate of 20 per cent.
Those earning between Rs 7.5 lakh to 10 lakh per year will be able to pay tax at a rate of 15 per cent against the current 20 per cent subject to the condition that they do not opt for any deductions and exemptions under the various sections of Income Tax Act. The new rate for those with between Rs 10 to 12.5 lakh will be 20 per cent against 30 per cent at present while those earning between Rs 12.5 lakh to 15 lakh will pay tax at 25 per cent against 30 per cent.
But the new tax rates will be available only to those who forego deductions and exemptions under various sections of the Income Tax Act.
There is will be no change for those earning more than Rs 15 lakh per annum and they will continue to pay tax at the current rate of 30 per cent.
Here are the new income tax slabs subject to no deductions and exemptions
Income Rs 5 lakh-7.5 lakh per annum - 10 per cent tax rate against 20 per cent currently
Income Rs 7.5 lakh-10 lakh per annum - 15 per cent against 20 per cent currently
Income Rs 10-12.5 lakh per annum - 20 per cent against 30 per cent currently
Income Rs 12.5 -15 lakh per annum - 25 per cent against 30 per cent currently
Income above Rs 15 lakh per annum - continue to 30 per cent