In Budget 2020, Govt announces big income tax relief

Feb 1, 2020

New Delhi: In a major relief to the salaried and middle class, the Government today exempted from income tax all those earning up to five lakh and reduced the tax rate for different groups having income above that.

Announcing the new slabs in the Union Budget for 2020-21 presented in Parliament on Saturday, Finance Minister Nirmala Sitharaman said those earning ₹5 lakh will not pay any tax, and for those earning ₹5 to ₹7.5 lakh, income tax has been reduced to 10% from 20%.

The group with income of ₹7.5 lakh to ₹10 lakh will pay an income tax at 15%, and those in the ₹10 lakh-12.5 lakh income group will pay 20 percent. The tax for income group of 12.5 lakh-15 lakh will be 25%, and for those earning above ₹15 lakh, it will remain at 30%, she said.

With the aim simplifying the tax systems, around 70 of more than 100 income tax deductions and exemptions have been removed.

Ms Seetharaman said that the new reduced rates would apply for those who agree to forego all other exemptions available under the Income Tax Act.

At present, those earning upto Rs 2.5 lakh a year are exempted from income tax. The current income tax rate for those earning from Rs 2.5 lakh to Rs 5 lakh is 5 per cent but this tax can be brought down to nil availing the deductions and exemptions.

The measures are aimed at addressing the demand side concerns.

On account of lower income tax rates, the government would forego a total revenue of Rs 40,000 crore in a year.

The Budget also proposes 100% tax concession to sovereign wealth funds on investment in infrastructure projects, and concessional tax rate of 15% to power generation companies.

–India News Stream