Personal Income Tax Benefits under Union Budget 2020: A Boon or A Bane

February 01, 2020
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Additional new Tax regime is Optional in Nature.

Income Tax Slabs In Existing, as well as New Tax Regime, proposed in Budget 2020

 

S. No.

Income Slab

Existing Tax Rates

New tax Rates

1

Up to 2.5 Lakh

No tax

No Tax

2

From 2.5 lakh to 5 Lakh

5%

5%

3

From 5 lakh to 7.5 lakh

20%

10%

4

From 5 lakh to 10 lakh

20%

15%

5

From 10 lakh to 12.5 lakh

30%

20%

6

From 12.5 lakh to 15 lakh

30%

25%

7

15 lakh and above

30%

30%

 

Condition is that 70 tax exemptions are not available in New Tax Structure.

 

 

 Note: Below Exemptions/Deductions not available in New Tax Regime:

Note:

  1. the option (Old slab or New Slab tax rate) once exercised for a previous year shall be valid for that previous year and all subsequent years.
  2. The new concessional Tax rate shall be applicable only if total income of the individual or HUF is computed without following exemptions and deductions:

 

Relevant Section of Income Tax Act

Description of Section

Amount of exemption/ Deduction not available

10(5)

Leave Travel Concession (LTC)

As per salary structure

10(13A)

House rent allowance (HRA)

As per salary structure

10(14)

Transport Allowance

As per salary structure, covered in the standard deduction

10(17)

Daily allowance received by a Member of Parliament or by a Member of State Legislature or by a member of any committee thereof

As per salary structure

10(32)

the income of a minor child

Rs. 1500

10AA

Special provisions in respect of newly established Units in Special Economic Zones

As per the Business structure

16

Standard Deduction

50,000

24(b)

Interest on Home Loan- in respect of self occupied property

2,00,000

32(1)

Depreciation on assets

As per Business structure

32AD

Investment in new plant or machinery in notified backward areas in certain States

As per Business structure

33AB

Tea development account, coffee development account and rubber development account

As per Business structure

33ABA

Site Restoration Fund

As per Business structure

35

investment-linked incentives

As per Business structure

35AD

Notified Scientific Research Association

As per Business structure

35CCC

expenditure on agricultural extension project notified by the Board

As per Business structure

57(iia)

Income in the nature of family pension

Maximum Rs 15,000

Chapter VI-A

80C

80D

80E

80G

And Other sections

 

Investment,

Medical

Interest on education loan

Donation

 

150000

50000

Interest Amount

Upto 10% of total income

Without set off of any loss,-

(i) Carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in (a) above; or

(ii)  Under the head house property with any other head of income;

(c) by claiming the depreciation, if any, under section 32, except clause (iia) of sub-section (1) thereof, determined in such manner as may be prescribed; and

(d) without any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being in force.

(v) the loss and depreciation referred to in (ii)(b) above shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent year

 

Conclusion:

In our opinion, the Taxpayer should do his calculation or check with his consultant while adopting the option of Tax rates.  Because in new optional tax slab, rates of tax have come down but reduced rates are applicable only after limitation on many exemptions and Deductions i.e you will be allowed to take exemption and deduction in many income tax provisions as tabled above.

Read more & stay tuned for more details on Unionbudget2020 , Incometaxslabs , Budget2020 , Nirmalasitharaman, Budget2020 , Dividentdistributiontax , BudgetSession2020, Janjankabudget

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