SNCO

08 February

Budget 2020, An Overview – Personal Income Tax Rate

By Sudarsan.S.K

BUDGET 2020 â€“ AN OVERVIEW

The budget of the Central Government for the year 2020-21 was presented by Finance Minister, Nirmala Seetharaman, on 01^st February, 2020 in the Parliament. Through this article we are looking into the major proposals in the budget effecting the common man in relation to Income Tax i.e. the Income Tax Rate Slabs applicable for Individuals. Letâ€™s have a look at the proposal regarding the same in the Budget.

Basic income tax exemption slab and tax rates for AY 2021-22

Up to income of Rs. 2.5 lakhs Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â :Â Â Â Â Â Â Â Â Nil

Income more than Rs. 2.5 lakhs up to 5 lakh Â Â Â Â Â Â Â :Â Â Â Â Â Â Â Â 5%

Income more than Rs. 5 lakhs up to 7.50 lakh Â Â Â Â Â :Â Â Â Â Â Â Â Â 10%

Income more than 7.50 lakhs upto 10 lakhs Â Â Â Â Â Â Â Â :Â Â Â Â Â Â Â Â 15%

Income more than 10 lakhs up to 12.50 lakhsÂ Â Â Â Â Â :Â Â Â Â Â Â Â 20%

Income more than 12.50 lakhs up to 15 lakhsÂ Â Â Â Â Â :Â Â Â Â Â Â Â 25%

Income above Rs. 15 Lkahs Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â :Â Â Â Â Â Â Â Â 30%

*Rebate u/s 87A has been kept unchanged so that assessees with income up to Rs. 5 lakhs shall not have to pay any tax

**The above tax rates and income tax exemption slabs are under new simplified Personal Tax Regime which shall be optional and shall be applicable without claim to any deduction or exemptions.

Here is the list of exemptions and deductions that a taxpayer will have to give up while choosing the new tax regime.

Leave Travel AllowanceÂ (LTA)
House Rent AllowanceÂ (HRA)
Conveyance
Daily expenses in the course of employment
Relocation allowance
Helper allowance
Children education allowance
Other special allowances [Section 10(14)]
Standard deduction
Professional tax
Interest on housing loan (Section 24)
Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJA)

*** The tax calculated on the basis of such rates will be subject to health and education cess of 4%.

The effect of the new rates and old rates on the Tax Payable can be summarised as below. It is based on assuming no deductions under Sec 80 and exemptions claimed Under Sec 10 as required in the budget proposal

Income of 5Lakhs

Income of 7.5 Lakhs

Income of 10 Lakhs

Income of 12.5 Lakhs

Income of 15 Lakhs

Income of 20 Lakhs

If you are availing deductions u/s 80 or exemptions u/s 10 and in a dilemma as to whether old scheme or New Simplified Tax scheme is beneficial for you, the below break levels of total Deductions/ Exemptions can be your decision criteria. If your total Deductions and Exemptions are equal to or exceeding the below break even levels, Old Tax Scheme is beneficial for you

Gross Income	Under 60 Years	Above 60 years	Above 80 Years
5,00,000	nil	nil	nil
6,50,000	75,000	62,500	12,500
7,50,000	1,25,000	1,12,500	62,500
8,50,000	1,50,000	1,37,500	87,500
9,50,000	1,75,000	1,62,500	1,12,500
10,00,000	1,87,500	1,75,000	1,25,000
11,00,000	1,87,500	1,75,000	1,25,000
12,50,000	2,08,350	2,00,000	1,66,650
13,50,000	2,25,000	2,16,650	1,83,350
15,00,000	2,50,000	2,41,650	2,08,350
>15,00,000	2,50,000	2,41,650	2,08,350

Hence the decision of whether to opt for New Tax Scheme or continue in Old Scheme as part of your Tax Planning is based on the whether the amount of Deductions you have for claiming is above these limits or not. Points to remember while opting for the new tax regime:

Option to be exercised on or before the due date of filing return of income for AY 2021-22
In case of a taxpayer having business income, the option once exercised can be withdrawn only once. Further, if the taxpayer withdraws the option, he will never be able to opt-in the option again.

Kindly do consult a professional for your tax planning for 2020-21 to get a full picture and plan your taxation. The author can be reached at sudarsan@snco.co.in.

Sudarsan.S.K

CEO, SNCO Group