BUDGET 2020: A STEP FORWARD OR NOT
The union budget is always looked forward to with much anticipation. Be it for its allocations or for the proposed changes to the already prevalent Income tax law and the rules thereby. Much the same this year too everybody waited for the budget. And when it came out it did leave cloud of suspicion around.
Change in Income tax slabs
The buzz word this budget season was the change in the tax slab. But was it actually a boon or bane to the society let’s have a look.
According to Budget 2020 the new tax regime shall be as follows for individuals
Income tax slab
Up to ₹ 2.5 Lakhs
₹2.5 lakhs to ₹ 5 Lakhs
₹ 5 lakhs to ₹ 7.5 Lakhs
₹7.5 lakhs to ₹ 10 Lakhs
₹ 10 lakhs to ₹ 12.5 Lakhs
₹ 12.5 lakhs to ₹ 15 Lakhs
₹ 15 lakhs an above
When you look at it for the first time it does look like the change is for the benefit of all. The essential part was what came after this.
The finance minister announced that the new tax regime can be availed by only those individuals who agree to forego the deductions and any other benefits available to them under the existing tax regime.
So let’s have a look at the impact it has on the individuals with an example.
If an individual’s Taxable income is ₹ 10 lakhs, what will be his tax liability?
|Under old scheme||Under new schere|
|up to 2.5 lakhs||-||-|
|2.5 lakhs - 5 lakhs||12500||12500|
|5 lakhs – 7.5 lakhs||50000||25000|
|7.5 lakhs – 10 Lakhs||50000||37500|
Thus it is very evident that through the new tax regime the individual shall pay a lesser amount of tax.
However, the crux of the change lies in the computation of the taxable income. And when you look at it that way there are many permutations and combinations that can be applied to its computations.
So now even though the tax regime looks simplified, the decision to either choose the new scheme or continue with the existing one is the big decision requiring a detailed investigation. So is it really the simplification or a complication?
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