The Finance Minister, Nirmala Sitharaman presented the Union budget of 2020-21 on 1st February 2020. The budget has proposed a new tax regime on slashing income tax rates and rejigging income tax sabs to reduce total tax payable by individuals. After slashing income tax rates for individuals the Finance minister said that the government intends to remove all I-T exemptions in the long run.
A new tax regime has also been proposed under which foregoing exemptions and deduction would be taxed at reduced tax rates. The exemptions which need to be forgone are exemptions which are claimed widely by individuals including leave travel concession, standard education, house rent allowance, deduction under Section 80C, deduction in relation to self-occupied house property, set-off of loss from house property against any other source of income tax.
For recognized provident fund, notified pension scheme or approved superannuation fund, the contribution of the employer exceeding INR 7,50,000 to an employee’s account would be the taxable perquisite in the hands of the employees. The annual accretions to such contributions exceeding INR 7,50,000 would also be considered as taxable perquisite.
The need for efficiency of tax administration was stressed upon and the incorporation of a “Taxpayer’s Charter” in the statute with the objective of ending taxpayer harassment was proposed. The contents of the charter would be notified soon.
The income tax slabs are as follows: