Budget 2020: Know five tax slabs govt has introduced with lower rates for those foregoing exemptions

Finance Minister Nirmala Sitharaman on Saturday introduced new slabs and reduced the tax rate for different slabs for an individual income of up to ₹ 15 lakh per annum if a taxpayer opts for foregoing exemptions and deductions.

The new tax regime will be optional and the taxpayers will be given the choice to either remain in the old regime with exemptions and deductions or opt for the new reduced tax rate without those exemptions, she said in the Lok Sabha while unveiling the Budget 2020-21.

Here are the new income tax rates:

• 15% tax for income between 7.5 lakh to 10 lakh
• 20% tax for income between 10 lakh to 12.5 lakh
• 25% tax for income between 12.5 lakh to 15 lakh
• 30% tax for income above 15 lakh
• No tax for income below  Rs 5 lakh

Under the proposal, people with an annual income of ₹5 lakh to ₹ 7.5 lakh will have to pay a reduced tax rate of 10 per cent; between ₹ 7.5 lakh and ₹ 10 lakh 15 per cent; between ₹10 lakh and 12.5 lakh 20 per cent; between ₹12.5 lakh and 15 lakh 25 per cent; and above ₹15 lakh 30 per cent, she said.

The proposal would lead to a revenue sacrifice of ₹40,000 crores per annum, she added.

The minister further said that the new regime will be optional and the people can continue with old regime if they desire so.

Observing that there are about 100 tax exemptions and deductions, she said that 70 of them are being removed in the new simplified tax regime, while the remaining will be reviewed and examined in due course.

Citing an example, she said, a person earning ₹15 lakh per annum would be able to save ₹78,000 in taxes by opting for the new tax regime

with PTI inputs