For individual taxpayers, the Budget has been underwhelming, especially given the high expectations that preceded it.
In an attempt to address the demands of taxpayers to lower tax rates, the Finance Minister has given them a choice to move to a new tax regime. But this has only complicated matters, and the end-result may not be worth it for many taxpayers.
So, we now have the option of continuing with the existing tax regime (with existing income slabs, tax rates and benefits of deductions and exemptions) or moving to the new tax regime (with new income slabs, lower tax rates, but without the benefit of most deductions and exemptions).
Should you opt for the new tax regime? The short answer is — it depends. Number-crunching and cost-benefit analysis will be needed to decide whether to stay in the old regime, or shift to the new one.
Under the old regime, there were four income slabs and basic tax rates. This will now become seven (see table).
On the face of it, the rejig of income slabs and lower taxes in the new regime should ideally translate to lower taxes. But there is a catch that spoils the match. To be eligible for the new regime that has lower tax rates, you will have to forgo the benefits of most tax breaks.
These include deductions such as Section 80C (annual investment, expenses, life insurance premium of up to ₹1.5 lakh), Section 80D (health insurance premiums), Section 24 (home loan interest of up to ₹2 lakh), Section 80CCD (including extra NPS (National Pension Scheme) contribution of up to ₹50,000 a year), Section 80E (education loan interest), Section 16 (standard deduction on salary income).
Also, you will have to forgo the benefits of most exemptions under Section 10 such as house rent allowance and leave travel concession.
Denne historien er fra February 03, 2020-utgaven av The Hindu Business Line.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra February 03, 2020-utgaven av The Hindu Business Line.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
Covid Presents An Opportunity For India
India must attract investors exiting China post-Covid. Streamlining of project clearances and relaxation in FRBM norms will help
Did Alternative Assets Shield You From Covid-19 Volatility?
The assets closely linked to stock and debt markets could not stave off the losses
How To Put Aircraft To Bed
Preserving grounded planes, to get them up and flying at short notice, is a challenging task. Ashwini Phadnis captures the process
There Can Be No Going Back On WFH
Covid-19 has fast-forwarded the shift to ‘work from home’. However, some face-to-face connect will always be needed
UN, WHO Urged To Ensure ‘Benefit Sharing' Of Covid-Related Data
Biopharma firms should reach vaccines, medicines to poor nations at an affordable price, say civil society bodies
With No Clear Signal From Rlys, States Explore Ways To Bring Back Migrants
Quarantine centres, cross-country buses being arranged even as migrants hop on to boats, trucks and ambulances
Centre Allows All Neighbourhood Shops To Open But With Riders
Final call will be taken by local authorities; shopping complexes that draw fewer ‘outsiders’ are permitted to operate
Covid Impact Relatively Muted In India
Compared to Italy and the US, India’s rate of infection spread has been slow. This can be attributed to the strict measures in place
How Global Trade Will Fare Post-Covid
China isn’t likely to lose its pre-eminent position soon. India, for one, will need to make manufacturing globally competitive
How To Curb Harassment In The Virtual Office
Training and sensitisation are essential. Institute a strict dress code and chat etiquette to ensure professionalism during video calls