With an aim to extend significant relief to taxpayers and to further simplify the Income Tax Law, the Finance Minister has proposed a new and simpler personal tax regime. Under the new tax regime, income tax rates have been significantly reduced for individual taxpayers who are willing to forgo all exemptions and deductions.
Take a look at the new tax slabs and rates here:
|Taxable Income Range (Rs.)||Existing Tax Rate||New Tax Rate|
|Above 15 lakh||30%||30%|
- Around 70 of the current deductions and exemptions is to be removed under the new simplified tax regime.
- Remaining deductions and exemptions to be rationalised and reviewed in the upcoming years.
- The new simplified tax regime is optional—A taxpayer can choose to pay tax according to the old regime and avail the exemptions and deductions as usual.
- In the new tax regime, measures to pre-fill the income tax returns will be introduced so that taxpayers need not require professional assistance for paying income tax.
- New tax regime to include a projected revenue forgone of Rs. 40,000 crore per annum.
These new proposals related to income tax will come to effect during the financial year 2020-21 or the assessment year 2021-22. You must know that an assessment year follows immediately after a particular financial year.
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