BackBudget 2020: New income tax scheme retains 50 tax breaks
Certain tax incentives related to gratuity, commutation of pension, leave encashment on retirement, payments to EPFO and payment received from NPS on closure will be available
PremiumNew Delhi: The new income tax regime with lower taxes and revised slabs, announced by finance minister Nirmala Sitharaman on Saturday while presenting the Union Budget, has retained about 50 tax incentives while doing away with 70 others, officials explained on Saturday.
Individuals who sign up for the new scheme will be able to avail certain tax incentives related to gratuity, commutation of pension, leave encashment on retirement, payments to Employees Provident Fund Organisation and payment received from the National Pension System on closure, revenue secretary Ajay Bhushan Pandey explained at a post-budget press conference.
The new regime has proposed halving the tax rate to 10% on income in the range of ₹5-7.5 lakh, while those earning up to ₹5 lakh will be exempt from taxes as is the case now.
Income in the range of ₹7.5-10 lakh will attract 15% tax in the new regime, down from the current 20%.
A 20% tax will be levied on income in the range of ₹10-2.5 lakh, down from 30% now while income of ₹12.5-15 lakh will be taxed at 25%, again down from the current 30%. Income above ₹15 lakh will continue to be taxed at 30%, but no exemptions at all.
Sitharaman, also present at the press conference, told reporters that the idea was to reduce tax rate as much as to simplify the structure. “We wanted to leave more money in the hands of people. Too many exemptions will be difficult for to administer. We wanted to achieve the two goals. To achieve this, we came with the new scheme, with limited exemptions," said the minister.
The tax rate cut announced in the Union Budget is expected to cost the exchequer about ₹40,000 crore in annual revenue.
The revenue secretary said the incentives retained under the new scheme was chosen after careful examination of all the 120 incentives available to individuals as of now.
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