NEW DELHI :
Individuals having an annual salary income of over ₹13 lakh and availing deductions of up to ₹2 lakh will save on their tax outgo if they opt for the new tax regime proposed in the Budget, government sources said on Sunday.
For those earning a salary of ₹12 lakh and less and availing deductions of up to ₹2 lakh, the old tax system will be beneficial as the tax outgo will be less compared to the proposed new structure.
As per data, as many as 5.3 crore taxpayers out of 5.78 crore claimed deductions of less than ₹2 lakh (standard deduction, provident fund, home loan interest, contribution to national pension scheme, life insurance, medical insurance etc.) while filing income tax returns.
This means that about 90 per cent of taxpayers actually claim deduction of less than ₹2 lakh.
Offering an optional lower rate of income tax to individuals, Finance Minister Nirmala Sitharaman in the Budget 2020-21 proposed new tax slabs of 15 per cent and 25 per cent in addition to the existing 10 per cent, 20 per cent and 30 per cent.
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Under the proposed tax slab, annual income up to ₹2.5 lakh is exempt from tax.
Those individuals earning a salary between ₹2.5 lakh and ₹5 lakh will pay 5 per cent tax. Income between ₹5 and 7.5 lakh will be taxed at 10 per cent, while earning of ₹7.5 and 10 lakh to attract 15 per cent tax.
Those earning a salary between ₹10 and 12.5 lakh will pay tax at the rate of 20 per cent, while income between ₹12.5 and ₹15 lakh will be liable to pay 25 per cent tax.
Income above ₹15 lakh will be taxed at 30 per cent.
The new slabs would be for individuals not availing certain specified deductions or exemptions.
While individuals with an annual salary income of ₹13 lakh and above will pay ₹1.43 lakh tax under the proposed tax structure; in the old regime, they would have paid a tax of ₹1.48 lakh, thereby saving ₹5,200, a source said.
On salary of ₹14 lakh a year, savings would be ₹10,400; and for those with income of ₹15 lakh and above, savings would be ₹15,600, provided the deductions claimed are up to ₹2 lakh.
In case of non-salary earners, who do not get standard deduction of ₹50,000, the new tax structure is beneficial for those earning ₹9.5 lakh annually and availing deductions up to ₹1.5 lakh. They would save ₹5,200 in their annual income tax outgoing.