BUDGET 2020- PERSONAL TAX

Personal Tax

·         Now there are two options available to individual tax payer . The first option is to continue with old rate with all tax exemptions and another one with new tax rate slab without any tax exemptions. 

Ø  Old Scheme.

Income Slabs (Rs.)		Individuals (< 60 years)		Senior Citizens (60 years to 80 years)		Super Senior Citizens (> 80 years)
Upto 2,50,000		-		-		-
2,50,001 To 300,000	5%				-		-
301,000 to 5,00,000		5%		5%		-
5,00,001 to 10,00,000		20%		20%		20%
More than 10,00,000		30%		30%		30%

 

·          

·         Rebate of Rs. 12,500  if taxable Income less than Rs. 500,000/-. Thus there is no tax payable for Income less than  Rs. 5 Lakhs and if Income exceeds Rs. 500,000 then compute tax as per captioned slab.

·         All other regular exemptions and deductions are available.  

Ø  New Scheme

·         A new Section 115BAC has been proposed to be inserted to provide an alternative to Individuals and HUFs to pay tax at lower rates. Option under this scheme can be exercised by every individual or the HUF. However, an individual and HUF having business income, the option once exercised for a previous year shall be valid for that previous year and for all subsequent years. (it means for other there is option to swap in next subsequent years)The income under this scheme shall be computed without claiming any deduction under Chapter VI-A (except Sections 80CCD or 80JJAA) or Section 24 or exemptions.  Further, similar table applicable for senior citizen.

Total Income	Tax Rate
Upto 2,50,000	-
250,001 to 500,000	5%
500,000 to 750,000	10%
750,001 to 10,0000	15%
10,00,001 to 12,50,000	20%
12,50,001 to 15,00,000	25%
15,00,001 & above	30%

 

·         As mentioned above, taxpayer cannot claim any exemption or deduction if they opt for the new scheme.    The few exemptions which are not available is given below.

Ø  Deduction under chapter VIA which include 80 C and 80D. (other than 80CCD(2) and 80JJA)

Ø  HRA under section 10(13A)

Ø  Allowance under section 10(14). (Conveyance allowance allowed)

Ø  LTA under section 10(5)

Ø  Interest on house property u/s 24(i)

Ø  Rebate under section 87A.

Ø  Standard deduction of 50K.

Ø  Food Coupon.

·         No Change in Surcharge and cess.

·         Section 80EEA was introduced vide Finance (No. 2) Act 2019 to provide a deduction for the interest on loan taken to buy an affordable residential house property. One of the conditions to claim this deduction is that loan should be sanctioned by the financial institution during the period from 01-04-2019 to 31-03-2020. The period of sanctioning of loan by the financial institution is proposed to be extended to 31-03-2021.

·         Dividend Income is taxable.

·         Overall ceiling of exemption in respect of employers contribution to PF, Superannuation fund and National Pension Scheme restricted time Rs 7.50 lakhs.  Thus there is double taxation of same income as the time of withdrawal.

NON RESIDENT

·         All Indian Citizens to be deemed Resident of India, if they are not resident of any other country. Accordingly if any Indian is holding Indian passport ,he needs to establish Residential status of other country if he claims to be a non resident. Such Indian Citizen shall be required to pay tax on global income.

·          Further for the purpose of determining residential status, the number of days for stay in India will be 120 days as against 182 days. 

·         For Resident but not ordinary resident -- test will be of non resident in 7 out of 10 preceding years as against present condition of 9 out of 10 preceding years.