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<ul><li>The government has introduced new 'optional' tax slabs for individual taxpayers.</li><li>Instead of five different tax slabs, the new tax regime has seven tax slabs.</li><li>It also the lowers the tax for income between ₹12.5 lakh to ₹15 lakh from 30% to 25%.</li></ul>New tax slabs have been proposed by the Direct Tax Code panel to boost consumption and investment. The government hopes that increased purchasing power will push demand ahead of supply, incentivising firms to ramp up production which will reflect in GDP growth in the next financial year. The new tax slabs increase the minimum taxable limit from ₹2.5 lakh to ₹5 lakh. At the other end of the segment, anyone earning up to 15 lakh annually will be subject to 25% tax rate instead of 30%. However, the new tax slabs are only applicable to people who do not opt for exemptions under the tax regime -- including deductions under 80C of PF, LIP, standard deduction, LTC, house rent allowance, minor income exemption, interest deduction on home loans among others. Essentially, individual tax payers now have the choice to choose between the two tax regimes depending on their requirements. "The complex tax regime for taxpayers with the slabs rejig. With the optional new regime, taxpayers will have to evaluate what works better. Those committed to long term saving and investing via 80C may be discouraged and this may likely demotivate taxpayers from tax-saving linked investing," said Archit Gupta from Clear Tax. There will be no tax levied on annual income upto ₹5 lakh. However, if you cross that threshold tax will charged for income above ₹2.5 lakh. <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup></colgroup></colgroup></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Income </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Previous Tax Rate </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">New Tax Rate </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Up to ₹2.5 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nil </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nil </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹2.5 lakh to ₹5 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">5% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">5% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹5 lakh to ₹7.5 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹7.5 lakh to ₹10 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">15% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹10 lakh to ₹12.5 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹12.5 lakh to ₹15 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">25% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Above ₹15 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td></tr></tbody></table> The government’s move to stimulate the economy As companies look to increase output, job creation will go up or at least arrest job losses taking the pressure off of the country’s unemployment crisis. More jobs, would again, increase purchasing power resulting in a growth cycle. It could also increase the government’s burden On the flip side, experts expect lower tax rates to weigh on the exchequer. Tax revenue collection has often been criticized for being inefficient. However, the ultimate outcome depends on how the cycle of investment and economic growth plays out. Tax revenue could increase if the new tax cuts result in greater compliance over the next two to three years. This is also an attempt by the government to simplify the tax laws, which are known to be one of the most complicated in the world. See also: <a href="https://www.businessinsider.in/budget/news/budget-2020-allocates-6000-crore-for-bharatnet-to-connect-1-lakh-gram-panchayats/articleshow/73832949.cms">Budget 2020 allocates ₹6,000 crore for BharatNet to connect 1 lakh Gram Panchayats</a> <a href="https://www.businessinsider.in/budget/news/budget-2020-aayushman-bharat-allocation-to-eradicate-tuberculosis-by-2025-announced-by-nirmala-sitharaman/articleshow/73832769.cms">Budget 2020 aims to eradicate tuberculosis by 2025 using AI and ML to empower Aayushman Bharat</a> <a href="https://www.businessinsider.in/budget/news/budget-2020-nirmala-sitharaman-wants-nabard-to-geo-tag-cold-storage-facilities-to-make-them-more-efficient/articleshow/73832369.cms">Nirmala Sitharaman wants NABARD to geo-tag cold storage facilities to make them more efficient</a>

New income tax slabs 2020, income up to ₹5 lakh exempt

Maharashtra Chief Minister
Uddhav Thackeray on Saturday alleged that the Union budget
gives "step-motherly" treatment to the state and does not do
justice to Mumbai.
 The budget presented by finance minister Nirmala
Sitharaman was far removed from reality, said Thackeray, a
former ally of the BJP.
 "It is deeply disappointing for Maharashtra. This
budget is unjust for Maharashtra and Mumbai which is the
country's growth engine," Thackeray said in a statement.
 It does not support development of basic amenities in
Mumbai and on-going metro projects in the megapolis, he said.
 "There is no mention of the suburban railway network
(in Mumbai) and development of proposed lines (on the Central
and Western Railway routes).
 "The budget gives no momentum to the development of
railway network in the state except for the mention of
projects announced earlier, such as the Mumbai-Ahmedabad
Bullet Train," Thackeray said.
 He also raised a question over the Centre not
considering any site from "culturally rich" Maharashtra for
development as "iconic site".
 Sitharaman announced in the budget that Rakhigarhi
(Haryana), Hastinapur (Uttar Pradesh), Shivsagar (Assam),
Dholavira (Gujarat) and Adichanallur (Tamil Nadu) will be
developed as "iconic sites".
 "The step-motherly treatment given to Maharashtra has
become evident in the budget. The International Finance Centre
in Gujarat has been strengthened, while Mumbai, which makes
the highest contribution to the country's growth, has been
deliberately ignored," Thackeray said.
 The decision to divest a stake in LIC and possible
privatisation of the railways show the precarious state of the
economy, the chief minister said.
 The growth rate for the current fiscal is 5 per cent,
while in the economic survey for 2020-21 it is estimated at 6
to 6.5 per cent, he said.
 "This growth doesn't not have the potential to achieve
Prime Minister Narendra Modi's dream of making India a USD 5
trillion economy nation," Thackeray said.
 He also dismissed the finance minister's claim that
the Goods and Services Tax gave a relief to the Small and
Medium Enterprises (SMEs).
 "The Small and Medium Enterprises have been bedevilled
by GST. People's purchasing power has decreased, impacting
small scale industries, which in turn has landed workers in
trouble.
 "There was a need to encourage employment-generating
industries. But no such steps were announced in the budget,"
Thackeray said.
 It made no substantial provisions for farmers, women
and children and disabled persons, he added.

Budget does injustice to Maharashtra, Mumbai: Uddhav Thackeray

Ministry of Civil Aviation has been allocated Rs 3,797 crore in this year's Budget, 2.62 per cent higher than Rs 3,700 crore which was allocated in the 2019-20 fiscal year. For the purchase of two B777 aircrafts - which would be for travel of the prime minister, president and vice president - the government has allocated Rs 810 crore in this year's budget that is significantly higher than Rs 272 crore allocated in 2019-20. Currently, Prime Minister Narendra Modi, President Ram Nath Kovind and Vice President M Venkaiah Naidu fly on Air India's B747 planes, which have the call sign 'Air India One'. The government has allocated Rs 465 crore for its regional connectivity scheme Udan, which is 3.1 per cent higher than what was allocated in 2019-20. Just like current fiscal year, the Centre has allocated just Rs 1 lakh in 2020-21 for the "turnaround plan for Air India", as per the documents. Air India Asset Holding Ltd, a special purpose vehicle (SPV), has been set up as part of financial restructuring of the debt-laden national carrier. According to the documents presented in the full Budget for 2020-21, the government has allocated Rs 2,205 crore for the SPV this fiscal. DSP DSP TDS TDS

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New income tax slabs 2020, income up to ₹5 lakh exempt

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