Finance Minister Nirmala Sitharaman on Saturday announced that people earning between Rs 5-7.5 lakhs will be required to pay tax at 10 per cent against the current 20 per cent. “We propose to bring a personal income tax regime, where income tax rates will be reduced, so now, the people earning between Rs 5-7.5 lakhs will be required to pay tax at 10 per cent against current 20 per cent,” announced Sitharaman while presenting the Union Budget 2020.
Those with income between Rs 7.5-10 lakhs to pay tax at 15 per cent against current 20 per cent. Those with income between Rs 10-12.5 lakhs to pay tax at 20 per cent against 30 per cent. “In this new personal income tax regime, income tax rates will be significantly reduced for the individuals who forgo certain exemptions and deductions,” she said.
Finance Minister said that a people earning Rs 15 lakh per annum and not availing any deductions will now pay Rs 1.95 lakh tax in place of Rs 2.73 lakh.
Sitharaman said that around 70 of more than 100 income tax deductions and exemptions have been removed in a bid to simplify tax system and lower tax rates. Tax on Cooperative societies proposed to be reduced to 22 per cent plus surcharge and cess, as against 30 per cent at present, she said.
She also said that the income of charitable institutions has been fully exempted from taxation. “Donation to such institutions allowed as deduction in computing taxable income of donor,” the Finance Minister added.
Sitharaman also announced ‘Vivad Se Vishwas Scheme’ under which taxpayer will pay only amount of disputed tax and will get complete waiver on interest and penalty, if scheme is availed by March 31, 2020.
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