New Delhi, January 23: Union Finance Minister Nirmala Sitharaman will present the Union Budget for the financial year 2020-21 on February 1. This will be the first full-year Budget after Prime Minister Narendra Modi-led Bharatiya Janata Party (BJP) returned to power in May last year. As the common man expects the Modi-2.0 government to announce major relief in income tax, Sitharaman may extend the 5 percent tax rate for income upto Rs 7 lakh.
According to a report of CNBC Awaaz, there will be no tax on first Rs 2.5 lakh, 5 percent on income between Rs 2.5 and 7 lakh, 10 percent on income between Rs 7 lakh and Rs 10 lakh, 20 percent on earnings between Rs 10 lakh and Rs 20 lakh. For income bracket from Rs 20 lakh to Rs 10 crore, the tax proposed is 30 percent. The government may impose 35 percent tax if the income exceeds Rs 10 crore, the report said. Tax Slabs After Budget 2019: If Your Income Is Rs 5 Lakh, 7.5 Lakh or 10 Lakh, Here's The Amount You'll Have to Pay.
If the above-mentioned tax rates are announced, individual taxpayers earning Rs 10 lakh, Rs 15 lakh and Rs 20 lakh could save Rs 60,000, Rs 1.1 lakh and Rs 1.6 lakh, respectively. In July last year, Sitharaman had kept the existing tax rates and slabs unchanged. At present, individual taxpayers pay 5 percent tax on income between Rs 2.5 and 5 lakh, 20 percent on income between Rs 5 lakh and Rs 10 lakh and 30 percent on earnings of over Rs 10 lakh.
While the common man expects Sitharaman to raise the basic income tax exemption limit to Rs 5 lakh from Rs 2.5 lakh, economists believe no such announcement will be made. The government has already announced a provision whereby individuals earning up to Rs 5 lakh can get full tax rebate under Section 87A. Those earning Rs 5 lakh per annum are only required to file tax returns even though they have zero tax liability.
Here's the Current Income Tax Slab Table
|Income Slabs (Individual below 60 years of age)||Tax Rates||Income Slabs (resident & above 60 years but below 80 years)||Tax Rates||Income Slabs (resident & above 80 years)||Tax Rates|
|Total income up to Rs. 2.5 Lac||NIL||Total income up to Rs. 3.00 Lac||NIL||NA||NA|
|Total income exceeds Rs. 2.5 Lac but less than Rs.5 Lac||5% on amount exceeding Rs. 2.5 Lac||Total income exceeds Rs. 3 Lac but less than Rs.5 Lac||10% on amount exceeding Rs. 3.00 Lac||Total income up to Rs. 5 Lac||NIL|
|Total income exceeds Rs. 5 Lac but less than Rs.10 Lac||20% on Income exceeding Rs. 5 Lac + Rs. 25,000||Total income exceeds Rs. 5 Lac but less than Rs.10 Lac||20% on Income exceeding Rs. 5 Lac + Rs. 20,000||Total income exceeds Rs. 5 Lac but less than Rs.10 Lac||20% on Income exceeding Rs. 5 Lac|
|Total income more than Rs. 10 Lac||30% on Income exceeding Rs. 10 Lac + Rs. 1,25,000||Total income more than Rs. 10 Lac||30% on Income exceeding Rs. 10 Lac + Rs. 1,20,000||Total income more than Rs. 10 Lac||30% on Income exceeding Rs. 10 Lac + Rs. 1 Lac|
The ongoing economic slowdown and a sharp reduction in corporate tax rates leave little room for Sitharaman to dole out a big concession in income tax. Besides, the Goods and Services Tax (GST) rates were lowered many times in 2019. All these factors have led to a decline in revenue, making Sitharaman's job more difficult.