Personal Income Tax in India presented in budget 2020

Is it a boon or a curse, read to know

Nirmala Sitharaman’s new tax regime — a big curse to tax payers Six income tax slabs in, 70 exemptions out: Impact on taxpayers FM is comparing tax paid by tax payers in both cases and citing an example that “A person earning 15 Lakhs income needs to pay around 78,000 less in new tax regime”. This statement is true only when the person does not use any of the reliefs and exemptions in old tax regime. But every person definitely uses some exemptions(such as 50,000 standard deduction which does not require any bills, HRA, LTC, medical insurance, life insurance,…) The catch in the new tax regime is that the individual has to forfeit reliefs and exemptions. Clearly, new tax regime without any deductions puts more money in the hands of Government and not individuals.

*IMPORTANT** Once you shift to new tax regime, you cannot shift back to old regime. So, think twice and watch this video thrice before you make a move.

Deductions assumed in income tax calculation as per old slab rate:
— Standard Deduction: 50,000 AND deductions under section 80C (PPF, LIC, NSC, Tax FD): 1,50,000
— Additional deduction for NPS 80CCD(1B): 50,000
— All other misc. deductions (HRA, health insurance under 80D, donations under 80G,…): 70,000
— Savings account interest earned 80TTA: 10,000
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Total exemptions = 3,30,000
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complete indetailed explanation can be found at https://youtu.be/ISMopKHfdLs

Some of the 70 exemptions and deductions you won’t get in new regime. Section 80C investments

House rent allowance

Housing loan interest

Leave travel allowance

Medical insurance premium

Standard deduction

Savings bank interest

Education loan interest

Passionate author, strategic investor, financial advisor