Budget 2020: Govt Changes Slabs To Simplify Tax Payment
Finance Minister (FM) Nirmala Sitharaman had many a surprise in store
for the real estate sector as she presented the second Budget for the
Prime Minister Narendra Modi government in its second stint on February
1, 2020. In her record 2-hour-17-minute speech in the Lok Sabha, the
longest Budget Speech made by an FM, Sitharaman announced major changes
in the personal tax slab to simplify the process — a move which is
likely to result in higher in-hand savings for the salaried class.
Changes in income tax slab
The Budget 2020-2021 proposes significant changes in the income tax slab in order to help middle-class taxpayers. However, only those taxpayers who are willing to let go of certain deductions can make the switch to new rates.
“The Income Tax Act is riddled with various exemptions and deductions which make compliance by the taxpayer complicated. In order to provide significant relief to the individual taxpayers and to simplify the Income-tax law, I propose to bring a new and simplified personal income tax regime wherein, income tax rates will be significantly reduced for the individual taxpayers who forgo certain deductions and exemptions,” Sitharaman said in her Budget Speech.
While switching to the new tax regime would mean lower rates sans some deductions, sticking with the old regime would result in claiming deductions.
New income tax slabs
“In
the new tax regime, substantial tax benefit will accrue to a taxpayer
depending upon exemptions and deductions claimed by him,” the Budget
Speech read.
Boost for affordable housing: Date to avail of higher tax deduction on home loan extended till March 2021
As it tries to pull out all stops to spur demand in real estate, the government has also extended the additional Rs 1.5 lakh tax benefit on home loan interest by one year. In the Budget presented in July 2019, the government had introduced Section 80EEA in the Income Tax Act to offer buyers Rs 1.50 lakh rebate over and above the Rs 2 lakh deduction available under Section 24, if the worth of the property stood at up to Rs 45 lakh. To avail of this benefit, the loan sanction date was kept at March 2020, which has now been extended to March 2021.
Concession on capital gains
In a move that would result in lower tax outgo for both buyers and sellers, the Budget proposes to change the way in which it would compute capital gains. Currently, if the consideration value of a property is less than the government-specified circle rates by more than five per cent, the differential is counted as income both in the hands of the purchaser and seller and taxed accordingly. The Budget proposes to increase this limit to 10 per cent.
Cooperative societies to be taxed at 22% from the earlier 30%
Sitharaman has proposed reduction of tax on cooperative societies to 22 per cent, plus surcharge and cess, from 30 per cent at present.
Ministry of Information & BroadcastingChanges in income tax slab
The Budget 2020-2021 proposes significant changes in the income tax slab in order to help middle-class taxpayers. However, only those taxpayers who are willing to let go of certain deductions can make the switch to new rates.
“The Income Tax Act is riddled with various exemptions and deductions which make compliance by the taxpayer complicated. In order to provide significant relief to the individual taxpayers and to simplify the Income-tax law, I propose to bring a new and simplified personal income tax regime wherein, income tax rates will be significantly reduced for the individual taxpayers who forgo certain deductions and exemptions,” Sitharaman said in her Budget Speech.
While switching to the new tax regime would mean lower rates sans some deductions, sticking with the old regime would result in claiming deductions.
New income tax slabs
| Taxable income slab | Existing rate | New rate |
| Rs 0-2.5 lakh | Exempt | Exempt |
| Rs 2.50-5 lakh | 5% | 5% |
| Rs 5-7.5 lakh | 20% | 10% |
| Rs 7.5-10 lakh | 20% | 15% |
| Rs 10-12.5 lakh | 30% | 20% |
| Rs 12.5-15 lakh | 30% | 25% |
| Rs 15 lakh and above | 30% | 30% |
Boost for affordable housing: Date to avail of higher tax deduction on home loan extended till March 2021
As it tries to pull out all stops to spur demand in real estate, the government has also extended the additional Rs 1.5 lakh tax benefit on home loan interest by one year. In the Budget presented in July 2019, the government had introduced Section 80EEA in the Income Tax Act to offer buyers Rs 1.50 lakh rebate over and above the Rs 2 lakh deduction available under Section 24, if the worth of the property stood at up to Rs 45 lakh. To avail of this benefit, the loan sanction date was kept at March 2020, which has now been extended to March 2021.
Concession on capital gains
In a move that would result in lower tax outgo for both buyers and sellers, the Budget proposes to change the way in which it would compute capital gains. Currently, if the consideration value of a property is less than the government-specified circle rates by more than five per cent, the differential is counted as income both in the hands of the purchaser and seller and taxed accordingly. The Budget proposes to increase this limit to 10 per cent.
Cooperative societies to be taxed at 22% from the earlier 30%
Sitharaman has proposed reduction of tax on cooperative societies to 22 per cent, plus surcharge and cess, from 30 per cent at present.
FM presents people focused budget
Lower Income Tax rates for individuals who forgo rebates
Posted On: 01 FEB 2020 1:53PM by PIB Mumbai
Finance Minister Ms.Nirmala Sitharaman presented the Union Budget in Parliament today
Key highlights :
Introduction
Budget 2020 is woven around three prominent things - aspirational India to boost the standard of living; economic development for all; and building a humane and compassionate society
Public Finance
Nominal GDP growth for the year 2020-21 estimated at 10%, on the basis of trends available. Accordingly, receipts for 2020-21 estimated at Rs22.46 lakh crores Expenditure estimated to be Rs 30.42 lakh crores.
Fiscal deficit of 3.8% in RE 2019-20 and 3.5% in BE 2020-21
Central govt's debt has come down to 48.7% in March, 2019 from 52.2% in March, 2014.
Significant tax reforms undertaken. To provide significant relief to individual tax payers and simplify tax law, a new regime of personal income tax to be introduced.Around 70 of more than 100 income tax deductions and exemptions have been removed, in order to simplify tax system and lower tax rates.
- Under the new personal income tax regime, individual tax payers to pay tax at reduced rate of 10% for income between Rs5 lakh - Rs 7.5 lakhs.
- For income between Rs7.5 lakhs- Rs 10 laks, tax rate will now be 15% against the current 20%.
- For income between Rs 10 lakhs- Rs 12.5 lakhs, the new tax rate will be 20%, down from 30%.
- For income between Rs 12.5 lakh –Rs 15 lakhs - tax rate will be 25%
- Income above 15 lakh rupees will continue to be taxed at 30%
- The new personal income tax regime is optional for taxpayers and the new tax rates are without deductions available under the old tax regime.
- Those who wish to claim rebates and concessions are free to file taxation under the old regime.
Under Vivad Se Vishwas Scheme, taxpayer to pay only amount of disputed tax, will get complete waiver on interest and penalty, if scheme is availed by March 31, 2020
To boost startups, tax burden on employees due to tax on Employee Stock Options to be deferred by five years or till they leave the company or when they sell, whichever is earliest.
Dividend Distribution Tax to be removed, companies will not be required to pay DDT; dividend to be taxed only at the hands of recipients, at applicable rates.
Concessional corporate tax cut to be extended to new domestic companies engaged in power generation.
Tax on Cooperative societies to be reduced to 22 per cent plus surcharge and cess,as against 30 per cent at present.
FM says GST has resulted in efficiency gains in transport and logistics sector, inspector raj has vanished, it has benefitted MSME
Agriculture & Allied Activities
FM lists 16-point action plan for farmers, towards the goal of doubling farmers' income by 2022.
Rs 2.83 lakh crores allocated for agriculture and allied activities, irrigation and rural development
Agricultural credit target has been set at Rs 15 lakh crores.NABARD Refinancing Scheme to be further expanded.
Comprehensive measures for 100 water-stressed districts being proposed
For better marketing and export, supporting states will focus on one product for one district, so that high focus is given at district level for horticulture to gain momentum
Financing on Negotiable Warehousing Receipts to be integrated with e- National Agricultural Market.
Krishi UDAN will be launched by Ministry of Civil Aviation on international and national routes, improving value realization in North East and tribal districts.
Indian Railways will set up Kisan Rail through PPP arrangement, for transportation of perishable goods
Budget encourages balanced use of all fertilizers, a necessary step to change the incentive regime which encourages excessive use of chemical fertilizers.
Farmers who have fallow or barren land will be helped to set up solar power generation units and also sell surplus power to the solar grid.
Pradhan Mantri KisanUrja Suraksha evamUtthanMahabhiyan (PM KUSUM) to be expanded to provide 20 lakh farmers in setting up standalone solar pumps
Milk processing capacity to be doubled by 2025
Fish production to be raised to 200 lakh tonnes by 2022-23. Framework for development, management and conservation of marine fishery resources to be put in place. Fishery extension work to be enabled by rural youth as Sagar Mitras, forming 500 fish farmer producing organizations
Village Storage Scheme run by SHGs, will provide holding capacity for farmers, women in villages can regain their status as Dhaanya Lakshmi. Warehouses will be set up, viability gap funding to be provided to set up warehouses.
Industry & Commerce
Rs 27,300 crore for development of industry and commerce
Investment Clearance Cell to provide end-to-end facilitation, support and information on land banks.
Scheme focussed on encouraging manufacture of mobile phones, electronic equipment and semiconductor packaging to be introduced.
National Technical Textiles Mission to be introduced, with a four-year implementation period, with an outlay of Rs 1,480 crores.
To achieve higher export credit, a new scheme being launched which provides higher insurance cover, reduced premium for small exporters and simplified procedure for claim settlements.
National Logistics Policy will soon be released, creating single window e-logistics market.
Project Preparation Facility to be set up for preparation of infrastructure projects, actively involving young engineers and management graduates.
Infrastructure
Rs 1.7 lakh crores to be provided for transport infrastructure in the coming financial year.
100% tax concession to sovereign wealth funds on investment in infra projects.
Accelerated development of highways will be undertaken.Delhi-Mumbai Expressway and two other projects to be completed by 2023.
100 more airports to be developed by 2024 to support the UDAN scheme.
More Tejas like trains to be introduced.
Rs. 22,000 crores for power and renewable energy sector in 2020-21
National Gas Grid to be expanded from 16,200 kms to 27,000 kms
Large solar power capacity to be set up alongside rail tracks, on land owned by Railways.
Fibre to Home connections under Bharat Net will be provided to 1 lakh gram panchayats this year itself, 6000 crore rupees provided for Bharat Net
Development
Rs 30,757 crores for Union Territory of Jammu & Kashmir Rs 5,958 crores for Union Territory of Ladakh
Banking &Finance
Deposit Insurance Coverage to be increased from 1 lakh rupees to 5 lakh rupees. FM says robust mechanism is in place to monitor and ensure health of all scheduled commercial banks and depositors' money is absolutely safe.
Govt. proposes to sell part of its holding in Life Insurance Corporation by way of Initial Public Offering
Certain specified categories of government securities will be open fully for NRIs, apart from being open to domestic investors
Government proposes to expand Exchange Traded Fund by floating a Debt ETF, consisting primarily of govt. securities.
GIFT City to have an International Bullion Exchange, enabling better price discovery of gold
Amendments to be made to enable NBFCs to extend invoice financing to MSMEs. App-based invoice financing loans product to be launched, to obviate problem of delayed payments and cash flow mismatches for MSMEs
India to host G20 Presidency in 2022, 100 crore rupees to be allocated for making preparations for this historic occasion, where India will drive global economic agenda
Education
Rs 99,300 crores to be provided for education sector in 2020-21 and Rs 3,000 crores for skill development
Degree-level full-fledged online education programme to be offered by institutes in top 100 in National Institutional Ranking Framework.
Urban local bodies across the country to provide internships for young engineers for a period of up to one year.
IND-SAT exam to be held in African and Asian countries, for benchmarking foreign candidates who wish to study in India.
Government proposes to set up National Police University and National Forensic University.
BetiBachaoBetiPadhao has given tremendous results, Gross Enrolment Ratio is now higher for girls than for boys at all levels. GER for girls is 94.3 at the elementary level.
Health
Budget 2020 provides an additional Rs 69,000 crore for the health sector
Govt to expand Mission Indradhanush, add more hospitals to Ayushman Bharat
Jan AushadhiKendras in all districts of country to be expanded to provide medicines at affordable rates.
A medical college to be attached to each district hospital in PPP mode. Viability gap funding to be set up for setting up such medical colleges.
Rs 35,600 crores outlay for nutrition-related programmes in 2020-21.
Over 6 lakh anganwadi workers have been equipped with smartphones to upload the nutrition status of 10 crore households.
Women Empowerment
Rs 28,600 crores provided for programmes which are specific to women
Welfare of SCs/STs and Divyangjan
85,000 crore rupees for Scheduled Castes and Other Backward Classes in 2020-21 53,700 crore rupees for Scheduled Tribes Enhanced allocation of 9,500 crore rupees for Senior citizens and Divyangjan
Culture
Indian Institute of Heritage and Conservation to be established under the aegis of Ministry of Culture. Five archaeological sites to be developed as iconic sites-Rakhigarhi (Haryana), Hastinapur (UP), Shiv Sagar (Assam), Dholavira (Gujarat) and Adishanaloor (Tamil Nadu).
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MD
Source : PIB (Release ID: 1601433)