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Waiting for the Modi government's budget, tax slab may change

Friday - January 17, 2020 4:20 pm , Category : BUSINESS
Four new tax slabs proposed for the income tax
Four new tax slabs proposed for the income tax

‘These people’ may be harmed if the proposed tax slab comes into force
 
JAN 17 (WTN) - The budget of India, the world's largest democracy and the second largest populated country, for the financial year 2020-21 is going to be presented on February 1. Like all times, this time also the people are waiting for the announcements on the income tax in the budget. In fact, every time people expect from the budget that they will get some relief from income tax. From time to time, governments keep changing the income tax slab so that the common men can get relief. In this context, the people have high hopes for the budget that the Modi government should give some relief to the common people in this budget.

According to the information received from the media, in this budget, there is a possibility of the government to propose four tax slabs instead of the existing three tax slabs in the income tax. If this happens in reality, then who will get benefit from it and who will have to face losing it, let's have a look at it. For your information, let us know that the task force constituted for the change in the income tax has suggested four new slabs in its report presented in August 2019.
 
According to the report of the task force, a 10 percent tax rate can be proposed for individuals with annual earnings between Rs 2.5 lakh to Rs 10 lakh. Similarly, 20 percent tax can be proposed for people with annual income between Rs 10 lakh to Rs 20 lakh, and 30 percent tax for those with an annual income of Rs 20 lakh to Rs 2 crore. Not only this, a 35 percent tax rate can be fixed on people with income above Rs 2 crore annually.
 
For your information, let us know that according to the tax slab currently, 5 percent tax has to be paid on annual income ranging from Rs 2.5 lakh to Rs 5 lakh. There is a tax rate of 20 percent on annual income from Rs 5 lakh to Rs 10 lakh. Talk about the annual income of 10 lakh rupees or more so there is a provision of 30 percent tax on it.

When the Modi government presented the interim budget on 1 February 2019 last year, the then Finance Minister Piyush Goyal had declared rebate on annual earnings up to Rs 5 lakh. But it was clear in the budget proposal that rebates can be availed only when the returns are filled. Explain that if your annual income is Rs 5 lakh and you do not fill the returns, then you can get a notice from the Income Tax Department. To avail of tax rebates, you have to declare your annual income. For your information, let us know that apart from the standard deduction, at present there is a total rebate of Rs 2 lakh under section 80C.

Now, if there is a change in the tax slab on the suggestion of the task force, then the middle class will have the most impact. Now some taxpayers may benefit and some taxpayers may suffer. In fact, those whose annual income is up to Rs 5 lakh and who are currently paying income tax at the rate of 5 percent will have to pay tax at the rate of 10 percent from the possible new tax slab. Naturally, this will cause losses for taxpayers earning Rs 2.5–5 lakh annually.
 
At the same time, the possible new tax slabs will provide relief to those taxpayers who are currently paying tax at the rate of 20 percent on annual earnings of Rs 5 lakh to 10 lakh. Because the new tax slab is applicable then these people will fall under the ambit of 10 percent tax slab. Naturally, this will give tax relief to the income tax of Rs 5 to 10 lakhs per annum. At the same time, for those earning an annual income of 10 lakh rupees or more, the tax is currently taxed at the rate of 30 percent, but they will have to pay tax at the rate of 20 percent from the new slab. This means that people of this category will also get relief.

It is clear that if the new slab is applied on the recommendation of the Task Force, then it will be a loss for the income of Rs 2.5 to 5 lakhs per annum, but there will be more beneficial for those earning more than this. Now it has to be seen whether the Modi Government implements a new tax slab by accepting the task force's recommendation.

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