New Tax Slabs : Proposed 2020-21 : Budget 2020

Finance minister introduces new tax slab in budget 2020 and give one other option for the tax payers. In this new tax system finance minister proposed tax slab which does not include maximum deductions which normally tax payers use for income tax rebate like 80C, 80 D, LTA, House rent allowance insurance policy premiums etc.

In simple words government is trying to discourage income tax payers to invest money in PPF, NSC, ULIP etc and also not give any benefit of tuition fee paid, mutual fund, pension fund, home loan interest and principle, term deposit, post office, health insurance premium.

Old Tax Slabs (with Tax deductions)		Old Tax Slabs (with Tax deductions)
Taxable Income	Tax Rate	Taxable Income	Tax Rate
Up to Rs 2.5 Lacs	NIL	Up to Rs 2.5 Lacs	NIL
Rs. 2.5 Lacs – Rs 5 Lacs	5%	Rs. 2.5 Lacs – Rs 5 Lacs	5%
Rs. 5 Lacs – Rs 10 Lacs	20%	Rs. 5 Lacs – Rs 7.5 Lacs	10%
		Rs. 7.5 Lacs – Rs 10 Lacs	15%
Above Rs 10 Lacs	30%	Rs. 10 Lacs – Rs 12.5 Lacs	20%
		Rs. 12.5 Lacs – Rs 15 Lacs	25%
		Above Rs 15 Lacs	30%
You get a choice to stick with the old slabs or opt for the new slabs. However, if you opt for the new slabs, you will have to let go of various deductions. For the old slabs, age < 60 is considered.

This new tax scheme will be beneficial to income tax payers earning income more than 13 Lacs yearly. Salaried tax payers earning less than 12 Lacs yearly will save by using old scheme of tax slab. In short new tax slab is better for individuals who does not pay house rent do not have any housing loan and also do not have good investment in PF, EPF, LIC etc.

As we all know that Indian economy is facing problem of liquidity in market. Now they are expecting liquidity of market will increase as tax payer will stop saving money in different schemes of 80 C, 80 D, LIC, Housing loans etc because they have option to opt new tax slab and the same money they will spent in market.