Nov
What are really the changes in budget 20-21?
The 2020 budget made two schemes on the personal income tax front. The first scheme (old regime) is to retain the current tax structure with all its allowances, exemptions and tax slabs. This would allow those who had already enrolled in tax saving schemes to continue to enjoy those benefits.
In the second scheme (new regime), tax slabs were sliced more finely to introduce a couple of lower tax rates. The earlier non-existent 10%, 15% and 25% slabs have been introduced in addition to the existing rates of 5%, 20% and 30%. Section 87A being rebate for any tax on income below Rs.5 lakhs per annum has been retained, thereby making income earned upto Rs.5 lakhs per annum tax fre
Considering the mentioned schemes, those who earn more than Rs.5 lakhs and upto Rs.15 lakhs will move to lower tax slabs & will have something to cheer about. However, for those who are in the 30% tax bracket, please continue to be grumpy as there seems to be no change at all!
What's more?
- Apart from introducing new tax slabs and rates, the government has done away with all allowances that used to provide tax benefit.
- Additionally, the exemptions provided to employees for investments done under Sec.80 have also been done away with.
For example, items such as House rent allowance, leave travel allowance, meal allowance, etc have now been removed.
For example, investments made in Public Provident Fund Schemes, NSCs, Tax-Saver Fixed Deposit scheme of banks, etc have all been removed with the exception of Sec.80CCD (2).