Finance Minister Nirmala Sitharaman on Saturday announced a cut in personal income tax, increased tax benefits for affordable housing and relieved companies on payment of dividends in the Union Budget for 2020-21 as the government boosted consumption to bring the economy out Was looking to give. The worst recession in 11 years.
The minister proposed raising the customs duty on various products ranging from tableware and kitchenware, electrical appliances to footwear, furniture, stationery, and toys to give a level playing field to domestic companies and promote Make in India.
Offering an alternative lower rate of income tax for individuals, Sitharaman proposed new tax slabs of 15 percent and 25 percent in addition to the existing 10 percent, 20 percent and 30 percent in his budget for 2020-21. The new I-T slab will be for individuals who are not availing certain specified deductions or exemptions.
Annual income up to Rs 2.5 lakh is exempt from tax under the proposed I-T slab. Individuals who earn between Rs 2.5 lakh and Rs 5 lakh will pay a 5 percent tax.
Income between Rs 5 to 7.5 lakh will be taxed at 10 percent, while income between Rs 7.5 to 10 lakh will be 15 percent.
People earning between Rs 10 and 12.5 lakh will pay tax at the rate of 20 percent, while those between Rs 12.5 and Rs 15 lakh will pay at the rate of 25 percent. Income above Rs 15 lakh will be taxed at 30 percent.
Persons desirous of taxation under the new rates will not be entitled to exemption/deduction, including sections 80C and 80D, LTC, house rent allowance, the deduction for entertainment allowance, professional tax and interest on self-occupied or vacant property. Discounts included.
Currently, annual income up to Rs 2.5 lakh is exempt from I-T. While income between 2.5 percent and 5 lakh is taxed at 5 percent. 20 percent for income from Rs 5 lakh to Rs 10 lakh and 30 percent for those above Rs 10 lakh.
“The new tax regime will be optional for taxpayers,” she said.
Sitharaman said, “The proposed tax structure will provide significant relief to middle-class taxpayers.”
To promote development, Sitharaman announced high spending on infrastructure, rural development, and agriculture.
The Finance Minister said that the government is proposing a 16-point action plan to promote agriculture and farmer welfare.
Agricultural services need abundant investment, he said that the government has insured 6.11 crore farmers under the Pradhan Mantri Awas Bima Yojana.
Corporate tax was cut by Rs 1.45 lakh crore after the 2019-20 budget in the government’s revenue. The minister raised the fiscal deficit target for the current fiscal from 3.3 percent to 3.3 percent of GDP.
For 2020-21, it pegged the fiscal deficit at 3.5 percent.