Income Tax Rule: The government is contemplating to make the new tax system more attractive. The government wants to end the old tax system gradually. The benefit of deduction and exemption is not available in the new tax regime.
Income tax news: Presenting the budget for the financial year 2020-21, Finance Minister Nirmala Sitharaman announced the new tax system. There is no benefit of any deduction in the new tax system. In such a situation, it is a good option for taxpayers who do not make savings schemes, insurance or any other kind of investment. According to the latest information, the Finance Ministry is considering to make the new tax system more attractive. The government plans to gradually do away with the old tax system, in which benefits of various exemptions and deductions are available. In its place, there will be an option of new tax regime without exemption for individual taxpayers. The new system will not have any exemption.
Presenting the budget 2020-21, Nirmala Sitharaman announced the new tax regime. In this the tax rate is low but there is no exemption of any kind. It is a simple tax system. It is also easy for taxpayers to understand. This message has reached the government that due to the new tax regime being simple, taxpayers are easily understandable. It is easy to understand and calculate as there are no deductions or exemptions.
Announced to simplify the tax system
A reliable source said about this matter that when PM Modi came to power in 2014, he had promised next year that we would try to keep the tax system simple. At present it is very complex. The kind of exemption being available will be reduced gradually and the tax rate will be reduced. Moving forward on this idea, the new tax system was implemented two years ago. There is no exemption in this but, the tax rate is low.
Corporate tax rate cut is the first big step
Let us tell you that in September 2019, the government had reduced the corporate tax rate from 30 percent to 22 percent. This was the first step taken towards simplifying the tax system. The next year, a new tax regime was launched in which the benefit of exemption and deduction is not available. However, the tax rate has been kept low in this.
How much tax is levied on how much income under the new tax regime?
The new tax system was announced on 1 February 2020. In this, there is no tax on income up to 2.5 lakhs. The tax rate on income up to 2.5-5 lakhs is 5 percent. The tax rate on income up to 5-7.5 lakhs is 10 percent. The tax rate on income up to Rs 7.5-10 lakh is 15%. The tax rate on income of 10-12.5 lakhs is 20 percent. The tax rate on income of 12.5-15 lakhs is 25 percent and on income above 15 lakhs the tax rate is 30 percent.
