For the first time ever, the Union budget 2020 presented by the Finance Minister came up with two tax slabs and rates and gave an option to the taxpayers to choose between the two from the financial year 2020-21.

While retaining the existing three slab tax rates, it introduced a new six-slab tax rate. On the budget day, as news started trickling in on the tax front, the initial euphoria evaporated and gave rise to confusion and disappointment. The confusion was reinforced when I got a call from one of my colleagues recently, asking me which regime was beneficial as it was the time for the annual investment declaration in the organisation.

Old or New? Taxes, deductions, exemptions and compliances are by themselves something of a rocket science for the average taxpayer. The new rules have only added to the mystery surrounding income tax. So let us try to figure out which tax regime is better.

The table (for taxpayers who are less than 60 years of age) compares the tax slabs & rates between the old and the new tax structure.

The system that we follow in India is a progressive tax system meaning the more an individual earns the more taxes he is expected to pay. There is no change in the exemption limit of Rs 2.50 lakh and the tax rate of 5 % for taxable income up  to Rs 5 lakh. The good news also is that individuals with taxable income up to Rs 5 lakh can claim tax rebate of Rs 12,500 under section 87A in both the old and new tax regimes. Effectively, this means that individual taxpayers having taxable taxable income up to Rs 5 lakh need not pay any tax.

What is the difference between the old and new other than the tax slabs & tax rates? If you opt for the new regime, the bad news is you will have to forego 70 deductions and exemptions:

Read more at: https://www.deccanherald.com/business/all-about-the-new-income-tax-slabs-and-rates-833166.html

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