Budget 2020 has made
the tax structure more complicated by adding three income tax slabs. The
removal of tax exemptions and deductions certainly makes compliance less
tedious, but avid tax planners who maximised their tax deductions will probably
pay more tax under the new tax regime. The budget 2020 has tried to put more
money in the hands of taxpayers by curtailing the incentives to save.
Even the claim that taxpayers will save
tax under the new regime raises questions. Finance Minister Nirmala Sitharaman
said in her budget speech that a taxpayer earning Rs 15 lakh will save Rs
78,000 in tax under the new regime. “A person earning Rs 15 lakh in a year and
not availing any deductions and exemptions will pay only Rs 1.95 lakh tax as
compared to Rs 2.73 lakh in the old regime,” said the Finance Minister.
New income tax slabs and rates
No change in tax exemption given to incomes up to Rs 5 lakh in interim.
But this is without any deductions under various sections of Chapter
VI-A. If the taxpayer claims deductions for Rs 2.5 lakh (Rs 50,000 standard
deduction, Rs 1.5 lakh under 80C and Rs 50,000 contribution to NPS), his tax
will not change. If he also claims house rent allowance (HRA) exemption or home
loan interest deduction of Rs 2 lakh, his tax in the old regime would be lower
by Rs 46,800 (see graphics).
Salaried taxpayers who opt for the new regime will have to forgo the
standard deduction as well as the exemptions under chapter VI-A, including the
HRA, investments under Section 80C, medical insurance premium and even the
leave travel allowance which is tax free if claimed once in a block of two
years.
What’s out
Some of the 70 exemptions and deductions you won’t get in new regime.
Some of the 70 exemptions and deductions you won’t get in new regime.
- Section 80C investments
- House rent allowance
- Housing loan interest
- Leave travel allowance
- Medical insurance premium
- Standard deduction
- Savings bank interest
- Education loan interest
What stays
Some 50 tax exemptions have been left untouched. These include.
Some 50 tax exemptions have been left untouched. These include.
- Standard deduction on rent
- Agricultural income
- Income from life insurance
- Retrenchment compensation
- VRS proceeds
- Leave encasement on retirement
To be fair, taxpayers will have the option to switch to the new tax structure.
“This is a good move because taxpayers will be able to make the choice
depending on their financial situation,” says Sudhir Kaushik, co-founder of Tax spanner. “Taxpayers who avail several exemptions and deductions such as
house rent allowance and 80C deductions may not benefit from switching to the
new system,” says Amit Maheshwari, India Tax Leader at Ashok Maheshwary &
Associates.
Original Source From:- Economic Times
The feature of this Excel
Utility is the following:-
1) This Excel Utility can prepare automatic Tax Calculation as
per new Finance Budget 2019
2) The Salary Structure as per the West Bengal Govt. employee’s
Salary Pattern (As per ROPA 2019)
3) Automated Individually Salary Sheet for each Employee
4) Automated Income Tax Salary Sheet for each Employee
5) This Excel Utility calculates your House Rent Exemption
Calculation U/s 10(13A)
6) Automated Income Tax Revised Form 16 Part A&B for F.Y.
2019-20 in New Format
7) Automated Income Tax Revised Form 16 Part B for the F.Y.
2019-20 in New Format
