The Finance Minister has proposed several changes in respect of taxation of Individual through Finance Bill 2020. Changes are discussed below:

New Slab rates for Individuals on cost of removal of exemptions/deduction (Optional Tax Regime Sec 115BAC)

The Finance Minister Nirmala Sitharaman has proposed a new optional tax regime in the budget 2020 for the FY 2020-21 with low rates of taxes, however, to opt new rates, benefits of popular deductions like 80C, 80D , home loan interest benefits has to foregone.

The comparison of new Income-tax slab rates with Old rates applicable under the new tax regime would be as follows:

Slab Rates New Rate of Tax Old Rate of Tax
Upto to INR 2,50,000 Nil Nil
INR 2,50,001 to INR 500,000 5% 5%
INR 500,001 to INR 750,000 10% 20%
INR 750,001 to INR 10,00,000 15%
INR 10,00,001 to INR 12,50,000 20% 30%
INR 12,50,001 to INR 15,00,000 25%
Above INR 15,00,000 30%

Surcharge & Cess would apply as per existing tax rates.

Partic-ulars
Old
New
Old
New
Old
New
Old
New
Old
New
Old
New
Salary
500 000
500 000
750000
750 000
1000 000
1000 000
1250 000
1250 000
15 Lakh
15 Lakh
20 lakh
20 lakh
Less: Dedu-ctions
HRA
25000
75000
100000
125000
150000
200000
Standard Dedu-ctions
50000
50000
50000
50000
50000
50000
LTA
27500
62475
83300
104125
124950
166600
Interest on Home Loan
50000
75000
100000
125000
150000
200000
80C
25000
100000
150000
150000
150000
150000
80D Medical
10000
25000
25000
25000
25000
25000
Net taxable income
312 500
500 000
362525
750 000
491700
1000 000
670875
1250 000
850 050
15 Lakh
1208400
20 Lakh
Tax
3125
12500
5626
37500
12085
75000
46675
125000
82510
187 500
175020
337500
Rebate u/s 87A
3125
12500
5626
12085
Net Tax Payable
37500
75000
46675
125000
82510
187 500
175020
337500
Add: Cess @ 4%
1500
3000
1867
5000
3300
7500
7001
13500
Total Tax payable
39000
78000
48542
130000
85810
195 000
182021
351000

 Please note that new tax rate are optional and individuals who wants to avail deductions/exemption can choose to tax under existing rates. Also, there has been no changes in section 87A i.e. there is no tax for individuals earning taxable income up to INR 5,00,000 under both regime.

Changes in definition of Residential status for Indian Citizens/Persons of Indian Origin

1. The amendments has been proposed only for Indian Citizens (IC)/Persons of Indian Origin (PIO) that they will becomes residents if

a. Stays in India for 182 days or more

b. Stays in India for 120* days or more and 365 days or more in immediately preceding 4 previous years

* reduced from 182 days under existing laws

2. One more interesting change for Indian Citizen is that the Indian Citizens who is not liable to tax in any other country shall be deemed to be residents in India. Accordingly, citizens of India who are not liable for tax in any other country would be required to pay tax in India. This moves curbs the planning of Individual who managed their affairs in such way that they are not require to pay tax in any country. It is very bold move taken by Indian government & it may increase litigations as it overrides DTAA & chargeability sections of the Act.

3. An individual or HUF shall be not ordinarily residents if the individual has been a non-residents in India in 7 out of 10 preceding previous years.

Extending time limit for sanctioning of loan for affordable housing for availing deduction under section 80EEA of the Act

The existing provisions of section 80EEA of the Act provide for a deduction in respect of interest on loan taken from any financial institution for acquisition of an affordable residential house property. The deduction allowed is up to one lakh fifty thousand rupees and is subject to certain conditions. One of the conditions is that loan has been sanctioned by the financial institution during the period from 1st April, 2019 to 31st March, 2020.

In order to continue promoting purchase of affordable housing, the period of sanctioning of loan by the financial institution is proposed to be extended to 31st March, 2021.

Contribution to Provident Fund, Superannuation Fund or Notified Pension Scheme Taxed as Perquisite under Section 17 of the Act

Contribution made by the employer to a recognised provident fund, notified pension scheme under section 80CCD; and in an approved superannuation fund in employee accounts exceeding INR 7,50,000 shall be treated as perquisite.

Also, annual accretion by way of interest, dividend or any other amount of similar nature during the previous year to the balance at the credit of the fund or scheme be treated as perquisite to the extent it relates to the contribution which is included in total income and shall be computed in the prescribed manner.

Dividends from domestic companies and Mutual Fund

With removal dividend distribution taxation payable by the company or mutual fund on distribution of dividends, the same is taxable in the hands of recipients at the applicable rates.

Instant PAN through Aadhaar

In order to further ease the process of allotment of PAN, PAN shall be instantly allotted online on the basis of Aadhaar without any requirement for filling up of detailed application form.

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Qualification: CA in Job / Business
Company: Aisan Fiem Automotives India Pvt. Ltd.
Location: Delhi, New Delhi, IN
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3 Comments

  1. KANCHAN MALA VERMA says:

    ONCE AGAIN IT NOT GIVEN REBATE IN NEW LAW U/S 89 OF INCOME TAX. WHERE IN OLD ITR IT IS GIVEN REBATE OLD AREAR DURING CURRENT YEAR. NEW ITR SNATCHED ALL THE REBATE/EXEMPTION,
    SECONDLY, OLD IS GOLD, NOT GIVEN ANY BENEFIT TO PROMOTE SAVING IN THE HANDS OF INDIVIDUALS. AS EPS-95 PENSION IS VERY MEAGER IN THE HAND OF RETIRED EMPLOYEE, MEDICAL TREATMENT IS VERY COSTLY. F.M. PRESENTED THIS BUDGET AS PER INDIA IS MOST ADVANCE COUNTRY THAN U.S.A.
    IN INDIA THERE IS NO SOCIAL SECURITY FOR INDIVIDUALS EXCEPT POLITICIANS

  2. VIPAN KUMAR VERMA says:

    If NRI filing ITR in resident status, his income is below Rs.80,000/- on banks fixed deposits of old Bank a/c’s, MIS/NSC/KVP etc.of Post Office Jointly with mother second JT.holder.

  3. VIPAN KUMAR VERMA says:

    Sir,
    The above chart shows individuals below 60 years, there is also more beneficial to file in old ITR of SR. Citizen as they are entitled to benefit U/S 80TTB where in sr.citizens are entitle more benefits U/S 80D also. Yours self has not mentioned deduction U/S 80TTB /80TTA in your Above Chart. Please Review the Chart & clarify the Customers

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