In order to put more money in the hands of the taxpayer, the Finance Ministry is likely to provide tax relief of up to Rs 80,000 per year in total tax liability. As per sources, based on discussion during budget exercise there is strong possibility income taxpayers may get relief between Rs 50,000 to Rs 80,000 in the total tax liability.
If one opts for the new regime, income tax would be applicable at a lower rate, but the person will have to forgo certain permissible exemptions and deductions available under the old income tax regime. However, tax experts suggest there is not much enthusiasm among taxpayers for the new system. Hence, to make it more popular, the coming budget may introduce certain changes in the slab rate of the new regime, which will give more headroom for taxpayers to save taxes.
Currently, for an income of up to 2.5 lakh there is no tax, between 2.5 lakh to 5 Lakh there is 5 percent, for 5 to 7.5 lakh it is 10 percent, for 7.5 to 10 lakh it is 15 percent, for 10 lakh to 12.5 lakh it is 20 percent, for 12.5 to 15 lakh it is 25 percent and for 15 lakh and above a 30 percent tax is applicable for individual taxpayers up to 60 years of age.
The standard deduction is an amount that is deducted from an individual’s salaried taxable income, thus reducing the taxable income. Finance Minister Nirmala Sitharaman, in Budget 2020, had added three income tax slabs in the tax structure to incentivize more savings.
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