Budget 2020: To Avail Lower Tax Rates, Here's The Complete List Of Exemptions You Need To Give Up

Budget 2020 Income Tax Slab Rates: Tax rate on income in the range of Rs 5-7.5 lakh will be halved to 10% For Rs 7.5-10 lakh income, tax rate of 15% will be applicable No change in tax rate for those who arn over Rs 15 lakh annually

India's Finance Minister Nirmala Sitharaman (2R) looks on as she leaves the Finance Ministry for the Parliament to announce the 2020-21 Union Budget. (Image: AFP)

New Delhi: Finance Minister Nirmala Sitharaman on Saturday tabled the Union Budget for 2020-21 fiscal where she proposed an optional new income tax  regime that levies a lower tax burden for those who do not want to claim any of the specified exemptions or deductions. Speaking at a press conference in the national capital after the Budget presentation, Sitharaman said the intention was to reduce the rate as much as to simplify the tax structure. Finance Minister, who delivered the longest ever Budget speech ever, also  said the government intends to remove all income tax exemptions in the long run. "Income tax cuts follow reduction in corporate tax rates in September last year and in the same manner, with or without exemptions," she told reporters. As per the new tax regime announced by the FM Sitharaman in her budget speech, the tax rate on income in the range of Rs 5-7.5 lakh will be halved to 10 per cent. Likewise, income in the range of Rs 7.5-10 lakh will attract 15 per cent tax in the new regime, down from the existing 20 per cent.

Did you check out the new #IncomeTax rates announced in #Budget2020.#janjankabudget pic.twitter.com/j7LahYkbDn

— PIB India (@PIB_India) February 1, 2020

There has been, however, no change in tax rate for those who earn over Rs 15 lakh annually. To mention it once again, the lower tax rates can be availed by the people only on the condition that they seek any tax exemption or deductions. As per the memorandum that listed changes to the income tax law, below mentioned are the exemptions that salaried individuals will not be entitled to if they want to be taxed at a lower rate:  1. Leave travel concession [Clause (5) of section 10] of Income Tax Act 2. House rent allowance [Clause (13A) of section 10] 3. Some of the allowance as contained in clause (14) of section 10 4. Allowances to MPs/MLAs as contained in clause (17) of section 10 5. Allowance for income of minor as contained in clause (32) of section 10 6. Exemption for SEZ unit contained in section 10AA 7. Standard deduction, deduction for entertainment allowance and employment/professional tax as contained in section 16 8. Interest under section 24 in respect of self-occupied or vacant property 9. Additional depreciation 10. Deductions under section 32AD, 33AB, 33ABA of Income Tax Act 11. Various deduction for donation for or expenditure on scientific research contained in sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) of section 35 12. Deduction under section 35AD or section 35CCC; 13. Deduction from family pension under clause (iia) of section 57; 14. Any deduction under 80CCC (contribution towards certain pension fund), Section 80D (health insurance), 80E (interest on loan for higher education), 80EE (interest on loan taken for residential property), 80EEB (purchase of electric vehicle), 80G (donation to charitable institutions), and 80G (rent paid). The under above mentioned clause, individuals have to forego a host of exemptions and deductions including a standard deduction of Rs 50,000, tuition fee of children, and contribution towards insurance premium and provident fund. As per the Budget document, an individual taxpayer opting for the new tax regime will not be entitled for deduction under 80C of the Income Tax. Section 80C provides deduction for contribution towards insurance premium, deferred annuity, provident fund and certain type of shares. Besides, a taxpayer opting for the new scheme will not get tax benefit for leave travel concession (LTC), allowances for income of minors, and certain allowances of MPs/MLAs. The tax benefit will not be available in respect free food and beverages through vouchers provided to employees. However, certain deductions are proposed to be retained in the new regime, like conveyance allowance for meeting expenses in performance of duty and allowance for travel on tour and transfers.